EXHIBIT 1.1
BALANCE BAR COMPANY
2,400,000 SHARES/1/
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
May __, 0000
XXXXXXXXX & XXXXX LLC
XXXXX, XXXXXXXX & XXXX, INC.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Balance Bar Company, a Delaware corporation (herein called the Company),
proposes to issue and sell 1,003,372 shares of its authorized but unissued
Common Stock, $ 0.01 par value (herein called the Common Stock), and the
stockholders of the Company named in Schedule II hereto (herein collectively
called the Selling Securityholders) propose to sell an aggregate of 1,396,628
shares of Common Stock of the Company (said 2,400,000 shares of Common Stock
sold in the aggregate by the Company and the Selling Securityholders being
herein called the Underwritten Stock). The Selling Securityholders propose to
grant to the Underwriters (as hereinafter defined) an option to purchase up to
360,000 additional shares of Common Stock (herein called the Option Stock and
with the Underwritten Stock herein collectively called the Stock). The Common
Stock is more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-1 (No. 333-49651), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the
-----------------------------------
/1/ Plus an option to purchase from the Selling Securityholders up to 360,000
additional shares to cover over-allotments.
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event of any supplement or amendment to such prospectus after the Effective
Date, shall also mean (from and after the filing with the Commission of such
supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it became effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.
(a) The Company hereby represents and warrants as follows:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus and as being conducted, and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character
of the property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified
would not have a material adverse effect on the business, properties,
financial condition or results of operations of the Company (herein called a
"Material Adverse Effect")).
(ii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any material
adverse change in the business, properties, financial condition or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, other than as set forth in the Registration
Statement and the Prospectus, and since such dates, except in the ordinary
course of business, the Company has not entered into any material transaction
not described in the Registration Statement and the Prospectus.
(iii) The Registration Statement and the Prospectus comply, and on
the Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any 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 statements therein not misleading; and, on the
Effective Date the Prospectus did not and, on the Closing Date and any later
date on which Option Stock is to be purchased, will not contain any 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, not misleading; provided, however, that none of the
representations and warranties in this subparagraph (iii) shall apply to
statements in, or omissions from, the Registration Statement or the Prospectus
made in reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters for
use in the Registration Statement or the Prospectus.
(iv) The Stock is duly authorized, is (or, in the case of shares of
the Stock to be sold by the Company, will be, when issued and sold to the
Underwriters as provided herein) validly issued, fully paid and nonassessable
and conforms to the description thereof in the Prospectus. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the transfer and sale of the Stock to be sold by
the Selling Securityholders or the issuance and sale of the Stock as
contemplated herein. The authorized capital stock of the Company consists of
12,000,000 shares of Preferred Stock, $0.01 par value, of which there are
outstanding 3,806,910 shares, (and all of which will convert into an aggregate
of 3,806,910 shares of Common Stock immediately prior to the Closing Date) and
24,000,000 shares of Common Stock, $0.01 par value, of which there are
outstanding E shares (including the Underwritten Stock plus the
number of shares of Option Stock issued on the date hereof); all of the
outstanding securities have been validly issued and are fully paid and
nonassessable and have been issued in compliance with all federal and state
securities laws except where any such failure to comply would not have
singularly, or in the aggregate, a Material Adverse Effect; and no
registration
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rights or rights of co-sale (other than those which have been waived or are
described in the Prospectus), voting agreements, preemptive rights of, or
rights of refusal in favor of, stockholders exist with respect to the Stock,
or the issue and sale thereof. As of the Closing Date, each share of Preferred
Stock will convert into one share of Common Stock.
(v) The Company has filed a registration statement pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended, to register
the Common Stock, and prior to the Closing Date, the Stock will be approved
for listing and trading on the Nasdaq National Market, and prior to the
Closing Date the Stock to be issued and sold by the Company will be approved
for listing on the Nasdaq National Market upon official notice of issuance.
(vi) The Company has full corporate power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
is a valid and binding agreement on the part of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may
be limited by applicable law and except as the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles; the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
material breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any bond, debenture, note or other evidence of
indebtedness, or under any lease, contract, license, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or instrument to
which the Company is a party or by which its properties may be bound, (ii) the
charter or bylaws of the Company, or (iii) any law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or
any of its subsidiaries or its properties except where such breach, violation
or default would not have a Material Adverse Effect. No consent, approval,
authorization or order of or qualification with any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or over its properties is required for the execution and delivery of
this Agreement and the consummation by the Company of the transactions herein
contemplated, except such as may be required under the Act or under state or
other securities or Blue Sky laws, all of which requirements have been
satisfied in all material respects.
(vii) The Company has not sustained, since the date of the latest
audited financial statements included in the Prospectus, any material 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, since such date, there has not been any
material change in the capital stock or long-term debt of the Company or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus.
(viii) The audited financial statements of the Company, together
with the related notes and supporting schedules, and the unaudited financial
statements, filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus, fairly present the financial
condition and results of operations of the Company at the dates and for the
periods indicated, in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved. The unaudited
financial statements (including related notes) filed as part of the
Registration Statement or included in the Prospectus include all adjustments,
consisting of normal recurring adjustments, that the Company considers
necessary for a fair presentation of the financial position and results of
operations for these periods (except for the footnotes and more detailed
information with respect to the three month numbers announced and described as
set forth in the Registration Statement). The selected and summary financial
and statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with
the audited financial statements presented therein. No other financial
statements or schedules are required to be included in the Registration
Statement.
