Exhibit 1.1
Digital Island, Inc.
Common Stock
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Underwriting Agreement
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............., 2000
Xxxxxxx, Xxxxx & Co.,
Bear Xxxxxxx & Co. Inc.,
Xxxxxx Brothers, Inc.,
Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated,
Xxxxxx Xxxxxx Partners LLC,
Xxxx Xxxxxxxx Xxxxxxx,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Digital Island, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of . .
. . . . .shares and, at the election of the Underwriters, up to . . . . . .
additional shares of Common Stock ("Stock") of the Company, and the stockholders
of the Company named in Schedule II hereto (the "Selling Stockholders") propose,
subject to the terms and conditions stated herein, to sell to the Underwriters
an aggregate of . . . . . . . shares and, at the election of the Underwriters,
up to . . . . . . . additional shares of Stock. The aggregate of . . . . shares
to be sold by the Company and the Selling Stockholders is herein called the
"Firm Shares" and the aggregate of . . . . . additional shares to be sold by the
Company and the Selling Stockholders is herein called the "Optional Shares".
The Firm Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof are herein collectively called the "Shares".
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-_______), for the
registration of the Shares under the
Securities Act of 1933, as amended (the "Act"). Such registration
statement, including the prospectus, financial statements and schedules,
exhibits and all other documents filed as a part thereof, as amended at the
time of effectiveness of the registration statement, including any
information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of Rule 430A or Rule 434 of the Rules and
Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the Regulations is herein called the "462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The
prospectus, in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations or filed as a part of the Registration Statement
at the time of effectiveness if no Rule 424(b) or Rule 434 filing is
required, is herein called the "Prospectus." The term "preliminary
prospectus" as used herein means a preliminary prospectus as described in
Rule 430 of the Regulations. For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus
or any amendment, supplement or term sheet with respect to any of the
foregoing shall be deemed to include the copy of such documents filed with
the Commission pursuant to its statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and
when any amendment or supplement thereto was first filed with the
Commission, such preliminary prospectus and any amendments and supplements
thereto complied in all material respects with the applicable provisions of
the Act and the Electronic Data Gathering, Analysis and Retrieval system
("XXXXX"). Neither the Commission nor the Blue Sky or securities authority
of any state or other jurisdiction has issued a stop order suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any preliminary prospectus, the Prospectus, the Registration
Statement or any amendment or supplement or term sheet thereto, refusing to
permit the effectiveness of the Registration Statement or suspending the
registration or qualification of the Shares, nor has any of such
authorities instituted or threatened to institute nor, to the Company's
knowledge, contemplated instituting, any proceedings with respect to a stop
order.
(ii) At the respective time of the effectiveness of the Registration
Statement or any 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus
is first filed with the Commission pursuant to Rule 424(b) or Rule 434 of
the Regulations, when any supplement to or amendment of the Prospectus is
filed with the Commission and at the Closing Date and the Additional
Closing Date, if any (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments and
supplements thereto complied or will comply in all material respects with
the applicable provisions of the Act and the Regulations and do not or will
not contain an untrue statement of a material fact and do not or will not
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein (A) in the case of the Registration
Statement, not misleading and (B) in the case of the Prospectus, in light
of the circumstances under which they were made, not misleading. When any
related preliminary prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the
Shares or any amendment thereto or pursuant to Rule 424(a) of the
Regulations) and when any amendment or supplement thereto was first filed
with the Commission, such preliminary prospectus and any amendments and
supplements thereto complied in all material respects with the applicable
provisions of the Act and the Regulations and did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the
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statements therein, in light of the circumstances under which they were
made, not misleading. In addition, each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted
by Regulation S-T. No representation and warranty is made in this
subsection (ii), however, with respect to any information contained in or
omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment or supplement thereto in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of any Underwriter through you as herein stated expressly
for use in connection with the preparation thereof. If Rule 434 is used,
the Company will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different," as such term is used in
Rule 434, from the Prospectus included in the Registration Statement at the
time it became effective.
(iii) PricewaterhouseCoopers, LLP, who have certified certain financial
statements of the Company and its subsidiaries and certain supporting
schedules included in the Registration Statement and Ernst & Young LLP, who
have certified certain financial statements of Sandpiper Networks, Inc. and
certain supporting schedules included in the Registration Statement, are
each independent public accountants as required by the Act and the
Regulations.
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth
in the Registration Statement and the Prospectus, (A) there has been no
material adverse change or any development involving a prospective material
adverse change in the general affairs, management, the current or future
consolidated financial position, business prospects, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"), including but not limited to
relationships with customers and suppliers of the Company; (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries taken as a
whole; (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock; and (D)
since the date of the latest balance sheet presented in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred or undertaken any liabilities or obligations,
direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations which
are reflected in the Registration Statement and the Prospectus.
(v) This Agreement and the transactions contemplated herein have been
duly and validly authorized by all necessary corporate action, and this
Agreement has been duly and validly executed and delivered by the Company.
Assuming due authorization, execution and delivery by the Representatives,
this Agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms.
