Shares
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XXXXXXX.XXX INC.
Common Stock
$.01 Par Value Per Share
UNDERWRITING AGREEMENT
, 1999
Xxxx Xxxxxxxx Incorporated
U.S. Bancorp Xxxxx Xxxxxxx Inc.
SoundView Technology Group, Inc.
Wit Capital Corporation
As Representatives of the several Underwriters
x/x Xxxx Xxxxxxxx Xxxxxxx
Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
XxxxXxx.xxx Inc., a Washington corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell, to the
several Underwriters named in Schedule A hereto (the "Underwriters"), for
which you are acting as representatives (the "Representatives"),
________________ shares (the "Firm Shares") of Common Stock, $.01 par value
per share, of the Company (the "Common Stock"). The Company also proposes,
subject to the terms and conditions stated herein, to sell to the
Underwriters, at the Underwriters' election,________________ additional
shares of Common Stock to cover over-allotments (the "Option Shares"). The
Firm Shares and the Option Shares are herein collectively called the "Shares."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-80981) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Act"). The registration statement, as
amended at the time it was declared effective, including the information (if
any) deemed to be part thereof pursuant to Rule 430A under the Act is herein
referred to as the "Registration Statement." The form of prospectus first filed
by the Company with the Commission pursuant to Rules 424(b) and 430A under the
Act is referred to herein as the "Prospectus." Each preliminary prospectus
included in the Registration Statement prior to the time it became effective or
filed with the Commission pursuant to
Rule 424(a) under the Act is referred to herein as a "Preliminary
Prospectus." Copies of the Registration Statement, including all exhibits
and schedules thereto, any amendments thereto and all Preliminary
Prospectuses have been delivered to you.
The Company hereby confirms its agreements with respect to the
purchase of the Shares by the Underwriters as follows:
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:
(i) The Registration Statement has been declared
effective under the Act, and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or threatened by the
Commission.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, nor, to the Company's
Knowledge have proceedings for such purpose been instituted or threatened, and
each Preliminary Prospectus, at the time of its issue date, conformed in all
material respects to the requirements of the Act and the rules and regulations
of the Commission promulgated thereunder (collectively, the "Regulations"), and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, the Company makes no representation or warranty
as to information contained in or omitted from any Preliminary Prospectus in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representatives expressly
for use in the preparation thereof. For purposes of this Agreement, "Knowledge"
shall mean, with respect to the Company, the knowledge of the Company's
executive officers and directors, provided that such persons have made due and
diligent inquiry of those employees of the Company whom such executive officers
and directors reasonably believe would have actual knowledge of the matters
represented.
(iii) The Registration Statement conforms, and the
Prospectus and any amendments or supplements thereto will conform, in all
material respects to the requirements of the Act and Regulations. Neither the
Registration Statement nor any amendment thereto, and neither the Prospectus nor
any supplement thereto, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the statements
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therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to information contained in or omitted from the Registration
Statement or the Prospectus, or any amendment or supplement to either of
them, in reliance upon, and in conformity with, written information furnished
to the Company by or on behalf of any Underwriter through the Representatives
expressly for use in the preparation thereof.
(iv) The Company has been duly organized, is validly
existing as a corporation under the laws of its state of incorporation, has the
corporate power and authority to own, lease, license and use its properties and
conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in all jurisdictions in which the
conduct of its business or its ownership, lease, license, or use of property
requires such qualification and the failure so to qualify would have a material
adverse effect on the business, properties, key personnel, prospects, condition,
financial or otherwise, or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(v) The Company has no subsidiaries other than as listed
on Exhibit 21 to the Registration Statement (herein referred to as its
"subsidiaries"). Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own,
lease, license and use its properties and conduct its business as described in
the Prospectus, and is duly qualified to transact business in all jurisdictions
in which the conduct of its business or its ownership, lease, license or use of
property requires such qualification and the failure so to qualify would have a
Material Adverse Effect. Other than the Company's subsidiaries and except as
set forth on Schedule 1(a)(v) hereto, the Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt securities
of any corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity. All outstanding shares of capital stock of
each of the subsidiaries of the Company have been duly authorized and validly
issued, are fully paid and non-assessable, and are owned, directly or
indirectly, by the Company free and clear of all liens, encumbrances and
security interests. No options, warrants or other rights to purchase,
agreements or other obligations to issue, or other rights to convert any
obligations into, shares of capital stock or ownership interests in any of the
subsidiaries of the Company are outstanding.
(vi) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. All offers and sales by the Company of outstanding shares of
capital stock and other securities of the Company, prior to the date hereof,
were made in compliance with the Act and all applicable state securities or blue
sky laws and were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right. The Shares to be issued and sold by
the
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Company to the Underwriters pursuant to this Agreement have been duly
authorized and, when issued and paid for as contemplated herein, will be validly
issued, fully paid and nonassessable. Each of the Underwriters will receive
good and marketable title to the Shares purchased by it, free and clear of any
and all liens, encumbrances, pledges, security interests, charges, claims,
equitable interests, restrictions and defects. Except as set forth in
Schedule 1(a)(vi) hereto and as otherwise stated in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of capital stock of the
Company pursuant to the Company's charter, bylaws or any agreement or other
instrument to which the Company is a party or by which the Company is bound.
Neither the filing of the Registration Statement nor the offering or the sale of
the Shares as contemplated by this Agreement gives rise to any rights for, or
relating to, the registration of any shares of capital stock or other securities
of the Company, except such rights which have been validly waived or satisfied.