(ix) Xxxxxx Xxxxxxxx LLP, who has audited the balance sheets of
the Company as of December 31, 1996 and 1997 and the related statements of
operations, shareholder's equity and cash flows, together with the
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related schedules and notes for each of the three (3) years in the period
ended December 31, 1997, whose report appears in the Registration Statement
and in the Prospectus and who have delivered the Original Letter referred to
in Section 9(f) hereof, are independent public accountants as required by and
within the meaning of the Securities Act and the Rules and Regulations.
(x) All real property and buildings held under lease by the
Company are held by them to the best of the Company's knowledge, under valid
and enforceable leases except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles, with
such exceptions as would not have a Material Adverse Effect.
(xi) The Company carries, or maintains insurance in such amounts
and covering such risks as is reasonably adequate for the conduct of its
business and the value of its properties. The Company has not been refused any
insurance coverage sought or applied for; and the Company does not have any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company.
(xii) The Company owns or possesses adequate rights to use all
inventions, trade secrets, know-how, trademarks, trademark registrations,
service marks, service xxxx registrations, trade names, copyrights, approvals
and government authorizations, described in the Registration Statement and
Prospectus as being owned by it or useful in the conduct of its businesses as
now conducted [or proposed to be conducted] as described in the Registration
Statement and Prospectus; the Company has not received any notice of, and has
no knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and has no knowledge of, any infringement of or
conflict with asserted rights of others with respect to any inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, might have a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company other than as described in the Prospectus.
(xiii) Except as described in the Prospectus, there are no legal,
governmental or administrative proceedings pending to which the Company is a
party or of which any property or assets of the Company is the subject which,
if determined adversely to the Company, may have a Material Adverse Effect,
and no such proceedings are threatened or contemplated by governmental
authorities or by others.
(xiv) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement.
(xv) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as required to be disclosed in the Registration Statement
and the Prospectus. No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
collaboration partners, joint venturers, licensees, licensors, consultants,
customers or suppliers of the Company on the other hand, which is required to
be described in the Prospectus which is not so described.
(xvi) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent which might be expected to
have a Material Adverse Effect. No collective bargaining agreement exists
with any of the Company's employees and, to the best of the Company's
knowledge, no such agreement is imminent.
(xvii) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon, and no tax deficiency has been determined
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adversely to the Company which will have (nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to the Company,
might have) a Material Adverse Effect. All tax liabilities are adequately
provided for on the books of the Company. The Company is not currently
subject to any audit by any tax authorities and, to the Company's knowledge,
no such audit is threatened or contemplated by any such authorities.
(xviii) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed
in the Prospectus, the Company has not (i) issued or granted or obligated
itself to issue or grant any securities, other than option grants and
exercises and stock purchases pursuant to the Company's stock option and
employee stock purchase plans in the ordinary course of business and
consistent with past practice or pursuant to the exercise of warrants in the
ordinary course of business, (ii) incurred any liability or obligation, direct
or contingent, other than liabilities and obligations which were incurred in
the ordinary course of business, (iii) entered into any transaction not in the
ordinary course of business or (iv) declared or paid any dividend on its
capital stock.
(xix) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements in conformity with generally accepted
accounting principles and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xx) The Company (i) is not in violation of its charter or
bylaws, (ii) is not in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
condition contained in any license agreement, purchase order, manufacturing or
supply agreement, collaboration agreement, material indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets is
subject, other than as would not cause a Material Adverse Effect (and, to its
knowledge, no other party to any such agreement is in default thereof and no
event has occurred which, with notice, lapse of time or both, would constitute
such a default), or (iii) is not in violation in any material respect of any
law, ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject and the Company has not failed to obtain
any material license, permit, certificate, franchise or other governmental
authorization or permit necessary for the ownership of its property or to the
conduct of its business, other than as would not cause a Material Adverse
Effect.
(xxi) Except as set forth in the Registration Statement and
Prospectus, (i) and except as would not, singularly or in the aggregate have a
Material Adverse Effect, the Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
which are applicable to its business, (ii) the Company has received no notice
from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the
Registration Statement and the Prospectus, and (iii) to the best of its
knowledge, the Company will not be required to make future material capital
expenditures to comply with Environmental Laws. There has been no storage,
disposal, generation, manufacture, refinement, transportation, handling or
treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company (or, to the knowledge of the Company, any of its
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into
the environment surrounding such property of any toxic wastes, medical wastes,
solid wastes, hazardous wastes or hazardous substances due to or caused by the
Company or with respect to which the Company has knowledge, except for any
such spill, discharge, leak, emission, injection, escape, dumping or release
which would not have or would not be reasonably
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likely to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases, a
Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes",
"hazardous substances" and "medical wastes" shall have the meanings specified
in any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(xxii) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" or a company "controlled" by an "investment
company" within the meaning of the 1940 Act and such rules and regulations.
(xxiii) The Company has not at any time during the last five (5)
years (i) made any unlawful contribution to any candidate for foreign office
or failed to disclose fully any contribution in violation of law, or (ii) made
any payment to any foreign, federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(xxiv) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Stock to
facilitate the sale or resale of the Stock.
(xxv) The Company has not distributed and will not distribute
prior to the later of (i) the Closing Date, or any date on which Option Stock
is to be purchased, as the case may be, and (ii) completion of the
distribution of the Stock, any offering material in connection with the
offering and sale of the Stock other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted
by the Act.