(vi) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will
not (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, any
debenture, note, contract, indenture,
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mortgage, deed of trust, lease, joint venture or other agreement,
instrument, franchise, license or permit to which the Company or any of its
subsidiaries is a party or by which any of their respective properties or
assets may be bound, other than any conflict, breach, default, lien, change
or encumbrance which would not have a Material Adverse Effect or prevent
the consummation by the Company of the transactions contemplated by this
Agreement, (B) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any of its subsidiaries, or (C)
violate or conflict with any judgment, writ, decree, order, law, statute,
rule or regulation of any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or operations,
other than any violation or conflict which would not have a Material
Adverse Effect or prevent the consummation by the Company of the
transactions contemplated by this Agreement. No consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets is necessary
or required for the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby, including the
issuance, sale and delivery of the Shares to be issued, sold and delivered
by the Company hereunder, except the registration under the Act of the
Shares and such consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses and permits as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(vii) All of the outstanding shares of capital stock of the Company are
duly and validly authorized and issued, fully paid and nonassessable, and
none of such shares was issued in violation of or is now subject to any
preemptive right, co-sale rights, registration rights, rights of first
refusal or similar rights granted by the Company except for registration
rights being exercised by the Selling Stockholders in conjunction with
their proposed sale of Shares pursuant to this Agreement and rights that
have been waived in writing. All of the outstanding shares of capital
stock and all other outstanding securities of the Company have been issued
in compliance in all material respects with applicable Federal and state
laws. The Shares have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued, delivered and
sold in accordance with this Agreement, will be duly and validly issued and
outstanding, fully paid and nonassessable, free and clear of all liens,
encumbrances or claims, will not have been issued in violation of or be
subject to any preemptive rights, co-sale rights, registration rights,
rights of first refusal or similar rights and no holder of Shares will be
subject to personal liability by reason of being such a holder. The
authorized, issued and outstanding capital stock of the Company is as set
forth in the Prospectus in the column entitled "Actual" under the caption
"Capitalization", and, after giving effect to the offering will be as set
forth in the column entitled "As Adjusted," and the number of authorized,
issued and outstanding options is set forth in the Prospectus under the
caption "Capitalization." The authorized capital stock of the Company,
including the Common Stock, the Firm Shares and the Additional Shares,
conform in all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus and such descriptions conform
in all material respects to the rights set forth in the instruments
defining the same. Except as disclosed in the Registration Statement and
the Prospectus, there are no outstanding shares of capital stock, options,
warrants or other securities or other rights calling for the issuance of,
and no commitments, obligations, plans or arrangements to issue, any
securities of the Company or any of its subsidiaries. The outstanding
stock options
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relating to the Common Stock have been duly authorized and validly issued
and each of the Plan and stock options granted by the Company conform in
all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(viii) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of the Company
and its subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing which could not in the aggregate have a
Material Adverse Effect. All of the outstanding capital stock of each of
the Company's subsidiaries has been duly authorized and validly issued, is
fully paid and nonassessable and is owned by the Company free and clear of
any liens, mortgages, pledges, charges, security interests, claims,
encumbrances or other defects in title whatsoever and none of the
outstanding shares of capital stock of any of the Company's subsidiaries
was issued in violation of the preemptive rights, co-sale rights,
registration rights, rights of first refusal or similar rights, in each
case granted by the Company, that have not been waived in writing, of any
security holder of any such subsidiary or other party. Except as described
in the Prospectus, the Company has no agreements, commitments, or
understandings with respect to acquiring or selling the business, stock or
material assets, except those assets acquired in the ordinary course of
business, of the Company, its subsidiaries or any other person or entity.
The only subsidiaries of the Company are the subsidiaries listed on Exhibit
21.1 to the Registration Statement. None of the Company or any of its
subsidiaries owns any capital stock or any other interest in any other
corporation or entity (other than such subsidiaries) other than non-
controlling interests acquired in the ordinary course of business.
(ix) Each of the Company and its subsidiaries has all requisite
corporate power and corporate authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses
and permits (collectively, "Governmental Licenses") of and from all
appropriate Federal, state, local or foreign public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties
and conduct its business as now being conducted, or as presently proposed
to be conducted, and as described in the Registration Statement and the
Prospectus, except for such Governmental Licenses, the absence of which
would not have a Material Adverse Effect. Each such Governmental License is
valid and in full force and effect, the Company and its subsidiaries are in
material compliance with the terms and conditions of all such Governmental
Licenses, and no such Governmental License contains a materially burdensome
restriction not disclosed in the Registration Statement and the Prospectus,
and neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses.
(x) Neither the Company nor any of its subsidiaries is (A) in
violation of any provision of its certificate of incorporation or by-laws,
as the case may be, (B) in breach of any of the terms or provisions of or
in default (or would be in default with notice or lapse of time, or both)
under any debenture, note, contract, indenture, mortgage, deed of trust,
lease, joint venture or other agreement, instrument, franchise, license or
permit to which the Company or any of its subsidiaries is a party or by
which any of their respective properties, assets or operations may be
bound, which breach, violation, default or defaults could have,
individually or in the aggregate, a Material Adverse Effect, or (C) in
violation of any judgment, writ, decree, order,
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law, statute, rule or regulation of any court or any public, governmental
or regulatory agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties, assets or
operations, the violation of which could have, individually or in the
aggregate, a Material Adverse Effect.
(xi) Except as described in the Registration Statement and the
Prospectus, there is no litigation, action, suit, proceeding, inquiry or
governmental proceeding or investigation to which the Company or any of its
subsidiaries is a party or to which any property of the Company or any of
its subsidiaries is subject that would otherwise be required to be
described therein or which is pending or, to the best knowledge of the
Company, threatened or contemplated against the Company or any of its
subsidiaries.