Except as set forth on Schedule 1(a)(vi) hereto and as described in the
Prospectus, there are no outstanding options, warrants, agreements or contracts
to purchase or preemptive or other rights to purchase, subscribe for or acquire
from the Company any shares of its capital stock or any securities or
obligations convertible into or exercisable for shares of the Company's capital
stock. The Company had the authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus as of the date set
forth therein. The outstanding capital stock of the Company, including the
Shares, conforms, and the Shares to be issued by the Company to the Underwriters
will conform, in all material respects, to the description thereof contained in
the Prospectus.
(vii) The financial statements, together with the related
notes and schedules as set forth in the Registration Statement and Prospectus,
present fairly the consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries on the basis
stated in the Registration Statement at the indicated dates and for the
indicated periods. Such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, and all adjustments necessary for a fair presentation of
results for such periods have been made, except as otherwise stated therein, and
are in accordance with the books and records of the Company. The summary and
selected financial and statistical data included in the Registration Statement
present fairly the information shown therein on the basis stated in the
Registration Statement and have been compiled on a basis consistent with the
financial statements presented therein. The books, records and accounts of the
Company and its subsidiaries accurately and fairly reflect in all material
respects, in reasonable detail, the transactions in and dispositions of the
assets of, and the results of operations of, the Company and its subsidiaries.
(viii) The Company has provided you with all financial
statements that are available to the officers of the Company since the date of
the most recent financial statements included in the Prospectus.
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(ix) There is no action, suit, claim, proceeding or
investigation pending or, to the Knowledge of the Company, threatened or
contemplated against the Company or any of its subsidiaries or any of their
respective officers, directors, properties, assets or rights before any court or
administrative or regulatory agency which, if determined adversely to the
Company or any of its subsidiaries, would, individually or in the aggregate,
result in a Material Adverse Effect except as set forth in the Registration
Statement.
(x) The Company has good and marketable title to all
properties and assets reflected in the most recent financial statements
hereinabove described as owned by the Company (or as described in the Prospectus
as owned by the Company), except those disposed of in the ordinary course of
business, in each case free and clear of all liens, encumbrances, pledges,
security interests, charges, claims, equitable interests, restrictions and
defects (collectively, "Liens"), except such Liens as are described in the
Prospectus or do not materially affect the value of such properties and assets
and do not materially interfere with the use made, or proposed to be made, of
such properties and assets by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid and enforceable leases with such exceptions set forth
in the Prospectus or as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(xi) Since the respective dates as of which information
is given in the Registration Statement and Prospectus, as they may be amended or
supplemented, (A) there has not been any material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in or affecting the condition, financial or otherwise, of the Company
and its subsidiaries, taken as a whole, or the business affairs, management,
financial position, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, whether or not occurring in the ordinary
course of business, (B) there has not been any transaction not in the ordinary
course of business entered into by the Company or any of its subsidiaries which
is material to the Company and its subsidiaries, taken as a whole, other than
transactions described or contemplated in the Registration Statement, (C) the
Company and its subsidiaries have not incurred any material liabilities or
obligations, direct or indirect or contingent or non-contingent, which are not
in the ordinary course of business or which could result in a material reduction
in the future earnings of the Company and its subsidiaries, (D) the Company and
its subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, windstorm, accident or
other calamity, whether or not covered by insurance, (E) there has not been any
change in the capital stock of the Company (other than upon the exercise of
options and warrants that are described in the Registration Statement), or any
material increase in the short-term or long-term debt
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(including capitalized lease obligations) of the Company and its
subsidiaries, taken as a whole, (F) there has not been any declaration or
payment of any dividends or any distributions of any kind with respect to the
capital stock of the Company, other than any dividends or distributions
described or contemplated in the Registration Statement, or (G) there has not
been any issuance of warrants, options, convertible securities or other
rights to purchase or acquire capital stock of the Company (other than
options granted under the Company's employee stock option plans referred to
in the Prospectus).
(xii) Neither the Company nor any of its subsidiaries is
in violation of, or in default under, its charter or bylaws, or any statute, or
any law, rule, regulation, order, judgment, injunction, decree or authorization
of any court or governmental or administrative agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, or any indenture, mortgage, deed of trust, loan agreement, lease,
franchise, license or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any property or assets of the Company or any
of its subsidiaries is subject, which violation or default would have a Material
Adverse Effect.
(xiii) The issuance and sale of the Shares by the Company,
the execution and delivery of this Agreement by the Company and the performance
by the Company of its obligations pursuant to this Agreement will not violate
any provision of the charter or bylaws of the Company or any of its subsidiaries
or any statute or any order, judgment, decree, rule, regulation or authorization
of any court or governmental or administrative agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, and will not conflict with, result in a breach or violation of, or
constitute, either by itself or upon notice or passage of time or both, a
default under any indenture, mortgage, deed of trust, loan agreement, lease,
franchise, license or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any property or assets of the Company or any
of its subsidiaries is subject. No approval, consent, order, authorization,
designation, declaration or filing by or with any court or governmental agency
or body is required for the execution and delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated, except
as may be required under the Act or any state securities or blue sky laws or
under the rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD"). No further approval or authorization of any
securityholder, the Company's Board of Directors or any duly appointed committee
thereof or others is required for the issuance and sale or transfer of the
Shares, except as may be required by the NASD or under state securities or blue
sky laws.
(xiv) The Company and each of its subsidiaries holds and
is operating in compliance with all licenses, approvals, certificates and
permits from governmental and
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regulatory authorities, foreign and domestic, which are necessary or material
to the conduct of its business as described in the Prospectus (except where
the failure to so hold or operate in compliance with such a license,
approval, certificate or permit would not have a Material Adverse Effect) and
there are no proceedings pending or, to the Knowledge of the Company,
threatened, which may cause any such license, approval, certificate or permit
to be withdrawn, cancelled, suspended or not renewed.