(xxvi) The Company has not had any disagreements, during its two
most recent fiscal years or any subsequent interim period, with an independent
accountant who was previously engaged as the principal accountant to audit the
Company's financial statements and on whom the principal accountant expressed
reliance in its report (either of whom resigned, indicated that it declined to
stand for re-election after the completion of the current audit, or was
dismissed), on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement(s)
would require disclosure in the Registration Statement.
(b) Each of the Selling Securityholders hereby represents and
warrants as follows:
(i) Such Selling Securityholder has good and marketable title to
all the shares of Stock to be sold by such Selling Securityholder hereunder,
free and clear of all liens, encumbrances, equities, security interests and
claims whatsoever and no preemptive right, co-sale right, registration right,
right of first refusal or other similar right exists with respect to such
Stock, with full right and authority to deliver the same hereunder, subject,
in the case of each Selling Securityholder, to the rights of the Company, as
Custodian (herein called the Custodian), and that upon the delivery of and
payment for such shares of the Stock hereunder, assuming the Underwriters are
acquiring such shares in good faith without notice of any adverse claim, the
several Underwriters will receive good and marketable title thereto, free and
clear of all liens, encumbrances, equities, security interests and claims
whatsoever.
(ii) Certificates in negotiable form for the shares of the Stock to
be sold by such Selling Securityholder have been placed in custody under a
Custody Agreement, satisfactory to you in your sole discretion, for delivery
under this Agreement with the Custodian; such Selling Securityholder
specifically agrees that the shares of the Stock represented by the
certificates so held in custody for such Selling Securityholder are subject to
the interests of the several Underwriters and the Company, that the
arrangements made by such Selling Securityholder for such custody, including
the Power of Attorney and the Custody Agreement, are to that extent
irrevocable, and that the obligations of such Selling Securityholder shall not
be terminated by any act of such Selling Securityholder or by operation of
law, whether by the death or incapacity of such Selling Securityholder (or, in
the case of a Selling Securityholder that is not an individual, the
dissolution or liquidation of such Selling Securityholder) or the occurrence
of any other event; if any such death, incapacity, dissolution, liquidation or
other such event should
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occur before the delivery of such shares of the Stock hereunder, certificates
for such shares of the Stock shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death, incapacity,
dissolution, liquidation or other event had not occurred, regardless of
whether the Custodian shall have received notice of such death, incapacity,
dissolution, liquidation or other event. Each of the Power of Attorney and the
Custody Agreement constitutes a valid and binding agreement on the part of
such Selling Securityholder, enforceable in accordance with its terms, except
as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles. All
consents, approvals, authorizations and orders required for the execution and
delivery by such Selling Securityholder of the Power of Attorney and the
Custody Agreement, the execution and delivery by or on behalf of such Selling
Securityholder of this Agreement and the sale and delivery of the Stock to be
sold by such Selling Securityholder under this Agreement (other than, at the
time of the execution hereof (if the Registration Statement has not yet been
declared effective by the Commission), the issuance of the order of the
Commission declaring the Registration Statement effective and such consents,
approvals, authorizations or orders as may be necessary under state or other
securities or Blue Sky laws) have been obtained and are in full force and
effect.
(iii) Such Selling Securityholder has reviewed the Registration
Statement and Prospectus and the information contained under the caption
"Principal and Selling Stockholders" that specifically relates to such Selling
Securityholder does not, and will not on the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in light
of the circumstances under which they were made not misleading.
(iv) Xxxxxxx X. Xxxx (the "Affiliated Selling Securityholder") has
reviewed the Registration Statement and Prospectus and, although such
Affiliated Selling Securityholder has not independently verified the accuracy
or completeness of all the information contained therein, nothing has come to
the attention of such Affiliated Selling Securityholder that would lead such
Affiliated Selling Securityholder to believe that on the Effective Date, the
Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and, on the Effective
Date the Prospectus did not and, on the Closing Date will not contain any
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, not misleading.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell E shares of the Underwritten Stock to the several Underwriters, each
Selling Securityholder agrees to sell to the several Underwriters the number of
shares of the Underwritten Stock set forth in Schedule II opposite the name of
such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Securityholders and purchased by the several Underwriters shall
be $___ per share [IPO price less __% discount]. The obligation of each
Underwriter to the Company and each of the Selling Securityholders shall be to
purchase from the Company and the Selling Securityholders that number of shares
of the Underwritten Stock which represents the same proportion of the total
number of shares of the Underwritten Stock to be sold by each of the Company and
the Selling Securityholders pursuant to this Agreement as the number of shares
of the Underwritten Stock set forth opposite the name of such Underwriter in
Schedule I hereto represents of the total number of shares of the Underwritten
Stock to be purchased by all Underwriters pursuant to this Agreement, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
In making this Agreement, each Underwriter is contracting severally and not
jointly; except as provided in paragraphs (b) and (c) of this Section 3, the
agreement of each Underwriter is to purchase only the respective number of
shares of the Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
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pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company or the Selling Securityholders shall
immediately give notice thereof to you, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by you of such notice to
purchase, or procure one or more other Underwriters to purchase, in such
proportions as may be agreed upon between you and such purchasing Underwriter or
Underwriters and upon the terms herein set forth, all or any part of the shares
of the Stock which such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such shares and portion, the number of shares of the Stock
which each non-defaulting Underwriter is otherwise obligated to purchase under
this Agreement shall be automatically increased on a pro rata basis to absorb
the remaining shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the shares and portion which the
defaulting Underwriter or Underwriters agreed to purchase if the aggregate
number of such shares of the Stock exceeds 10% of the total number of shares of
the Stock which all Underwriters agreed to purchase hereunder. If the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company and the Selling Securityholders shall have the
right, within 24 hours next succeeding the 24-hour period above referred to, to
make arrangements with other underwriters or purchasers satisfactory to you for
purchase of such shares and portion on the terms herein set forth. In any such
case, either you or the Company and the Selling Securityholders shall have the
right to postpone the Closing Date determined as provided in Section 5 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary changes in
the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company and the Selling Securityholders shall make arrangements within the 24-
hour periods stated above for the purchase of all the shares of the Stock which
the defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company or the Selling Securityholders to any non-
defaulting Underwriter and without any liability on the part of any non-
defaulting Underwriter to the Company or the Selling Securityholders. Nothing
in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase, severally and
not jointly, up to E shares in the aggregate of the Option Stock from
the Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth (30th) day after the date of this Agreement upon written or facsimile
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made as provided in Section 5 hereof. The number of shares of the
Option Stock to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Stock, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of
the Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front
cover page and under the third and last paragraphs under the caption
"Underwriting" in the Registration Statement, any Preliminary Prospectus and the
Prospectus relating to the Stock filed by the Company (insofar as such
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf of
the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
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5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of O'Melveny & Xxxxx, LLP, 0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx, 00000, at 7:00 a.m., San Francisco time, on the fourth business day
after the date of this Agreement, or at such time on such other day, not later
than seven full business days after such fourth business day, as shall be agreed
upon in writing by the Company, the Selling Securityholders and you. The date
and hour of such delivery and payment (which may be postponed as provided in
Section 3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of O'Melveny & Xxxxx, LLP, 0000
Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000, at 7:00 a.m., San Francisco
time, on the third business day after the exercise of such option or if the
Company and you agree, upon shorter notice on the first Closing Date.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order, and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by one or more certified or official bank check or
checks or wire transfers in same day funds. Such payment shall be made upon
delivery of certificates for the Stock to you for the respective accounts of the
several Underwriters against receipt therefor signed by you. Certificates for
the Stock to be delivered to you shall be registered in such name or names and
shall be in such denominations as you may request at least one business day
before the Closing Date, in the case of Underwritten Stock, and at least one
business day prior to the purchase thereof, in the case of the Option Stock.
[insert DTC language].
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter.
Any such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. Each of the Company and the Selling Securityholders
respectively covenants and agrees as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on Rule
430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Securities Act or
the rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the event
of (i) the request by the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, (iii) the institution or
notice of intended institution of any action or proceeding for that purpose,
(iv) the receipt by the Company of any notification with respect to the
suspension of the qualification of the Stock for sale in any jurisdiction, or
(v) the receipt by it of notice of the initiation or threatening of any
proceeding for such purpose. The Company and the Selling Securityholders will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to
you a signed copy of the Registration Statement as originally filed and of
each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of each
post-effective
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amendment, if any, to the Registration Statement (together with, in each case,
all exhibits thereto unless previously furnished to you) and will also deliver
to you, for distribution to the Underwriters, a sufficient number of
additional conformed copies of each of the foregoing (but without exhibits) so
that one copy of each may be distributed to each Underwriter, (ii) as promptly
as possible deliver to you and send to the several Underwriters, at such
office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the
Prospectus and of any amended prospectus, filed by the Company with the
Commission, as you may reasonably request for the purposes contemplated by the
Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in
writing by you, shall occur as a result of which it is necessary, in the
opinion of counsel for the Company or of counsel for the Underwriters, to
supplement or amend the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of the Stock, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended
prospectus so that the Prospectus as so supplemented or amended will not
contain any 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 existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the Stock
by the Underwriters and during such period, the Underwriters shall propose to
vary the terms of offering thereof by reason of changes in general market
conditions or otherwise, you will advise the Company in writing of the
proposed variation, and, if in the opinion either of counsel for the Company
or of counsel for the Underwriters such proposed variation requires that the
Prospectus be supplemented or amended, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended
prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the
several Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company
will submit to you, for your information, a copy of any post-effective
amendment to the Registration Statement and any supplement to the Prospectus
or any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in
the qualification of the Stock for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, in keeping such qualifications in good standing under said securities
or blue sky laws, except that the Company shall not be required in connection
therewith or as a condition thereof to qualify as a foreign corporation or to
execute a general service of process in any jurisdiction in which it is not
otherwise required. In each jurisdiction in which the Stock is qualified as
provided above, the Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to continue
such qualifications in effect for so long a period as you may reasonably
request for distribution of the Stock.
(g) During a period of three years commencing with the date hereof,
the Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders
of the Company and of all information, documents and reports filed with the
Commission.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its security holders an earnings
statement in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.
(i) The Company and the Selling Securityholders agree to pay all
costs and expenses incident to the performance of their obligations under this
Agreement, including all costs and expenses incident to (i) the preparation,
printing and filing with the Commission and the National Association of
Securities Dealers, Inc. ("NASD") of the Registration Statement, any
Preliminary Prospectus and the Prospectus, (ii) the furnishing to the
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Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished,
(iii) the printing of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this Section 6,
(v) the furnishing to you and the Underwriters of the reports and information
referred to in paragraph (g) of this Section 6 and (vi) the printing and
issuance of stock certificates, including the transfer agent's fees. The
Selling Securityholders will pay underwriting discounts and commissions with
respect to the Stock to be sold by them (and the provisions of this section
shall not supersede or otherwise affect any agreement that the Company and the
Selling Securityholders may otherwise have for allocation of expenses among
themselves), and any transfer taxes incident to the transfer to the
Underwriters of the shares of the Stock being sold by the Selling
Securityholders. Except as provided for in Sections 6(i), 6(j) and 7, the
Underwriters shall pay all their own expenses, including the fees and
disbursements of their counsel and the Underwriter's travel, lodging and
entertainment expenses.