(xii) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the
Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the results of
their operations, stockholders' equity and cash flows for the periods
specified; said financial statements have been prepared in conformity in
all material respects with generally accepted accounting principles
("GAAP") applied on a consistent basis through the periods involved
(except, with respect to the quarterly and interim financial statements
included in the Registration Statement and the Prospectus, to the extent
such financial statements are subject to normal and recurring year-end
adjustments); the supporting schedules included in the Registration
Statement present fairly in all material respects the information required
to be stated therein; and the selected consolidated financial data, the
summary consolidated financial information, pro forma financial
information, and the capitalization information included in the
Registration Statement and the Prospectus present fairly in all material
respects in accordance with GAAP and the Regulations the information shown
therein and have been compiled on a basis consistent with that of the
financial statements included in the Registration Statement and the
Prospectus. No financial statements are required to be included in the
Registration Statement that have not been so included.
(xiii) All material Federal, state and local tax returns required to be
filed by the Company and its subsidiaries have been filed and all such
returns are true, complete, and correct in all material respects. All
material taxes that are due or claimed to be due from the Company and its
subsidiaries have been paid other than those (A) currently payable without
penalty or interest or (B) being contested in good faith and by appropriate
proceedings and for which adequate reserves have been established in
accordance with GAAP. Except as disclosed in the Registration Statement
and the Prospectus, there is no material tax deficiency that has been, or
may reasonably be expected to be, asserted against the Company or any of
its subsidiaries.
(xiv) Either the Company or its subsidiaries maintains insurance with
insurers of recognized financial responsibility of the types and in the
amounts purchased by similarly situated companies and generally deemed
adequate for its respective businesses, including, without limitation,
insurance coverage for real and personal property owned or leased by them
against theft, damage, destruction, acts of vandalism, and all other
material risks customarily insured against, all of which insurance is in
full force and effect. Neither the Company nor any of its subsidiaries has
any reason to believe that it will not be able to renew existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its respective
business. The officers and directors of the Company are insured by
insurers of recognized financial responsibility against such
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losses and risks and in such amounts as are prudent and customary for
officers and directors liability insurance of a public company and as would
cover claims which could be made in connection with the issuance of the
Shares; and the Company has no reason to believe that it will not be able
to renew its existing directors and officers liability insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to cover its officers and directors.
(xv) Each of the Company and its subsidiaries has good and marketable
title to all personal property and assets owned by it, free and clear of
all mortgages, pledges, security interests, claims, restriction, liens,
encumbrances and defects, except as do not, individually or in the
aggregate, interfere in any material respect with the use made or proposed
to be made of such property by the Company or its subsidiaries, as the case
may be. Any real property and buildings held under lease by the Company or
any of its subsidiaries are held under valid, existing and enforceable
leases in full force and effect with such exceptions as are not material
and which do not interfere in any material respect with the use made or
proposed to be made of such property and buildings by the Company or its
subsidiaries, as the case may be, and neither the Company or any of its
subsidiaries has any notice of any claims of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary
under any such leases.
(xvi) Except as described in the Registration Statement and the
Prospectus, either the Company or its subsidiaries owns or possesses legal
and valid rights to use all patents, inventions, copyrights, software,
databases, know-how, Internet domain names, trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures, trademarks, service marks, trade names, rights of
publicity pertaining to the name, likeness, voice, signatures, and/or
biographical information of real persons and other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
of the Company and its subsidiaries as currently conducted, and as
presently proposed to be conducted and described in the Prospectus, free
and clear of all liens, claims and encumbrances, subject to such exceptions
as would not have a Material Adverse Effect. Except as described in the
Registration Statement and the Prospectus, neither the Company nor any of
its subsidiaries has received any notice or is otherwise aware of (A) any
claim, action or demand of any person in the United States or elsewhere or
any proceeding in the United States or elsewhere, pending or threatened,
that (i) challenges the ownership of the Company or any of its subsidiaries
in or its right to use any Intellectual Property, or (ii) alleges that any
product or service of the Company or any of its subsidiaries infringes or
misappropriates the Intellectual Property rights of others or constitutes
unfair competition, or (B) any facts or circumstances that would render any
Intellectual Property owned or used by the Company or any Intellectual
Property license agreement to which the Company or any of its subsidiaries
is a party, invalid or inadequate to protect the interests of the Company
or any of its subsidiaries therein or thereunder, subject to such
exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company has taken reasonable steps to protect,
maintain and safeguard its rights in all material Intellectual Property
owned or used by the Company or its subsidiaries and to maintain the
secrecy of all such Intellectual Property as to which improper or
unauthorized disclosure would impair its value or validity, including the
execution of appropriate nondisclosure and confidentiality agreements.
(xvii) No relationship, direct or indirect, exists between or among the
Company or any of its affiliates, on the one hand, and the directors,
officers, stockholders, customers or
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suppliers of the Company or any of its subsidiaries, on the other hand,
that is required by the Act to be described in the Registration Statement
and the Prospectus that is not so described. Except as disclosed in the
Registration Statement and the Prospectus, there are no outstanding loans,
advances, or guarantees or indebtedness by the Company to or for the
benefit of any of the executive officers or directors of the Company or any
of the members of the families of any of them that would be required to be
described in the Registration Statement and the Prospectus.