(xv) The Company has the corporate power and authority to
enter into this Agreement and to authorize, issue and sell the Shares hereunder
as contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(xvi) Xxxxxx Xxxxxxxx LLP and Ernst & Young LLP, which
have expressed their opinions on the audited financial statements included in
the Registration Statement and Prospectus, are independent public accountants as
required by the Act and Regulations.
(xvii) The Company has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Common Stock.
(xviii) The Company's Common Stock is registered pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and has been approved for listing upon notice of issuance on
The Nasdaq National Market under the symbol "SPNW."
(xix) The Company has obtained and delivered to the
Representatives written agreements (the "Lock-Up Agreements"), in form and
substance satisfactory to the Representatives, of each of its executive officers
and directors AND [OTHER SHAREHOLDERS _______________] that they shall not
(A) offer, pledge, sell, offer to sell, contract to sell, sell any option or
contract to purchase, purchase any option to sell, grant any option right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the shares of Common Stock or any securities convertible
into, or exercisable or exchangeable for, Common Stock, or (B) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, shares of Common Stock
(whether any such transaction described in clause (A) or (B) above is to be
settled by delivery of the shares of Common Stock or such other securities, in
cash or otherwise), in each case, beneficially owned (within the meaning of
Rule 13d-3 under the Exchange Act) or otherwise controlled by such officer,
director or shareholder on the date hereof or hereafter acquired, for a period
beginning from the date of execution of this Agreement and
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continuing to and including the date 180 days after the date of the
Prospectus (the "Lock-Up Period"); PROVIDED, HOWEVER, that the foregoing
shall not prevent such officer, director or shareholder from exercising any
option or warrant to purchase Common Stock and that, if such officer,
director or shareholder is an individual, such officer, director or
shareholder may, without the prior written consent of Xxxx Xxxxxxxx Xxxxxxx
on behalf of the Underwriters, transfer shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, Common Stock
either during his or her lifetime or, on death, by will or intestacy to
members of his or her immediate family to trusts exclusively for the benefit
of members of his or her immediate family or to trusts exclusively for the
benefit of members of his or her immediate family or in connection with BONA
FIDE gifts, PROVIDED that, prior to any such transfer, such transferee
executes an agreement, satisfactory to Xxxx Xxxxxxxx Xxxxxxx, pursuant to
which such transferee agrees to receive and hold such shares subject to the
provisions of the Lock-Up Agreement and not to further transfer such shares
prior to the end of the Lock-up Period except in accordance with the
provisions of the Lock-Up Agreement. For purposes of this paragraph,
"immediate family" shall mean the spouse, lineal descendant, father, mother,
brother or sister of such officer, director or shareholder. The restrictions
on transfers described in the Lock-Up Agreements shall not apply to
transactions in shares of Common Stock acquired in open-market transactions
after completion of the Offering.
(xx) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Act to be distributed by the
Company.
(xxi) The Company is in compliance with all provisions of
Florida Statutes Section 517.075 (Chapter 92-198, laws of Florida). The Company
does not do any business, directly or indirectly, with the government of Cuba or
with any person or entity located in Cuba.
(xxii) The Company and its subsidiaries have timely filed
all federal, state, local and foreign tax returns or reports required to be
filed, and have paid in full all taxes indicated by said returns or reports and
all assessments received by it or any of them to the extent that such taxes have
become due and payable, except where the Company and its subsidiaries are
contesting in good faith such taxes and assessments and there is no tax
deficiency that has been or, to the Company's Knowledge, might be asserted
against the Company or any of its subsidiaries which might have a Material
Adverse Effect and all material tax liabilities, whether or not disputed, are
adequately provided for on the books of the Company and its subsidiaries.
Except as set forth in the Registration Statement and the Prospectus, neither
the Company nor any subsidiary has executed or filed with any taxing authority,
foreign or domestic, any agreement extending the period for assessment or
collection of any income taxes or is a party to any pending action or proceeding
by any
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foreign or domestic governmental agency for assessment or collection of
taxes, and no claims for assessment or collection of taxes have been asserted
against the Company or any of its subsidiaries.
(xxiii) The Company and each of its subsidiaries owns or
possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service xxxx registrations, copyrights, licenses, inventions, trade secrets,
know-how, technology, Internet domain names (including without limitation, the
trademarks "ShopNow", "TechWave", and "Internet Mall", and the domain names
xxxxxxx.xxx, xxxxxxxxx.xxx, xxxxxxxxxxxxx.xxx, xxxxxxxxxxx.xxx and other
similar rights described in the Prospectus as being owned by them or any of them
or necessary to the conduct their respective businesses. The Company has no
Knowledge of any facts which would preclude it from having rights to its patent
applications described in the Prospectus. To the knowledge of the Company
after due inquiry, the business of the Company and its subsidiaries as now
conducted and as proposed to be conducted does not infringe or conflict with in
any material respect any patents, trademarks, service marks, tradenames,
trademark registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets, know-how, technology, Internet domain names or other
similar rights of others, and neither the Company nor any of its subsidiaries
has any Knowledge of or has received any notice or claim of conflict with the
asserted rights of others with respect any of the foregoing.
(xxiv) The Company is not, and upon completion of the sale
of Shares contemplated hereby will not be, required to register as an
"investment company" under the Investment Company Act of 1940, as amended.
(xxv) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; and (C) access to records
is permitted only in accordance with management's general or specific
authorization.
(xxvi) Other than as contemplated by this Agreement,
neither the Company nor any of its subsidiaries has incurred any liability for
any finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement by the Company or the performance by
the Company of its obligations pursuant to this Agreement.