(j) The Company and the Selling Securityholders agree to reimburse
you, for the account of the several Underwriters, for blue sky fees and
related disbursements (including counsel fees and disbursements and cost of
printing memoranda for the Underwriters) paid by or for the account of the
Underwriters or their counsel in qualifying the Stock under state securities
or blue sky laws and in the review of the offering by the NASD.
(k) The provisions of paragraphs (i) and (j) of this Section are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Company and the Selling Securityholders hereby agree to pay
and shall not affect any agreement which the Company and the Selling
Securityholders may make, or may have made, for the sharing of any such
expenses and costs.
(l) The Company and each of the Selling Securityholders hereby
agree that, without the prior written consent of Xxxxxxxxx & Xxxxx LLC on
behalf of the Underwriters, the Company or such Selling Securityholder, as the
case may be, will not, for a period of 180 days following the effective date
of the Registration Statement, directly or indirectly, (i) sell, offer,
contract to sell, transfer the economic risk of ownership in, make any short
sale, pledge or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire Common Stock. The foregoing sentence shall not
apply to (A) the Stock to be sold to the Underwriters pursuant to this
Agreement, (B) shares of Common Stock issued by the Company upon the exercise
of options granted under the stock option plans of the Company (the "Option
Plans") or otherwise authorized by the Board, all as described in footnote (E)
to the table under the caption "Capitalization" in the Preliminary Prospectus,
(C) options to purchase Common Stock granted under the Option Plans, (D)
transfers to one or more charitable organizations, or a trust, partnership,
corporation, limited liability company or similar entity, the sole beneficiary
or owner of which is exclusively such Selling Securityholder, a member or
members of such Selling Securityholder's immediate family, and/or a charitable
organization, provided however, that prior to any such transfer each
transferee shall agree to be bound by the terms of this provision, and [(E) in
the case of the Company, issuances of securities in connection with
acquisitions so long as the entity receiving the Company's securities agrees
to be bound by the terms of this provision.]
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding
to or commenting on such rumor, publication or event.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7,
the Company and the Selling Securityholders jointly and severally agree to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such
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indemnified parties or any of them may become subject under the Securities Act,
the Securities Exchange Act of 1934, as amended (herein called the Exchange
Act), or the common law or otherwise, and the Company and the Selling
Securityholders jointly and severally agree to reimburse each such Underwriter
and controlling person for any legal or other expenses ([including,] except as
otherwise hereinafter provided, [reasonable fees and disbursements of counsel])
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement), or 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, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company and the
Selling Securityholders contained in this paragraph (a) shall not apply to any
such losses, claims, damages, liabilities or expenses if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by or on
behalf of any Underwriter for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, (2) the indemnity agreement contained in this paragraph (a)
with respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof, and (3) each Selling
Securityholder shall only be liable under this paragraph with respect to (A)
information pertaining to such Selling Securityholder furnished by or on behalf
of such Selling Securityholder expressly for use in any Preliminary Prospectus
or the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto or (B) facts that would constitute a breach of any
representation or warranty of such Selling Securityholder set forth in Section
2(b) hereof. The indemnity agreements of the Company and the Selling
Securityholders contained in this paragraph (a) and the representations and
warranties of the Company and the Selling Securityholders contained in Section 2
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his
own behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and the Selling Securityholders and each person who
controls the Selling Securityholders from and against any and all losses,
claims, damages or liabilities, joint or several, to which such indemnified
parties or any of them may become subject under the Securities Act, the Exchange
Act, or the common law or otherwise and to reimburse each of them for any legal
or other expenses (including, except as otherwise hereinafter provided,
reasonable fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such losses,
claims, damages or liabilities or in connection with any investigation or
inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement) or 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 or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with
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information furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of such indemnifying Underwriter for use in the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto. The indemnity agreement of each Underwriter contained in
this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its
own expense to participate in the defense of any action, suit or proceeding
against, or investigation or inquiry of, an indemnified party. Any indemnifying
party shall be entitled, if it so elects within a reasonable time after receipt
of the Notice by giving written notice (herein called the Notice of Defense) to
the indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense of such indemnified party or parties to
the extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel, at their own
expense, chosen by such indemnified party or parties participate in, but not
conduct, the defense. If, within a reasonable time after receipt of the Notice,
an indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized in writing
to be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that 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 Securityholders on the one hand and the Underwriters on
the other shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Stock received by the Company and the
Selling Securityholders and the total underwriting discount received by the
Underwriters, as set
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forth in the table on the cover page of the Prospectus, bear to the aggregate
public offering price of the Stock. 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 each indemnifying party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d) to the extent such expenses would
have been payable pursuant to Section 7(c) if it had been applicable.
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Stock purchased by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this paragraph (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) No indemnifying party will, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party and each such controlling person from all liability arising out of such
claim, action, suit or proceeding.
(f) The liability of each Selling Securityholder under the indemnity
and reimbursement agreements contained in the provisions of this Section 7 and
Section 11 hereof shall be limited to an amount equal to the initial public
offering price of the stock sold by such Selling Securityholder to the
Underwriters. The Company and the Selling Securityholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible. The liability of each Underwriter under the indemnity,
reimbursement and contribution provisions of this Section 7 shall be limited to
an amount equal to the underwriting discount applicable to the Stock purchased
by such Underwriter.