(xviii) The Shares have been duly authorized for listing on the Nasdaq
National Market, subject to official notice of issuance.
(xix) Except for rights being exercised by the Selling Stockholders
in conjunction with their proposed sale of Shares pursuant to this
Agreement and rights that have been waived in writing, no holder of
securities of the Company has any rights to the registration of securities
of the Company because of the filing of the Registration Statement or
otherwise in connection with the sale of the Shares contemplated hereby.
(xx) The Company is not, and upon consummation of the transactions
contemplated hereby and the application of the net proceeds of the offering
of the Shares as described in the Prospectus will not be, subject to
registration as an "investment company" or an entity "controlled" by an
"investment company" under the Investment Company Act of 1940, as amended.
(xxi) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors that are likely, individually or in
the aggregate, to have a Material Adverse Effect.
(xxii) There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto that have not been so described and filed as required.
The descriptions of contracts in the Registration Statement and the
Prospectus are accurate and complete in all material respects; except as
described therein, all contracts described in the Registration Statement
and the Prospectus are valid, binding and enforceable and are in full force
and effect, and neither the Company nor any of its subsidiaries or, to the
Company's knowledge, any other party is in breach of or default under any
provisions of such contracts, except for any such breach or default which
would not have a Material Adverse Effect. Neither the Company nor its
subsidiaries has experienced a material adverse change in its business
relationships with its material suppliers.
(xxiii) Each employee benefit plan, within the meaning of Section 3(3)
of the Employee Retirement Income Securities Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the
Company or any of its subsidiaries for employees or former employees of the
Company or any of its subsidiaries has been maintained in compliance in all
material respects with its respective terms and the requirements of any
applicable statutes, order, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"). No prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any such
plan, excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan that is subject to the
funding rules of Section 412 of
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the Code or Section 302 of ERISA, no "accumulated funding deficiency", as
defined in Section 412 of the Code, has been incurred, whether or not
waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeded
the present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions. The description of the Company's Plan and
the options or other rights granted and exercised thereunder set forth in
the Registration Statement and the Prospectus accurately and fairly
describe, in all material respects, the information required to be shown
with respect to such Plan, options and rights.
(xxiv) Either the Company or its subsidiaries maintains a system of
internal accounting controls that are sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxv) The statistical and market-related data included in the
Registration Statement and the Prospectus are derived from sources that the
Company reasonably and in good faith believes to be accurate, reasonable
and reliable in all material respects, and such data agrees in all material
respects with the sources from which they were derived.
(xxvi) The Company has not at any time during the last five (5) years
in any jurisdiction (A) made any unlawful contribution to any candidate for
office, or failed to disclose fully any contribution in violation of law,
or (B) made any payment to any 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.
(xxvii) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, under the captions "Business--
Intellectual Property Rights," "Business--Legal Matters," "Certain
Transactions," "Management--Classified Board," "Management--Board
Committees," and under the caption "Underwriting", insofar as they purport
to describe the provisions of the laws and documents referred to therein,
are accurate and fair in all material respects.
(xxiii) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which
the business or operations of the Company or any of its subsidiaries has
been or will be affected by the Year 2000 Problem. As a result of such
review, the Company has no reason to believe, and does not believe, that
the Year 2000 Problem has had or will have a Material Adverse Effect or has
resulted or will result in any material loss or interference with the
Company's business or operations. The "Year 2000 Problem" as used herein
means any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind is not functioning or will not
function, in the case of dates or time periods occurring after December 31,
1999, at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000.
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Any certificate signed by any director or officer of the Company or any of
its subsidiaries delivered to any of the Underwriters or to the Underwriters'
Counsel (as herein defined) shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(b) Each of the Selling Stockholders severally and not jointly represents
and warrants to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement
and the Power of Attorney and the Custody Agreement hereinafter referred
to, and for the sale and delivery of the Shares to be sold by such Selling
Stockholder hereunder, have been obtained; and such Selling Stockholder has
full right, power and authority to enter into this Agreement, the Power-of-
Attorney and the Custody Agreement and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound or to which any of the property or
assets of such Selling Stockholder is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of such Selling Stockholder if such Selling Stockholder is a
corporation, the Partnership Agreement of such Selling Stockholder if such
Selling Stockholder is a partnership or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over such Selling Stockholder or the property of such Selling Stockholder;
(iii) Such Selling Stockholder has, and immediately prior to each Time
of Delivery (as defined in Section 4 hereof) such Selling Stockholder will
have, good and valid title to the Shares to be sold by such Selling
Stockholder hereunder, free and clear of all liens, encumbrances, equities
or claims; and, upon delivery of such Shares and payment therefor pursuant
hereto, good and valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several Underwriters;
(iv) During the period beginning from the date hereof and continuing
to and including the date 90 days after the date of the Prospectus, not to
offer, sell contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to
the Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than
pursuant to employee stock option plans existing on, or upon the conversion
or exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement), without your prior written consent;
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
10
(vi) To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement
thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly
for use therein, the Prospectus and the Registration Statement did, and the
Prospectus and any further amendments or supplements to the Registration
Statement and the Prospectus, when they become effective or are filed with
the Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof);
(viii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Stockholder hereunder have been placed in
custody under a Custody Agreement, in the form heretofore furnished to you
(the "Custody Agreement"), duly executed and delivered by such Selling
Stockholder to BankBoston N.A., as custodian (the "Custodian"), and such
Selling Stockholder has duly executed and delivered a Power of Attorney, in
the form heretofore furnished to you (the "Power of Attorney"), appointing
the persons indicated in Schedule II hereto, and each of them, as such