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(xxvii) The Company and its subsidiaries maintain insurance
with insurers of recognized financial responsibility of the types and in the
amounts generally deemed adequate for their respective businesses and consistent
with insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company or its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect; neither the Company nor any
such subsidiary has been refused any insurance coverage sought or applied for;
and neither the Company nor any such subsidiary has any Knowledge that it gives
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(xxviii) To the Company's Knowledge, no labor disturbance
by the employees of the Company or any of its subsidiaries exists or is
imminent; and the Company has no Knowledge of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, subassemblers,
subcontractors or international distributors that would reasonably be expected
to have a Material Adverse Effect. No collective bargaining agreement exists
with any of the Company's employees and, to the Company's Knowledge, no such
agreement is imminent.
(xxix) The Company has not distributed and will not
distribute prior to the later of (A) the Closing Date, or any date on which
Option Shares are to be purchased, as the case may be, and (B) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted by
the Act.
(xxx) Neither the Company nor any of its subsidiaries (nor
any person representing the Company or any of its subsidiaries) has at any time
during the last five (5) years (A) made any payment in violation of the Foreign
Corrupt Practices Act, or (B) made any payment to any federal or state
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof.
(xxxi) Except as set forth in the Registration Statement
and Prospectus, (i) the Company and each of its subsidiaries is in compliance
with all rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and
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protection of health or the environment ("Environmental Laws") which are
applicable to its business, except for such instances of non-compliance as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, (ii) neither the Company nor any of its subsidiaries
has received notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus and is not so
disclosed, (iii) to the Knowledge of the Company, neither the Company nor
any of its subsidiaries will be required to make future material capital
expenditures to comply with Environmental Laws and (iv) to the Knowledge of
the Company, no property which is owned, leased or occupied by the Company or
any of its subsidiaries has been designated as a Superfund site pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601, ET SEQ.), or otherwise designated
as a contaminated site under applicable state or local law.
(xxxii) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel to the Underwriters pursuant to this
Agreement shall be deemed to be a representation and warranty of the Company to
each Underwriter as to the matters covered thereby.
2. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and covenants contained herein, and subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a price of $_______ per share, the number of Firm Shares
as set forth opposite the name of such Underwriter in Schedule A hereto .
In addition, on the basis of the representations, warranties and
covenants contained herein and subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters an option to
purchase at the Underwriters' election up to the aggregate number of Option
Shares, at the same price per share as set forth for the Firm Shares in the
paragraph above, for the sole purpose of covering over allotments in the sale of
the Firm Shares. The option granted hereby may be exercised in whole or in
part, but only once, and at any time upon written notice given within 30 days
after the date of this Agreement, by you, as
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Representatives of the several Underwriters, to the Company setting forth the
aggregate number of Option Shares as to which the several Underwriters are
exercising the option and the time and date at which certificates are to be
delivered. Any such election to purchase Option Shares shall be made in
proportion to the maximum number of Option Shares to be sold by the Company.
If any Option Shares are purchased, each Underwriter agrees, severally and
not jointly, to purchase that portion of the aggregate number of Option
Shares as to which such election shall have been exercised (subject to
adjustment to eliminate fractional shares) determined by multiplying such
aggregate number of Option Shares by a fraction the numerator of which is the
maximum number of Option Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule A
hereto and the denominator of which is the maximum number of Option Shares
which all of the Underwriters are entitled to purchase hereunder. The time
and date at which certificates for Option Shares are to be delivered shall be
determined by the Representatives but shall not be earlier than two or later
than ten full business days after the exercise of such option, and shall not
in any event be prior to the Closing Date. If the date of exercise of the
option is three or more full days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date.
Certificates in definitive form for the Shares to be purchased by each
Underwriter hereunder, and in such denominations and registered in such names as
Xxxx Xxxxxxxx Xxxxxxx may request upon at least forty-eight hours' prior notice
to the Company, shall be delivered by or on behalf of the Company to you for the
account of such Underwriter at such time and place as shall hereafter be
designated by the Representatives, against payment by such Underwriter or on its
behalf of the purchase price therefor by wire transfer, payable to the order of
the Company in next day funds. The time and date of such delivery and payment
shall be, with respect to the Firm Shares, 8:30 a.m., local time, at the offices
of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx,
xx the third (or if the Shares are priced, as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business
day following the date hereof, or at such other time and date as you and the
Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, such time
and date being herein referred to as the "Closing Date," and, with respect to
the Option Shares, at the time and on the date specified by you in the written
notice delivered by you to the Company with respect to the Underwriters'
election to purchase the Option Shares, or such other time and date as you and
the Company may agree upon in writing, such time and date being referred to
herein as the "Option Closing Date." Such certificates will be made available
for checking and packaging at least twenty-four hours prior to the Closing Date
or the Option Closing Date, as the case may be, at a location as may be
designated by you.
3. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price and terms set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the
12
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer such Option Shares to the public on the
foregoing terms.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the several Underwriters that:
(a) The Company will prepare and timely file with the
Commission under Rule 424(b) under the Act a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A under the Act, and will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
and as to which the Representatives shall have reasonably objected in writing
promptly after reasonable notice thereof or which is not in compliance with the
Act or the Regulations.
(b) The Company will advise the Representatives promptly of any
request of the Commission for amendment of the Registration Statement or for any
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for that purpose, and the Company
will use all commercially reasonable efforts to prevent the issuance of any
such stop order preventing or suspending the use of the Prospectus or suspending
such qualification and to obtain as soon as possible the lifting thereof, if
issued.