8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company and the
Selling Securityholders if after the date of this Agreement trading in the
Common Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions would, in the Underwriters' reasonable judgment, make the
offering or delivery of the Stock impracticable, (iii) suspension of trading in
securities generally or a material adverse decline in value of securities
generally on the New York Stock Exchange, the American Stock Exchange, or The
Nasdaq Stock Market, or limitations on prices (other than limitations on hours
or numbers of days of trading) for securities on either such exchange or system,
(iv) the enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of, or commencement of any proceeding
or investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable opinion materially and adversely
-14-
affects or will materially or adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by either federal or New York
State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
the Underwriters' reasonable opinion has a material adverse effect on the
securities markets in the United States. If this Agreement shall be terminated
pursuant to this Section 8, there shall be no liability of the Company or the
Selling Securityholders to the Underwriters and no liability of the Underwriters
to the Company or the Selling Securityholders; provided, however, that in the
event of any such termination the Company and the Selling Securityholders agree
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, referred to in paragraphs (i) and (j) of
Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Stock shall be subject to
the performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing, and
the form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or prior
to the Closing Date by Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters.
(c) You shall have received from O'Melveny & Xxxxxx LLP, counsel for
the Company and from Xxxxxx, Xxxxx & Xxxxx, P.C., regulatory counsel for the
Company, opinions, addressed to the Underwriters and dated the Closing Date,
covering the matters set forth in Annex A and Annex B hereto, respectively,
and if Option Stock is purchased at any date after the Closing Date,
additional opinions from each such counsel, addressed to the Underwriters and
dated such later date, confirming that the statements expressed as of the
Closing Date in such opinions remain valid as of such later date.
(d) You shall be satisfied that the representations and warranties
of the Company herein are true and correct in all material respects as of the
Closing Date or any later date on which Option Stock is to be purchased, as
the case may be.
(e) You shall have received on the Closing Date and on any later
date on which Option Stock is purchased a certificate, dated the Closing Date
or such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers of
said certificate have carefully examined the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein and any supplements or amendments thereto, and that the statements
included in clauses (i) through (vii) of paragraph (d) of this Section 9 are
true and correct.
-15-
(f) You shall have received from Xxxxxx Xxxxxxxx LLP, a letter or
letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the meaning
of the Securities Act and the applicable published rules and regulations
thereunder and based upon the procedures described in their letter delivered
to you concurrently with the execution of this Agreement (herein called the
Original Letter), but carried out to a date not more than three business days
prior to the Closing Date or such later date on which Option Stock is
purchased (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company which, in your sole judgment, makes it impractical or inadvisable
to proceed with the public offering of the Stock or the purchase of the Option
Stock as contemplated by the Prospectus.
(g) You shall have received from Xxxxxx Xxxxxxxx, LLP a letter
stating that their review of the Company's system of internal accounting
controls, to the extent they deemed necessary in establishing the scope of
their examination of the Company's financial statements as at December 31,
1997, did not disclose any weakness in internal controls that they considered
to be material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold by
the Company shall have been duly approved for listing by the Nasdaq National
Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received from
substantially all Securityholders, agreements, in form reasonably satisfactory
to Xxxxxxxxx & Xxxxx LLC, stating that without the prior written consent of
Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, such person or entity
will not, for a period of 180 days following the effective date of the
Registration Statement, directly or indirectly, (i) sell, offer, contract to
sell, transfer the economic risk of ownership in, make any short sale, pledge,
or otherwise dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock, except for the Stock to be sold hereunder
and securities transferred to one or more charitable organizations, or a
trust, partnership, corporation, limited liability company or similar entity,
the sole beneficiary or owner of which is such securityholder, a member or
members of such securityholder's immediate family, and/or a charitable
organization, provided however that prior to any such transfer each transferee
agrees to be bound by the terms of this provision.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if you or Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for
the Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall be
without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company or the
Selling Securityholders to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the
-16-
transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company and the
Selling Securityholders by giving notice to you. Any such termination shall be
without liability of the Company and the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that in the event of any such
termination the Company and the Selling Securityholders jointly and severally
agree to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company and the Selling Securityholders hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
held by final and unappealable judgment to be improper, the persons receiving
such payments shall promptly refund them and (ii) such persons shall provide to
the Company, upon request, reasonable assurances of their ability to effect any
refund, when and if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by facsimile and, if to the
Underwriters, shall be mailed, faxed or delivered to Xxxxxxxxx & Xxxxx LLC, Xxx
Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company, shall be
mailed, telegraphed or delivered to it at its office, 0000 Xxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx; and if to the Selling
Securityholders, shall be mailed, faxed or delivered to the Selling
Securityholders in care of Xxxxxx Xxxxxxxxxx, at Xxxxxxxxxx, Xxxxx & Associates,
0000 Xxxxx Xxxxxxx Xxxx, Xxxxx 0000, Xxxxx Xxxxxxx, XX 00000. All notices given
by facsimile shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or the Selling Securityholders or their respective
directors or officers, and (c) delivery and payment for the Stock under this
Agreement; provided, however, that if this Agreement is terminated prior to the
Closing Date, the provisions of paragraphs (l) and (m) of Section 6 hereof shall
be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-17-
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California.
Please sign and return to the Company and to the Selling
Securityholders in care of the Company the enclosed duplicates of this letter,
whereupon this letter will become a binding agreement among the Company, the
Selling Securityholders and the several Underwriters in accordance with its
terms.