Selling Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the Underwriters
to the Selling Stockholders as provided in Section 2 hereof, to authorize
the delivery of the Shares to be sold by such Selling Stockholder hereunder
and otherwise to act on behalf of such Selling Stockholder in connection
with the transactions contemplated by this Agreement and the Custody
Agreement; and
(ix) The Shares represented by the certificates held in custody for
such Selling Stockholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder; the arrangements made by such
Selling Stockholder for such custody, and the appointment by such Selling
Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable; the obligations of the Selling Stockholders hereunder
shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Stockholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by
the occurrence of any other event; if any individual Selling Stockholder or
any such executor or trustee should die or become incapacitated, or if any
such estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement and of the
Custody Agreements; and actions taken by the Attorneys-in-Fact pursuant to
the Powers of Attorney shall be as valid as if such death, incapacity,
termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the
11
Attorneys-in-Fact, or any of them, shall have received notice of such
death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
and each of the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Stockholders,
at a purchase price per share of $.............., the number of Firm Shares (to
be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Shares to be sold by the Company and each of
the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling Stockholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company and each of the Selling
Stockholders agrees, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company and each of the Selling Stockholders, at the purchase
price per share set forth in clause (a) of this Section 2, that portion of the
number of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction the numerator of which
is the maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I hereto
and the denominator of which is the maximum number of Optional Shares that all
of the Underwriters are entitled to purchase hereunder.
The Company and the Selling Stockholders, as and to the extent
indicated in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to ...................
Optional Shares, at the purchase price per share set forth in the paragraph
above, for the sole purpose of covering sales of shares in excess of the number
of Firm Shares. Any such election to purchase Optional Shares shall be made in
proportion to the maximum number of Optional Shares to be sold by the Company
and each Selling Stockholder as set forth in Schedule II hereto initially with
respect to the Optional Shares to be sold by the Company and then among the
Selling Stockholders in proportion to the maximum number of Optional Shares to
be sold by each Selling Stockholder as set forth in Schedule II hereto. Any
such election to purchase Optional Shares may be exercised only by written
notice from you to the Company and the Attorneys-in-Fact, given within a period
of 30 calendar days after the date of this Agreement and setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company and the Attorneys-in-Fact otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to Xxxxxxx, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter,
12
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer of Federal (same-day) funds to the account specified
by the Company and the Custodian to Xxxxxxx, Xxxxx & Co. at least forty-eight
hours in advance. The Company will cause the certificates representing the
Shares to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto at
the office of DTC or its designated custodian (the "Designated Office"). The
time and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York City time, on ............., 2000 or such other time
and date as Xxxxxxx, Sachs & Co., the Company and the Selling Stockholders may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New
York City time, on the date specified by Xxxxxxx, Xxxxx & Co. in the written
notice given by Xxxxxxx, Sachs & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as Xxxxxxx, Xxxxx & Co., the
Company and the Selling Stockholders may agree upon in writing. Such time and
date for delivery of the Firm Shares is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and each
such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(n) hereof will be delivered at the offices of Xxxxxxx,
Phleger & Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000 (the "Closing Location"), and the Shares will be delivered at
the Designated Office, all at such Time of Delivery. A meeting will be held at
the Closing Location at 3:00 p.m., California time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York City are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be reasonably disapproved by you promptly after reasonable notice thereof;
to advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may
13
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation, subject
itself to taxation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as you may reasonably request, and, if the delivery of a prospectus
is required at any time prior to the expiration of nine months after the time of
issue of the Prospectus in connection with the offering or sale of the Shares
and if at such time any events shall have occurred 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 the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing to
and including the date 90 days after the date of the Prospectus, not to offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), without
your prior written consent; provided, however, that notwithstanding the
foregoing, during such 90-day period, the Company may issue, sell, offer or
agree to sell up to ten percent (10%) of its outstanding capital stock as of the
date of this Agreement in connection with any third party investment in the
Company, or in connection with any merger, acquisition or other business
combination involving the Company, at the higher of the initial public offering
price or the then current fair market value of such securities; provided that
any such shares which are issued or sold in accordance with the provisions set
forth above in this Section 5(e) during the period of 90 days from the date of
the Prospectus shall be subject to the restrictions set forth above in this
Section 5(e), and, in connection therewith, the Company shall cause any holder
of such shares or vested options to execute an appropriate Lock-Up Agreement
containing such provisions.
14
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed (to the
extent not available via XXXXX); and (ii) such additional information concerning
the business and financial condition of the Company as you may from time to time
reasonably request (such financial statements to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its reasonable best efforts to list for quotation the
Shares on the Nasdaq National Market; and
(j) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters that it
will pay or cause to be paid the following:
(i) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the
Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any preliminary prospectus and the
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers;
(ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection
with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section
5(b) hereof, including the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection
with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on
the Nasdaq National Market;
15
(v) the filing fees incident to, and the reasonable fees and
disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc.
of the terms of the sale of the Shares;
(vi) the cost of preparing stock certificates;
(vii) the cost and charges of any transfer agent or registrar; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder that are not otherwise specifically provided for in
this Section.