(c) The Company will endeavor to qualify the Shares for sale
under the securities laws of such jurisdictions as the Representatives may
reasonably have designated in writing and will, or will cause counsel to, make
such applications, file such documents, and furnish such information as may be
reasonably requested by the Representatives, provided that the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports and other documents as are or may be required
to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(d) The Company will furnish the Underwriters with as many
copies of any Preliminary Prospectus as the Representatives may reasonably
request and, during the period when delivery of a prospectus is required under
the Act, the Company will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may, from time to time, reasonably request. The Company will
deliver to the Representatives, at or before the Closing Date, three signed
13
copies of the Registration Statement and all amendments thereto, including
all exhibits filed therewith, and will deliver to the Representatives such
number of copies of the Registration Statement, without exhibits, and of all
amendments thereto, as the Representatives may reasonably request.
(e) If, during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or if
for any other reason it shall be necessary at any time to amend or supplement
the Prospectus to comply with any law, the Company promptly will prepare and
file with the Commission an appropriate amendment to the Registration Statement
or supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein in
light of the circumstances existing when it is so delivered, not misleading, or
so that the Prospectus will comply with law. In case any Underwriter is
required to deliver a prospectus in connection with sales of any Shares at any
time nine months or more after the effective date of the Registration Statement,
upon the request of the Representatives but at the expense of such Underwriter,
the Company will prepare and deliver to such Underwriter as many copies as the
Representatives may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 thereunder.
(g) During a period of five (5) years after the date hereof, or
such shorter period that the Company remains subject to the periodic reporting
requirements of the Exchange Act, the Company, as soon as practicable after the
end of each respective financial quarter or year, as applicable, will furnish to
its shareholders annual reports (including financial statements audited by
independent certified public accountants), and will, upon request, furnish to
you and the other several Underwriters hereunder (i) concurrently with making
such reports available to its shareholders, statements of operations of the
Company for each of the first three quarters in the form made available to the
Company's shareholders; (ii) concurrently with the furnishing thereof to its
shareholders, a balance sheet of the Company as of the end
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of such fiscal year, together with statements of operations, of shareholders'
equity and of cash flow of the Company for such fiscal year, accompanied by a
copy of the certificate or report thereon of nationally recognized
independent certified public accountants; and (iii) concurrently with the
furnishing of such reports to its shareholders, copies of all reports
(financial or other) mailed to shareholders; and (iv) as soon as they are
available, copies of all reports and financial statements furnished to or
filed with the Commission, any securities exchange or The Nasdaq National
Market by the Company (except for documents for which confidential treatment
is requested).
(h) No offering, sale or other disposition of any Common Stock
or other capital stock of the Company, or warrants, options, convertible
securities or other rights to acquire such Common Stock or other capital stock
(other than (i) pursuant to employee stock option plans, employee stock purchase
plans, (ii) upon the exercise of options or warrants outstanding on the date of
this Agreement, (iii) upon the conversion of convertible securities, outstanding
on the date of this Agreement, (iv) in connection with business acquisitions or
(v) pursuant to offerings exempt from the registration requirements of the Act,
provided that the Company shall not register the resale of Common Stock or other
capital stock of the Company, or warrants, options, convertible securities or
other rights to acquire such Common Stock or other capital stock issued or
issuable pursuant to such exempt transaction during the Lock-Up Period;
PROVIDED, that any employee stock options issued pursuant to employee stock
option plans during the Lock-Up Period shall not vest and become exercisable to
any extent prior to the expiration of the Lock-Up Period; and, PROVIDED FURTHER,
that any shares of Common Stock issued to any current executive officer or
director during the Lock-Up Period pursuant to the exercise of stock options
shall bear a restrictive legend restricting the transfer of such shares during
the Lock-Up Period will be made from the date of this Agreement until the end of
the Lock-Up Period, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of the Representatives.
(i) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
purposes set forth under "Use of Proceeds" in the Prospectus. The Company will
invest such proceeds pending their use in such a manner that, upon completion of
such investment, the Company will not be an "investment company" as defined in
the Investment Company Act of 1940, as amended.
(j) The Company will use all commercially reasonable efforts
to maintain the designation of the Common Stock on The Nasdaq National Market.
(k) From the date of this Agreement until the termination of
the Lock-Up Period, the Company will not, without the prior written consent of
Xxxx Xxxxxxxx Xxxxxxx on behalf of the Underwriters, alter or amend in any
manner the vesting schedule of any option, warrant or other security of the
Company or its subsidiaries.
15
(l) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
5. COSTS AND EXPENSES. Whether or not the transactions contemplated
by this Agreement are consummated, the Company will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of the
obligations of the Company under this Agreement, including, without limiting the
generality of the foregoing, the following: accounting fees of the Company; the
fees and disbursements of counsel for the Company, the cost of preparing,
printing and filing of the Registration Statement, Preliminary Prospectuses and
the Prospectus and any amendments and supplements thereto and the printing,
mailing and delivery to the Underwriters and dealers of copies thereof and of
this Agreement, the Agreement Among Underwriters, any Selected Dealers
Agreement, the Underwriters' Selling Memorandum, the Invitation Letter, the
Power of Attorney, the Blue Sky Memorandum and any supplements or amendments
thereto (excluding, except as provided below, fees and expenses of counsel to
the Underwriters); the filing fees of the Commission; the filing fees and
expenses (including the reasonable fees and disbursements of counsel for the
Underwriters) incident to securing any required review by the NASD of the terms
of the sale of the Shares; listing fees, if any, transfer taxes and the
expenses, including the reasonable fees, which shall not exceed $1,000, and
disbursements of counsel for the Underwriters incurred in connection with the
qualification of the Shares under state securities or blue sky laws; the fees
and expenses incurred in connection with the listing of the Common Stock on The
Nasdaq National Market; the costs of preparing stock certificates; the costs and
fees of any registrar or transfer agent and all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 5. In addition, the Company will pay
all travel and lodging expenses incurred by management of the Company in
connection with any informational "road show" meetings held in connection with
the offering and will also pay for the preparation of all materials used in
connection with such meetings. The Company shall not, however, be required to
pay for any of the Underwriters' expenses (other than those related to
qualification of the Shares under state securities or blue sky laws and those
incident to securing any required review by the NASD of the terms of the sale of
the Shares) except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied or because this Agreement is
terminated by the Representatives pursuant to clause (i) of Section 10(a)
hereof, or by reason of any failure, refusal or inability on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on their respective parts to be
performed, unless such failure to satisfy said condition or to comply with said
terms shall be due to the default or omission of any Underwriter, then the
Company shall promptly upon request by the Representatives reimburse the several
Underwriters for all
16
appropriately itemized out-of-pocket accountable expenses, including the
reasonable fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares
or in contemplation of performing their obligations hereunder; but the
Company shall not in any event be liable to any of the several Underwriters
for damages on account of loss of anticipated profits from the sale by them
of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date, are subject to the
condition that all representations and warranties of the Company contained
herein are true and correct, at and as of the Closing Date or the Option Closing
Date, as the case may be, the condition that the Company shall have performed
all of its covenants and obligations hereunder (to the extent that performance
of such covenants and obligations are due at such times) and to the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the Regulations and in accordance with Section 4(a) hereof; no stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, or any part thereof shall have been issued and no proceedings
for that purpose shall have been initiated or threatened by the Commission; and
all requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representatives.
