EXHIBIT 1.1
8,350,000 SHARES
ISILON SYSTEMS, INC.
COMPANY STOCK ($0.00001 PAR VALUE PER SHARE)
UNDERWRITING AGREEMENT
_______________ __, 2006
_______________ __, 2006
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx & Company, LLC
RBC Capital Markets Corp.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Isilon Systems, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS"), and certain stockholders of the Company (the "SELLING
STOCKHOLDERS") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of 8,350,000 shares of the Common Stock
($0.00001 par value per share) of the Company (the "FIRM SHARES"), of which all
shares are to be issued and sold by the Company.
The Company and certain Selling Stockholders named in Schedule I hereto
(the "Selling Stockolders") also propose to issue and sell to the several
Underwriters not more than an additional 1,252,500 shares of the Company's
Common Stock ($0.00001 par value per share) (the "ADDITIONAL SHARES") each
Selling Stockholder selling up to the amount set forth opposite such Selling
Stockholder's name in Schedule I hereto, if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common Stock
($0.00001 par value per share) of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"COMMON STOCK." The Company and the Selling Stockholders are hereinafter
sometimes collectively referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares (or in the form first made available to the
Underwriters by the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act) is hereinafter referred to as the "PROSPECTUS." If the
Company has filed an
abbreviated registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT"
shall be deemed to include such Rule 462 Registration Statement.
For purposes of this Agreement, "FREE WRITING PROSPECTUS" has the meaning
set forth in Rule 405 under the Securities Act, "TIME OF SALE PROSPECTUS" means
the preliminary prospectus together with the final term sheet and free writing
prospectuses, if any, each identified in Schedule III hereto, and "BROADLY
AVAILABLE ROAD SHOW" means a "bona fide electronic road show" as defined in Rule
433(h)(5) under the Securities Act that has been made available without
restriction to any person.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each
sale of the Shares in connection with the offering when the Prospectus is not
yet available to prospective purchasers and at the Closing Date (as defined in
Section 5), the Time of Sale Prospectus, as then amended or supplemented by the
Company, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(iv) each broadly available road show, if any, when considered together with the
Time of Sale Prospectus does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading and
(v) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement (or any amendment or
supplement thereto), the Time of Sale Prospectus or the Prospectus based upon
information relating to any
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Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company is not an "ineligible issuer" in connection with the
offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free
writing prospectus that the Company is required to file pursuant to Rule 433(d)
under the Securities Act has been, or will be, filed with the Commission in
accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule III hereto, and electronic road shows, if any, furnished
to you before first use, the Company has not prepared, used or referred to, and
will not, without your prior consent, prepare, use or refer to, any free writing
prospectus.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(e) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Time of Sale Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
or indirectly through other subsidiaries by the Company, free and clear of all
liens, encumbrances, equities or claims.
(f) This Agreement has been duly authorized, executed and delivered by the
Company.
(g) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in each of the Time of Sale
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Prospectus and the Prospectus under "Capitalization" and "Description of Capital
Stock."
(h) The shares of Common Stock (including the Shares to be sold by the
Selling Stockholders) outstanding prior to the issuance of the Shares to be sold
by the Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(i) The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(j) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene (i) any
provision of applicable law, (ii) the certificate of incorporation or by-laws of
the Company, (iii) any agreement or other instrument binding upon the Company or
any of its subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or (iv) any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any subsidiary,
except in the case of the foregoing clauses (i) and (iii) where such
contravention would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries taken as a whole, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
(k) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus.
(l) There are no legal or governmental proceedings pending or, to the
Company's knowledge after due inquiry, threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject (i) other than proceedings accurately
described in all material respects in the Time of Sale Prospectus and
proceedings that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under this Agreement or to consummate the transactions
contemplated by the Time of Sale Prospectus or (ii) that are required to be
described in the Registration Statement or the Prospectus and are not so
described; and there are no statutes, regulations, contracts or other documents
to which the Company is subject or by which the Company is bound that are
required to be described in the Registration
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Statement, the Time of Sale Prospectus or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder. Each Issuer Free Writing Prospectus,
as of its issue date and at all subsequent times through the completion of the
public offer and sale of the Shares, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Time of Sale Prospectus or the
Prospectus, as the case may be, and any preliminary or other prospectus deemed
to be a part thereof that has not been superseded or modified. "ISSUER FREE
WRITING PROSPECTUS" means any "issuer free writing prospectus," as defined in
Rule 433 under the Securities Act ("RULE 433"), relating to the Shares that (i)
is required to be filed with the Commission by the Company, (ii) is a "road show
that is a written communication" within the meaning of Rule 433(d)(8)(i) whether
or not required to be filed with the Commission or (iii) is exempt from filing
pursuant to Rule 433(d)(5)(i) because it contains a description of the Shares or
of the offering that does not reflect the final terms, in each case in the form
filed or required to be filed with the Commission or, if not required to be
filed, in the form required to be retained in the Company's records pursuant to
Rule 433(g).