Each Selling Stockholder will pay or cause to be paid all costs incident to
the performance of such Selling Stockholders obligations hereunder that are not
otherwise specifically provided for in this Section, including all expenses and
taxes incident to the sale and delivery of the Shares to be sold by such Selling
Stockholder to the Underwriters hereunder. In connection with the preceding
sentence, Xxxxxxx, Xxxxx & Co. agrees to pay New York State stock transfer tax,
and the Selling Stockholder agrees to reimburse Xxxxxxx, Sachs & Co. for
associated carrying costs if such tax payment is not rebated on the date of
payment and for any portion of such tax payment not rebated.
It is understood, however, that except as provided in this Section, and
Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of its and their obligations hereunder
theretofore to be performed, and 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 rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become effective
by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding 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 your reasonable satisfaction;
(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of each such
opinion is attached as Annex III(a) hereto), dated such Time of Delivery,
with respect to the matters covered in paragraphs (i), (ii), (vii), (xi)
and (xiii) of subsection (c) below as well as such other related matters as
you 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;
(c) Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex III(b) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
16
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the outstanding shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly and validly authorized and, to the knowledge of such
counsel, validly issued, fully paid and non-assessable (provided that the
knowledge limitation shall not apply to Common Stock issued upon conversion
of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock); and none of such shares were issued in
violation of or are now subject to any preemptive right, co-sale rights,
registration rights, rights of first refusal or similar rights granted by
the Company except for registration rights being exercised by the Selling
Stockholders in conjunction with their sale of Shares under this Agreement
and rights that have been duly waived; and the Shares conform in all
material respects to the description of the Stock contained in the
Prospectus;
(iii) To such counsel's knowledge, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, to
cause the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Shares or the right to have any Stock or
other securities of the Company included in the Registration Statement or
the right, as a result of the filing of the Registration Statement, to
require the Company to register under the Act any shares of Stock or other
securities of the Company, except for registration rights being exercised
by the Selling Stockholders in conjunction with their sale of Shares under
this Agreement and rights that have been waived in writing.
(iv) The Company has been duly qualified and is in good standing as a
foreign corporation in California, Hawaii and New York;
(v) The form of certificate for the Shares conforms in all material
respects to the requirements of the Delaware General Corporation Law and
any applicable requirements of the Certificate and Bylaws;
(vi) Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; all of the outstanding shares of capital
stock of each such subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for directors'
qualifying shares are owned directly or indirectly by the Company, free and
clear of all liens, mortgages, pledges, charges, security interests,
claims, encumbrances or other defects in title known to such counsel (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided that
such counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates); and none of the
outstanding shares of capital stock of any of the Company's subsidiaries
was issued in
17
violation of the preemptive rights, co-sale rights, registration rights,
rights of first refusal or similar rights known to such counsel that have
not been waived in writing;/1/
(vii) To such counsel's knowledge (without conducting any docket
search or other inquiry) and other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually or
in the aggregate have a material adverse effect on the current or future
consolidated financial position stockholders' equity or results of
operations of the Company and its subsidiaries; and, to such counsel's
knowledge, no such proceedings are threatened in writing by governmental
authorities or threatened by others;
(viii) To such counsel's knowledge there are no agreements, contracts,
indentures, leases or other instruments that are required to be described
in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration
Statement that are not so described or filed, as the case may be.
(ix) The Registration Statement and all post-effective amendments, if
any, have become effective under the Act and, to such counsel's knowledge,
no stop order suspending the effectiveness of the Prospectus or the
Registration Statement has been issued and no proceedings for that purpose
are pending before the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(x) Based solely on the written advice of the NASD, the Shares have
been approved for quotation on the Nasdaq National Market, upon issuance as
contemplated by this Agreement;
(xi) The Company has the corporate power and corporate authority to
enter into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided in this Agreement; and this Agreement has been
duly authorized, executed and delivered by the Company;
(xii) The issue and sale of the Shares being delivered at such Time of
Delivery to be sold by the Company and the compliance by the Company with
all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not violate or conflict with the
certificate of incorporation or bylaws of the Company or any of its
subsidiaries, conflict with or result in a breach, of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, any
debenture, note, contract, indenture, mortgage, deed of trust, lease, joint
venture or other agreement, instrument, franchise, license or permit filed
or incorporated by reference as an exhibit to the Registration Statement
nor, to the knowledge of such counsel, will such actions violate or
conflict with any judgment, writ, decree, order, law, statute, rule or
regulation of any United States Federal or California State court or any
-----------------------------
1/ Counsel may limit the opinion in this clause (iv) to subsidiaries that are
incorporated in California, Delaware or New York.