(b) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the Company, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters, to the effect that:
17
(i) The form of certificate for the Shares is in due and
proper form and complies with the requirements of the Washington Business
Corporation Act. The Shares have been duly authorized and, when issued and paid
for as contemplated herein, will be validly issued, fully paid and
nonassessable. To the knowledge of such counsel, no rights to register
outstanding shares of the Company's capital stock, or shares issuable upon the
exercise of outstanding warrants, options, convertible securities or other
rights to acquire shares of such capital stock, exist which have not been
validly exercised or waived with respect to the Registration Statement. The
capital stock of the Company, including the Shares, conforms in all material
respects as to legal matters to the description thereof contained in the
Prospectus.
(ii) The Registration Statement has become effective
under the Act and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued under the Act
and, to the knowledge of such counsel, no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
(iii) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the rules and regulations thereunder (except
that such counsel need express no opinion as to the financial statements and the
notes thereto and related schedules and other financial data derived from such
financial statements and included in the Registration Statement, the Prospectus
or each amendment or supplement thereto).
(iv) The statements (A) in the Prospectus under the
captions "Management-Director and Officer Indemnification and Liability,"
"Description of Capital Stock," and "Shares Eligible for Future Sale" and (B) in
the Registration Statement in Items 14 and 15 insofar as such statements
constitute a summary of matters of law, are, in all material respects, accurate
summaries and fairly present the information required to be stated.
18
(v) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or administrative body or
regulatory agency, to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
Prospectus and are not so described, or statutes or regulations that are
required to be described in the Registration Statement or the Prospectus that
are not so described.
(vi) The execution and delivery of this Agreement and
the performance by the Company of its obligations pursuant to this Agreement
do not and will not result in a violation of or default under the charter or
bylaws of the Company, or under any statute, permit, judgment, decree,
order, rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties (other than state securities or blue
sky laws, as to which such counsel need express no opinion).
(vii) The Company has the corporate power and authority to enter
into this Agreement and to authorize, issue, sell and deliver the Shares to
be sold by the Company pursuant to this Agreement. This Agreement has been
duly and validly authorized, executed and delivered by the Company.
19
(viii) No approval, consent, order, authorization,
designation, declaration, qualification or filing by or with any judicial,
regulatory, administrative or other governmental body is necessary in connection
with the execution and delivery of this Agreement and the performance by the
Company of its obligations pursuant to this Agreement (other than as may be
required by state securities or blue sky laws, as to which such counsel need
express no opinion) except such as have been obtained or made.
(ix) The Company is not, and immediately upon completion
of the sale of Shares contemplated hereby will not be, required to register as
an "investment company" under the Investment Company Act of 1940, as amended.
(x) Such opinion shall also include a statement to
the effect that such counsel has participated in conferences with officers
and representatives of the Company, representatives of the independent public
accountants for the Company, the underwriters and the underwriters' counsel
at which the contents of the Registration Statement and the Prospectus and
related matters were discussed, and although such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, such counsel has
no reason to believe that as of its effective date, the Registration
Statement (other than the financial statements and related schedules included
therein and financial data derived therefrom, as to which such counsel need
not comment) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus
(other than the financial statements and related schedules included therein
and financial data derived therefrom, as to which such counsel need not
comment) contained an untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that, as of the
Closing Date, either the Registration Statement or the Prospectus (other
than the financial statements and related schedules included therein and
financial data derived therefrom, as to which such counsel need not comment)
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the
20
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Xxxx X. Xxxxxx,
General Counsel of the Company, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Underwriters, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation under the laws of the State of Washington, with
corporate power and authority to own, lease, license and use its properties and
conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in all jurisdictions in which the
conduct of its business or its ownership, lease, license or use of property
requires such qualification and the failure so to qualify would have a Material
Adverse Effect.
(ii) The Company has authorized and outstanding
capital stock as described in the Prospectus as of the date set forth
therein. The outstanding shares of the Company's capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. No
preemptive right, co-sale right, registration right, right of first refusal
or other similar right of shareholders of the Company, or of holders of
warrants, options, convertible securities or other rights to acquire shares
of capital stock of the Company, exist with respect to any of the Shares or
the issue and sale thereof (A) pursuant to the terms of the Company's
Articles of Incorporation or Bylaws or (B) to the knowledge of such counsel,
pursuant to the terms of any agreement or instrument to which the Company is
a party or by which the Company is bound.