Very truly yours,
BALANCE BAR COMPANY
By ____________________________________
Xxxxx X. Xxxxx
President and Chief Executive Officer
SELLING SECURITYHOLDERS:
Listed on Schedule II
By ____________________________________
Xxxxxx X. Xxxxxx
By ____________________________________
Xxxxxxx X. Xxxx
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
XXXXX, XXXXXXXX & XXXX, INC.
By Xxxxxxxxx & Xxxxx LLC
By __________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
-18-
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ -----------
Xxxxxxxxx & Xxxxx LLC ......................................
Xxxxx, Xxxxxxxx & Xxxx, Inc. ...............................
............................................................
----
Total....................................................... E
=========
-19-
SCHEDULE II
SELLING SECURITYHOLDERS
NUMBER OF
NAME SHARES
OF SELLING SECURITYHOLDERS TO BE SOLD
-------------------------- ----------
Xxxxxxx X. Xxxx........................................................... 171,308
Xxxxx X. Xxxx............................................................. 70,759
Xxxxxx Xxxxxxx, Inc....................................................... 109,493
Xxxxxxxx Xxxxxx Xxxxxx.................................................... 10,063
Xxxxx Xxxxx............................................................... 43,016
Xxxxx Xxxxx............................................................... 9,995
Xxxxx Block............................................................... 15,845
Xxxxxx X. Xxxxxxxxxxx, Xx................................................. 42,827
Xxxxxx X. Xxxxxxxxxxx, Xx................................................. 83,796
Gene & Xxxxx Xxxxxx....................................................... 10,467
Xxxx X. Xxxxx............................................................. 5,139
Xxxx X. Xxxxxxxxxx........................................................ 85,654
Xxxx X. Xxxxxxx........................................................... 8,565
Xxxx X. Xxxxxxx Trust..................................................... 8,565
Xxxxx X. Xxxx............................................................. 10,706
Xxxxxxx X. Xxxx........................................................... 10,706
Xxxx X. Xxxxx............................................................. 139,189
PZL Limited............................................................... 34,261
Xxxxxx Major.............................................................. 427
Xxxxxx Xxxxx.............................................................. 4,655
R. Xxxxx XxXxxxxx......................................................... 37,233
Xxxx X. Xxxxxxxxxx........................................................ 32,120
Xxxx X. Xxxxxxxx.......................................................... 55,864
Trustees for Xxxxxxx Xxxx................................................. 10,706
Xxxxxx X. Xxxx............................................................ 7,066
Xxxx X.Xxxx............................................................... 4,496
J. Xxxxxxx Xxxxx, Jr...................................................... 111,728
Xxxxx Xxxxxxxxx........................................................... 42,827
Xxx Family Trust.......................................................... 47,109
Xxxxxxx Xxxxxxx........................................................... 42,827
Xxxxxxx X. Xxxx........................................................... 34,261
Xxxxxx X.Xxxxxxxxxx....................................................... 9,301
Xxxxxx X. Xxxxxxxx........................................................ 42,827
Xxxx & Xxxxxx Xxxxxx...................................................... 42,827
------
Total 1,396,628
============
-20-
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF O'MELVENY & XXXXX LLP
COUNSEL FOR THE COMPANY
(SUBJECT TO REASONABLE ASSUMPTIONS AND QUALIFICATIONS)
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of its state of incorporation, with
corporate power to own its properties and assets and to carry on its business
as described in the Registration Statement.
(b) The outstanding shares of capital stock of the Company have been
duly authorized by all necessary corporate action on the part of the Company
and are validly issued, fully paid and non-assessable.
(c) The Shares have been duly authorized by all necessary corporate
action on the part of the Company and, upon payment for and delivery of the
Company Shares in accordance with the Agreement and the countersigning of the
certificate or certificates representing the Company Shares by a duly
authorized signatory of the registrar for the Company's Common Stock, the
Shares will be validly issued, fully paid and non-assessable.
(d) Holders of the capital stock of the Company are not entitled to
any preemptive right to subscribe to any additional shares of the Company's
capital stock under the Company's Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws, any Delaware or California
statute or regulation or any of the agreements filed as an Exhibit to the
Registration Statement (the "Filed Agreements").
(e) The execution, delivery and performance of the Agreement have
been duly authorized by all necessary corporate action on the part of the
Company, and the Agreement has been duly executed and delivered by the
Company.
(f) The Registration Statement has been declared effective under the
Act and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued or threatened by the Commission.
(g) No order, consent, permit or approval of any California,
Delaware or federal governmental authority is required on the part of the
Company for the execution and delivery of, and performance of its obligations
under, the Agreement, except such as have been obtained under the Act and such
as may be required under applicable Blue Sky or state securities laws.
(h) The Company's execution and delivery of, and performance of its
obligations under, the Agreement do not and will not (A) violate the Company's
Amended and Restated Certificate of Incorporation or Amended and Restated
Bylaws, (B) violate, breach, or result in a default under, any existing
obligation of or restriction on the Company under any Filed Agreement, or (C)
breach or otherwise violate any existing obligation of or restriction on the
Company under any order, judgment or decree of any California, Delaware or
federal court or governmental authority binding on the Company and which has
been identified by the Company on a certificate provided to us. The execution
and delivery by the Company, and performance of its obligations under, the
Agreement do not violate any California, Delaware or federal statute or
regulation that we have, in the exercise of customary professional diligence,
recognized as applicable to the Company or to transactions of the type
contemplated by the Agreement, except that we express no opinion regarding any
federal securities laws or Blue Sky or state securities laws except as
otherwise expressly stated herein.