18
United States Federal or California State public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their respective properties, assets or operations;
(xiii) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any United States Federal or
California State court or any United States Federal or California State public,
governmental or regulatory agency or body is necessary or required for the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, including the issuance, sale and delivery of
the Shares to be issued, sold and delivered by the Company hereunder, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters;
(xiv) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock, under the captions "Business--Intellectual Property
Rights," "Business--Legal Matters," "Certain Transactions," "Management--
Classified Board," "Management--Board Committees," and under the caption
"Underwriting", insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate, complete and fair in all
material respects;
(xv) To the knowledge of such counsel, the Company is not an
"investment company" or an entity controlled by an "investment company", as such
terms are defined in the Investment Company Act; and
(xvi) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules therein, as
to which such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; although they do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, except for those referred to in the opinion in
subsection (xiv) of this Section 7(c), they have no reason to believe that, as
of its effective date, the Registration Statement or any further amendment
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, and financial and
statistical data therein, as to which such counsel need express no opinion)
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 or any further amendment
or supplement thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or that, as of such Time of Delivery, either the Registration
Statement or the Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, and financial and statistical data
therein, as to which such counsel need express no opinion) contains an
19
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; and they do not know of any
amendment to the Registration Statement required to be filed;
(xvii) To such counsel's knowledge, the Company has not received any
written notice of infringement of or conflict with asserted rights of any
third party's material patents, patent rights, licenses, inventions,
copyrights, know-how, (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, system or procedures),
trademarks, service marks and trade names that, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result
in a Material Adverse Effect.
(d) The respective counsel for each of the Selling Stockholders,
asindicated in Schedule II hereto, each shall have furnished to you their
written opinion with respect to each of the Selling Stockholders for whom they
are acting as counsel (a draft of each such opinion is attached as Annex III(c)
hereto), dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) A Power-of-Attorney and a Custody Agreement have been duly
executed and delivered by such Selling Stockholder and constitute valid and
binding agreements of such Selling Stockholder in accordance with their
terms;
(ii) This Agreement has been duly executed and delivered by or
on behalf of such Selling Stockholder; and the sale of the Shares to be sold
by such Selling Stockholder hereunder and the compliance by such Selling
Stockholder with all of the provisions of this Agreement, the Power-of-
Attorney and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not, to the knowledge of such counsel,
conflict with or result in a breach or violation of any terms or provisions
of, or constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument filed or incorporated
by reference as an exhibit to the Registration Statement, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of such Selling Stockholder if such Selling
Stockholder is a corporation, the Partnership Agreement of such Selling
Stockholder if such Selling Stockholder is a partnership or any order, rule
or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over such Selling Stockholder or the property of
such Selling Stockholder;
(iii) To the knowledge of such counsel, no consent, approval,
authorization or order of any United States Federal or California State
court or United States Federal or California State governmental agency or
body is required for the consummation of the transactions contemplated by
this Agreement in connection with the Shares to be sold by such Selling
Stockholder hereunder, except such as have been obtained under the Act and
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of such Shares by the
Underwriters; and
(iv) Good and valid title to such Shares, free and clear of all
liens, encumbrances, equities or claims, has been transferred to each of the
several Underwriters who have purchased such Shares in good faith and
without notice of any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial Code.
20
(e) Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxxxxx, LLP, regulatory counsel for
the Company, shall have furnished to you their written opinion (a draft of such
opinion is attached as Annex III(d) hereto), dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of the FCC is
necessary or required to be obtained by the Company under
the Act or the published rules, regulations, and
administrative orders promulgated thereunder in connection
with the execution, delivery and performance of this
Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered by
the Company hereunder; and
(ii) The statements set forth in the Prospectus under the
captions "Risk Factors-- Government regulation and legal
uncertainties could limit our business or slow our growth"
and "Government Regulation," taken together, insofar as they
are, or refer to, published statements of law, legal
conclusions, or summaries relating to the Act and the
published rules, regulations and administrative orders
promulgated thereunder, fairly reflect the provisions
purported to be summarized and are accurate, complete and
fair in all material respects.
(f) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery,
PricewaterhouseCoopers, LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto (the executed
copy of the letter delivered prior to the execution of this Agreement is
attached as Annex I(a) hereto and a draft of the form of letter to be delivered
on the effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b) hereto);
(g) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Ernst & Young shall
have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex II hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex II(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex II(b) hereto;
(h) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change,
21
or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' 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 any
such case described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(i) On or after the date hereof (i) no downgrading shall have occurred
in the rating, if any, accorded the Company's debt securities or preferred
stock by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities or preferred stock;
(j) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on the Nasdaq
National Market; (ii) a suspension or material limitation in trading in the
Company's securities on the Nasdaq National Market; (iii) a general
moratorium on commercial banking activities declared by either Federal or
New York or California State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public offering
or the delivery of the Shares being delivered at such Time of Delivery on
the terms and in the manner contemplated in the Prospectus;
(k) The Shares at such Time of Delivery shall have been duly listed for
quotation on the Nasdaq National Market, subject to notice of issuance;
(l) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from each [list appropriate stockholders of the
Company other than the Selling Stockholders], substantially to the effect
set forth in Subsection 1(b)(iv) hereof in form and substance reasonably
satisfactory to you;
(m) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(n) The Company and the Selling Stockholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Stockholders, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Stockholders, respectively,
herein at and as of such Time of Delivery, as to the performance by the
Company and the Selling Stockholders of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as to
such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (h) of this Section.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject,
22
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon 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, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter 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 any preliminary
prospectus, the Registration Statement or 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 Xxxxxxx, Xxxxx & Co.
expressly for use therein.