(iii) Such counsel does not know of any contracts,
agreements, documents or instruments required to be filed as exhibits to the
Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required; and insofar as any
statements in the Registration Statement or the Prospectus constitute summaries
of any contract, agreement, document or instrument, such statements are, in all
material respects, accurate summaries and fairly present the information called
for with respect to such matters.
(iv) The execution and delivery of this Agreement and
the performance by the Company of its obligations pursuant to this Agreement
do not and will not result in a breach of or default (except for such
breaches or defaults as would not have a Material Adverse Effect) under any
material lease, license, contract, indenture, mortgage, loan agreement or
other agreement or other instrument or obligation known to such counsel to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any property or
assets of the Company or any of its
21
subsidiaries is subject, except such agreements, instruments or
obligations with respect to which valid consents or waivers have been obtained
by the Company.
(v) To such counsel's knowledge, neither the Company nor
any of its subsidiaries is in violation of, or in default under, its charter or
bylaws, or any statute, or any law, rule, regulation, order, judgment,
injunction, decree or authorization of any court or governmental or
administrative agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, or any indenture, mortgage, deed of
trust, loan agreement, lease, franchise, license or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any property
or assets of the Company or any of its subsidiaries is subject, which violation
or default would have a Material Adverse Effect.
(vi) Such opinion shall also include a statement to the
effect that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company, the underwriters and the underwriters' counsel at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed, and although such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, such counsel has no
reason to believe that as of its effective date, the Registration Statement
(other than the financial statements and related schedules included therein and
financial data derived therefrom, as to which such counsel need not comment)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus (other than the financial
statements and related schedules included therein and financial data derived
therefrom, as to which such counsel need not comment) contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or that, as of the Closing Date, either the Registration
Statement or the Prospectus (other than the financial statements and related
schedules included therein and financial data derived therefrom, as to which
such counsel need not comment) contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(d) The Representatives shall have received from Faegre &
Xxxxxx LLP, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, with respect to the incorporation
of the Company, the validity of the Shares, the Registration Statement, the
Prospectus, and other related matters as the
22
Representatives may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them to
pass upon such matters.
(e) The Representatives shall have received on each of the date
hereof, the Closing Date and the Option Closing Date, as the case may be, a
signed letter, dated as of the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance reasonably satisfactory
to the Representatives, from Xxxxxx Xxxxxxxx LLP and Ernst & Young LLP, to the
effect that they are independent public accountants with respect to the Company
and its subsidiaries within the meaning of the Act and the related rules and
regulations and containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Option Closing Date, as the case may be,
there shall not have been any change or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in your judgment, is material and adverse to the Company and
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at the Closing Date or the Option Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
(g) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, a certificate or certificates of
the chief executive officer and the chief financial officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents on behalf of the Company as follows:
(i) The Prospectus was filed with the Commission
pursuant to Rule 424(b) within the applicable period prescribed for such filing
by the Regulations and in accordance with Section 4(a) of this Agreement; no
stop order suspending the effectiveness of the Registration Statement has been
issued, and no proceedings for such purpose have been initiated or are, to such
officer's knowledge, threatened by the Commission.
(ii) The representations and warranties of the Company
set forth in Section 1 of this Agreement are true and correct at and as of the
Closing Date or the Option Closing Date, as the case may be, and the Company has
performed all of its obligations under this Agreement to be performed at or
prior to the Closing Date or the Option Closing Date, as the case may be.
23
(h) The Company shall have furnished to the Representatives
such further certificates and documents as the Representatives may reasonably
have requested.
(i) The Lock-Up Agreements shall have been delivered to the
Representatives prior to the date hereof and are, as of the Closing Date or the
Option Closing Date, as the case may be, in full force and effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Representatives and to Faegre & Xxxxxx
LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be. In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 7
hereof).
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each officer and director thereof, and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) to which such Underwriter or such persons may became
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus or the
Prospectus, including any amendments or supplements thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and will reimburse each
Underwriter and each such officer, director and controlling person for any legal
or other expenses reasonably incurred by such Underwriter or such officer,
director or controlling person in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made in the
Registration Statement, any
24
Preliminary Prospectus or the Prospectus, including any amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein; provided further, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission, made
in a Preliminary Prospectus, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the
Underwriters to the person asserting such loss, claim, damage or liability,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of Shares to such person, and if the Prospectus (as
amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability, unless the failure to so deliver the
Prospectus (as amended or supplemented) is the result of noncompliance by the
Company with the first sentence of paragraph 4(d) of this Agreement.
(b) Each Underwriter agrees severally and not jointly to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Act, against any losses, claims,
damages or liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made, and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that each Underwriter will be
liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) or contribution provided for
25
in Section 7(d) shall be available with respect to a proceeding to any
indemnified party who shall fail to give notice of such proceeding as
provided in this Section 7(c) if the indemnifying party to whom notice was
not given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the indemnifying party or
parties from any liability which it or they may have to the indemnified party
otherwise than on account of the provisions of Section 7(a) or (b). In case
any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay promptly as incurred the reasonable fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the
indemnified party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party
and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it or other indemnified parties
which are different from or additional to those available to the indemnifying
party. It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm at any time
for all such indemnified parties. Such firm shall be designated in writing
by the Representatives and shall be reasonably satisfactory to the Company in
the case of parties indemnified pursuant to Section 7(a) and shall be
designated in writing by the Company and shall be reasonably satisfactory to
the Representatives in the case of parties indemnified pursuant to Section
7(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
Section 7(a), or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offering
of the Shares. If, however, the allocation provided by the
26
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 7(d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions or proceedings in
respect thereto) referred to above in this Section 7(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 7(d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have, and the
obligations of the Underwriters under this Section 7 shall be in addition to any
liability which the Underwriters may otherwise have.
8. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Shares which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of the
Company), you, as Representatives of the Underwriters, shall use your best
efforts to procure within 36 hours thereafter one or more of
27
the other Underwriters, or any others, to purchase from the Company such
amounts as may be agreed upon, and upon the terms set forth herein, of the
Firm Shares or Option Shares, as the case may be, which the defaulting
Underwriter or Underwriters failed to purchase. If the aggregate number of
Shares that the defaulting Underwriter or Underwriters agreed to purchase
shall not be purchased in accordance with the preceding sentence, the Company
shall have the right, within 36 hours next succeeding the 36-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such remaining Shares on the terms herein
set forth. If during such two 36-hour periods you, as Representatives, and
the Company shall not have procured such other Underwriters, or any others,
to purchase the Firm Shares or Option Shares, as the case may be, agreed to
be purchased by the defaulting Underwriter or Underwriters, then (a) if the
aggregate number of Shares with respect to which such default shall occur
does not exceed 10% of the Firm Shares or Option Shares, as the case may be,
covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective numbers of Firm Shares or Option Shares, as the
case may be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate
number of shares of Firm Shares or Option Shares, as the case may be, with
respect to which such default shall occur exceeds 10% of the Firm Shares or
Option Shares, as the case may be, covered hereby, the Company or you as the
Representatives of the Underwriters will have the right, by written notice
given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company except for expenses to be borne by the Company
and the Underwriters as provided in Section 5 hereof and the indemnity and
contribution agreements in Section 7 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 8 (and assuming
that this Agreement is not terminated pursuant to the immediately preceding
sentences), the Closing Date or Option Closing Date, as the case may be, may
be postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this
Section 8 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
9. NOTICES. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered or telegraphed
and confirmed as follows: if to the Underwriters, to Xxxx Xxxxxxxx Xxxxxxx, Xxxx
Xxxxxxxx Plaza, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention:
Xxxx Xxxxxx, with copies to Faegre & Xxxxxx LLP, 2200 Norwest Center, 00 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Xxxxxx X.
Xxxxxxx, Esq.; if to the Company to XxxxXxx.xxx Inc., 000 Xxxxx Xxxxxx Xxxxx,
Xxxxx 000 Xxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxx, with
copies to Xxxxxx Xxxxxxx Xxxxxxxx
28
& Xxxxxx, Professional Corporation, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx
00000-0000, Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
10. TERMINATION. This Agreement may be terminated by you by notice to
the Company as follows:
(a) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change in or affecting the condition, financial or otherwise, of the Company and
its subsidiaries taken as a whole or the business affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of war
or national emergency after the date hereof or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your judgment, make the
offering or delivery of the Shares impracticable or inadvisable,
(iii) suspension of trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such Exchange, or a halt or suspension of trading in securities generally which
are quoted on The Nasdaq National Market System, or (iv) declaration of a
banking moratorium by either federal or New York State authorities; or
(b) as provided in Sections 6 and 8 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company,
as to any obligation of the Underwriters to purchase the Option Shares, upon the
occurrence at any time prior to the Option Closing Date of any of the events
described in subparagraph (a) above or as provided in Sections 6 and 8 of this
Agreement.
11. WRITTEN INFORMATION. For all purposes under this Agreement
(including, without limitation, Section 1, Section 2 and Section 7 hereof), the
Company understands and agrees with each of the Underwriters that the following
constitutes the only written information furnished to the Company by or through
the Representatives specifically for use in preparation of the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto: (i) the per share "Public offering price" and per share
"Underwriting discounts and commissions" set forth on the cover page of the
Prospectus, and (ii) the information set forth under the caption "Underwriting"
in the Preliminary Prospectus and the Prospectus.
12. SUCCESSORS. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Company and their
respective successors and
29
assigns, and the officers, directors and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares merely
because of such purchase.
13. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or its directors or officers and (c) delivery of and
payment for the Shares under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Minnesota.
30
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
XxxxXxx.xxx Inc.
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
Xxxx Xxxxxxxx Incorporated
U.S. Bancorp Xxxxx Xxxxxxx Inc.
SoundView Technology Group, Inc.
Wit Capital Corporation
As Representatives of the several Underwriters
By Xxxx Xxxxxxxx Incorporated
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
31
SCHEDULE A
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM MAXIMUM NUMBER
UNDERWRITER SHARES TO BE OF OPTION
PURCHASED SHARES
Xxxx Xxxxxxxx Xxxxxxx . . . . . . . .
U.S. Bancorp Xxxxx Xxxxxxx Inc. . . .
SoundView Technology Group, Inc. . .
Wit Capital Corporation . . . . . . .
. . . . . . . .
. . . . . . . .
. . . . . . . .
. . . . . . . .
. . . . . . . .
. . . . . . . .
Total . . . . . . . . . . . . . .
SCHEDULE 1(a)(v)
1. 24/7 Media Assets Inc.
2. AXC Corporation
SCHEDULE 1(a)(vi)
1. First Amendment and Restated Shareholders' Agreement, dated February 26,
1997, by and among the Company, the Holders of Securities, and the other
Persons party thereto, as amended by the First Amendment to the First
Amended and Restated Shareholders' Agreement dated as of October 31,
1997, the Second Amendment to the First Amended and Restated
Shareholders' Agreement, dated as of December 29, 1997, the Third
Amendment to First Amended and Restated Shareholders' Agreement, dated as
of September 11, 1998, and the Fourth Amendment to First Amended and
Restated Shareholders' Agreement, dated as of April 30, 1999.
2. Distribution Agreement, effective as of February 6, 1998, by and between
the Company and InstallShield Software Corporation.