(i) We do not know of any legal or governmental proceeding pending
or threatened to which the Company is a party or to which any of their
respective property is subject which is required to be described in the
Registration Statement or the Prospectus and is not so described or of any
contract or other document of a character required to be filed therein which
is not filed therein as required.
(j) The statements in the Prospectus under the captions "Certain
Transactions", and "Description of Capital
-21-
Stock" in the Prospectus insofar as such statements summarize the Restated
Certificate of Incorporation and Amended and Restated Bylaws or the provisions
of any statute or regulation referred to therein fairly present the
information required by Form S-1. [Xxxxxx, Xxxxx & Xxxxx to give opinion on
"Government Regulation"]
(k) The Registration Statement, on the date it was filed, appeared
on its face to comply in all material respects with the requirements as to
form for registration statements on Form S-1 under the Act and the related
rules and regulations in effect at the date of filing, except that we express
no opinion concerning the financial statements and other financial information
contained therein.
(l) Assuming due execution and delivery by the Selling Stockholders,
the Power of Attorney of each Selling Stockholder has been duly executed and
delivered by such Selling Stockholder and constitutes the legally valid and
binding obligation of such Selling Stockholder enforceable against such
Selling Stockholder in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally (including without limitation,
fraudulent conveyance laws) and by general principles of equity, including
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing and the possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
(m) The Agreement and the Custody Agreement have been duly executed
and delivered on behalf of each Selling Stockholder pursuant to the Power of
Attorney, and the Custody Agreement constitutes the legally valid and binding
obligation of such Selling Stockholder enforceable against such Selling
Stockholder in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally (including without limitation,
fraudulent conveyance laws) and by general principles of equity, including
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing and the possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
(n) Upon payment for and delivery of the Stockholder Shares in
accordance with the Agreement, assuming the Underwriters are acquiring them in
good faith without notice of any adverse claim, the Underwriters will acquire
the Stock to be sold be each Selling Stockholder free and clear of any adverse
claim.
(o) No order, consent, permit or approval of any California,
Delaware or federal governmental authority that we have, in the exercise of
customary professional diligence, recognized as applicable to transactions of
the type contemplated by the Agreement, is required on the part of the Selling
Stockholders for the execution and delivery of, and performance of their
respective obligations under, the Agreement, except such as have been obtained
under the Act and such as may be required under applicable Blue Sky or state
securities laws.
In connection with our participation in conferences in connection with
the preparation of the Registration Statement and the Prospectus, we have not
independently verified the accuracy, completeness or fairness of the statements
contained therein, and the limitations inherent in the examination made by us
and the knowledge available to us are such that we are unable to assume, and we
do not assume, any responsibility for such accuracy, completeness or fairness,
except as otherwise specifically stated in paragraph (x) above. However, on the
basis of our review of the Registration Statement and the Prospectus and our
participation in conferences in connection with the preparation of the
Registration Statement and the Prospectus, and relying as to materiality to an
extent upon opinions of the Selling Stockholders and their representatives and
of officers and other representatives of the Company, we do not believe that the
Registration Statement, considered as a whole as of the effective date of the
Registration Statement, contained any 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, and we do not believe that the
Prospectus, considered as a whole on the date hereof, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. However, we express no opinion or belief as to the
financial statements and other financial information contained in the
Registration Statement or the Prospectus.
-22-
ANNEX B
MATTERS TO BE COVERED IN THE OPINIONS OF XXXXXX, XXXXX & XXXXX, P.C.
AND HALL, DICKLER, KENT, XXXXXXXX & XXXX, LLP REGULATORY COUNSEL FOR THE COMPANY
(SUBJECT TO REASONABLE ASSUMPTIONS AND QUALIFICATIONS)
Such counsel are familiar with the technology used by the Company in
its business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to governmental regulation
and:
(i) The statements in the Registration Statement and the Prospectus under
the captions "Risk Factors-Risks Associated with Advertising", "Risk
Factors-Government Regulation", "Business-Legal Proceedings" and "Business-
Government Regulation", are accurate and complete statements or summaries
of the matters therein set forth and nothing has come to such counsel's
attention that causes such counsel to believe that the above-described
portions of the Registration Statement and the Prospectus contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(ii) to the best of such counsel's knowledge and except as set forth in
the Prospectus under the caption "Risk Factors-Risks Associated with
Advertising", "Risk Factors-Litigation by Competitor", "Risk Factors-
Government Regulation", "Business-Legal Proceedings" and "Business-
Government Regulation" there are no legal or governmental proceedings
pending relating to governmental regulation, and to the best of such
counsel's knowledge no such proceedings are threatened or contemplated by
governmental authorities or others;
(iii) such counsel do not know of any contracts or other documents,
relating to governmental regulation affecting the Company or the Company's
patents, trade secrets, trademarks, service marks or other proprietary
information or materials of a character required to be filed as an exhibit
to the Registration Statement or required to be described in the
Registration Statement or the Prospectus that are not filed or described as
required;
(iv) such counsel has reviewed the Registration Statement and the
Prospectus, and nothing has come to such counsel's attention that causes
such counsel to believe that, with respect to the Food and Drug
Administration (the "FDA"), the National Advertising Division of the
Council of Better Business Bureaus, Inc. (the "NAD") or any other
governmental regulation matters, the Registration Statement, at the time it
became effective, 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 the Prospectus, as of
its date or at the Closing Date or Option Closing Date, as the case may be,
included or includes an untrue statement of a material fact or omitted or
omits to state a material fact relating to FDA or NAD matters necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
-23-