(b) Each of the Selling Stockholders, severally and not jointly, in
proportion to the number of Shares sold by such Selling Stockholder hereunder,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon 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, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Selling Stockholders 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 or 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 Xxxxxxx, Sachs & Co. expressly for use therein. The
liability of each Selling Stockholder shall in no event exceed the total net
proceeds (before deducting expenses) received by such Selling Stockholder from
the offering.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon 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 each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any preliminary
prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Xxxxxxx, Xxxxx & Co.
expressly for use therein; and will reimburse the Company and each Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
or such Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
23
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c), above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action 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 satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions 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 in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, 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 and the Selling Stockholders 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 in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders 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 and the Selling Stockholders 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 or the Selling Stockholders 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, each
of the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (e) were determined
24
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 subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) 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
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. 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 subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 8 shall be in addition to any liability which the Company and the
respective Selling Stockholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Stockholder within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company and the Selling Stockholders shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Stockholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Stockholders shall have the right to postpone such Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting
25
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company and the Selling Stockholders to sell
the Optional Shares) shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter or the Company or the Selling Stockholders,
except for the expenses to be borne by the Company and the Selling Stockholders
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Stockholders, or any officer
or director or controlling person of the Company, or any controlling person of
any Selling Stockholder, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Stockholders shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; if to any Selling Stockholder shall be delivered or sent by
26
mail, telex or facsimile transmission to counsel for such Selling Stockholder
at its address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(d) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholders by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Stockholders and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors of the
Company and each person who controls the Company, any Selling Stockholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Representatives plus one for
each counsel and the Custodian, if any counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement among each of the
Underwriters, the Company and each of the Selling Stockholders. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and the
Selling Stockholders for examination, upon request, but without warranty on your
part as to the authority of the signers thereof.
27
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power-of-Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
Digital Island, Inc.
By: _______________________________________
Name:
Title:
[Names of Selling Stockholders]
By: _______________________________________
Name:
Title:
As Attorney-in-Fact acting on behalf of
each of the Selling Stockholders named in
Schedule II to this Agreement.
Accepted as of the date hereof [at ....,
.......................:(2)]
Xxxxxxx, Xxxxx & Co.
Bear Xxxxxxx & Co. Inc.
Xxxxxx Brothers, Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated
Xxxxxx Xxxxxx Partners LLC
Xxxx Xxxxxxxx Xxxxxxx
By: __________________________________
(Xxxxxxx, Xxxxx & Co.)
---------------------------
(2) [In connection with a sale by Selling Stockholders the payment of transfer
taxes may depend, among other things, upon the place where the Agreement is
deemed to have been executed (i.e., signed and delivered). A record in the
Agreement where this event occurred often is useful.]
28
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
-------------------------------------------------------------------------- --------------- ------------------
Xxxxxxx, Sachs & Co.......................................................
Bear Xxxxxxx & Co. Inc....................................................
Xxxxxx Brothers, Inc......................................................
Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated.................................................
Xxxxxx Xxxxxx Partners LLC................................................
Xxxx Xxxxxxxx Xxxxxxx.....................................................
Total................................................................. --------------- ------------------
=============== ==================
29
SCHEDULE II
Number of Optional
Shares to be
Total Number of Sold if
Firm Shares Maximum Option
to be Sold Exercised
The Company.................................................................
The Selling Stockholder(s)(a):...........................................
[Names of Selling Stockholders]
--------------- ------------------
Total................................................................... =============== ==================
----------
(a) The Selling Stockholders are represented by Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
and have appointed Xxxxx Xxxxx and Xxxxxxxx Xxxxxx, and each of them, as
the Attorneys-in-Fact for the Selling Stockholders.
30
ANNEX I(b)
[FORM OF COMFORT LETTER FROM PRICEWATERHOUSECOOPERS, LLP]
Pursuant to Subsection 7(d)(i) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company, and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years which
were included or incorporated by reference in the Company's Annual Reports
on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
31
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which such
data and items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the basis for
the corresponding amounts in the audited consolidated financial
statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in clause (A) and any unaudited income
statement data and balance sheet items included in the Prospectus and
referred to in clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated financial
statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options
and stock appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements included in
the Prospectus) or any increase in the consolidated long-term debt of
the Company and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
32
(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in clause
(E) there were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with
the comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
33
ANNEX II(b)
[FORM OF COMFORT LETTER FROM ERNST & YOUNG]
Pursuant to Subsection 7(d)(ii) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They were independent certified public accountants with respect
to Sandpiper, Inc. ("Sandpiper"), and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of Sandpiper
for the periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of Sandpiper who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of Sandpiper for
the five most recent fiscal years included in the Prospectus agrees with
the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years which
were included or incorporated by reference in Sandpiper's Annual Reports on
Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
34
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of Sandpiper and and its subsidiaries, inspection of
the minute books of Sandpiper and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of Sandpiper and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which such
data and items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the basis for
the corresponding amounts in the audited consolidated financial
statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in clause (A) and any unaudited income
statement data and balance sheet items included in the Prospectus and
referred to in clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated financial
statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options
and stock appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements included in
the Prospectus) or any increase in the consolidated long-term debt of
Sandpiper and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
35
(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in clause
(E) there were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with
the comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives, which are derived from the general accounting records of
Sandpiper and its subsidiaries, which appear in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of Sandpiper and its
subsidiaries and have found them to be in agreement.
36