(n) The Company is not, and after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(o) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, be reasonably likely to have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(p) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in
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the aggregate, be reasonably likely to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(q) Except as described in the Time of Sale Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the Shares registered
pursuant to the Registration Statement.
(r) Subsequent to the respective dates as of which information is given in
each of the Registration Statement, the Time of Sale Prospectus and the
Prospectus, (i) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction, (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends, and (iii)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries, except in each case as
described in each of the Registration Statement, the Time of Sale Prospectus and
the Prospectus, respectively.
(s) The Company and its subsidiaries have good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries taken as a whole, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Time of Sale
Prospectus or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries, in each case except as described
in the Time of Sale Prospectus. Neither the Company nor any of its subsidiaries
owns any real property.
(t) Except as described in the Time of Sale Prospectus, the Company and
its subsidiaries own, possess, have valid rights to use or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would
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have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(u) No material labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in the Time of Sale Prospectus, or,
to the knowledge of the Company, is imminent; and the Company is not aware of
any existing, threatened or imminent labor disturbance by the employees of any
of its principal suppliers, manufacturers or contractors that would be
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(v) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has 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 be reasonably likely to have a material
adverse effect on the Company and its subsidiaries, taken as a whole, except as
described in the Time of Sale Prospectus.
(w) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would be reasonably likely to have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
except as described in the Time of Sale Prospectus.
(x) The Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Time of Sale Prospectus,
since the end of the Company's most recent audited fiscal year, there has been
(i) no material weakness in the Company's internal control over financial
reporting (whether or not remediated) and (ii) no change in the Company's
internal control over
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financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
(y) PricewaterhouseCoopers LLP, which has expressed its opinion with
respect to certain of the financial statements of the Company filed with the
Commission as a part of the Registration Statement and included in each of the
Time of Sale Prospectus and the Prospectus, is an independent registered public
accounting firm as required by the Securities Act.
(z) The financial statements of the Company filed with the Commission as a
part of the Registration Statement and included in each of the Time of Sale
Prospectus and the Prospectus present fairly the consolidated financial position
of the Company and its subsidiaries as of the dates indicated and the results of
their operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States ("GAAP") and such principles have
been applied on a consistent basis throughout the periods involved, except to
the extent adoption of standards in accordance with GAAP may limit
period-to-period comparability. The financial data set forth in the Time of Sale
Prospectus and the Prospectus, with the exception of EBITDA (as therein defined)
under the captions "Prospectus Summary-Summary Consolidated Financial Data,"
"Selected Consolidated Financial Data," "Quarterly Results of Operations," and
"Capitalization" present fairly the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus. The
EBITDA information and the related reconciliation to net loss set forth in the
Time of Sale Prospectus and the Prospectus was derived from the Company's
quarterly consolidated financial statements prepared in accordance with the
previous sentence and complies in all respects with the requirements of
paragraph (e) of Item 10 of Regulation S-K for the use of non-GAAP financial
measures in SEC filings.
(aa) No other financial statements or schedules of the Company or any
other entity are required to be included in the Registration Statement or the
Prospectus pursuant to any requirement of the Securities Act or any rules and
regulations thereunder, including Rules 3-05 and Article 11 of Regulation S-X.
(bb) There are no transactions or loans between the Company and any holder
of 5% or more of the Common Stock, any director, any director nominee or any
executive officer, or members of such individuals' immediate families, or any
enterprise in which a substantial interest in the voting power is owned,
directly or indirectly, by any of such individuals other than those described in
the Time of Sale Prospectus which are otherwise required to be disclosed in the
Time of Sale Prospectus. To the Company's knowledge, no such person or entity
(i) has any direct or indirect ownership interest in, or any employment or
consulting agreement with, any firm or corporation that competes with the
Company, (ii) is directly or indirectly interested in any contract with the
Company, except for compensation and standard benefits for services as a
director, officer or employee
8
that is disclosed in the Time of Sale Prospectus (to the extent it is required
to be disclosed), (iii) has any ownership interest in any property, real or
personal, tangible or intangible, used in the Company's business, except for the
normal rights of a stockholder, or (iv) has, either directly or indirectly, a
material interest in any person which purchases from or sells, licenses or
furnishes to Company any goods, property, technology or intellectual or other
property rights or services (except in the case of (i) - (iv) above, with
respect to any interest of less than 5% of the outstanding voting shares of any
corporation whose stock is publicly traded and with respect to any passive,
non-controlling ownership interest in a privately-held corporation or other
entity in connection with professional investing activities of such person or
entity as a part of an investment portfolio and which interest would not
otherwise require disclosure pursuant to Item 404 of Regulation S-K).
(cc) Except as described in the Time of Sale Prospectus, the Company has
not sold, issued or distributed any shares of Common Stock during the six-month
period preceding the date hereof, including any sales pursuant to Rule 144A
under, or Regulation D or S of, the Securities Act and, other than shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(dd) There are no contracts or documents which are required to be
described in the Registration Statement, the Time of Sale Prospectus or the
Prospectus or to be filed as exhibits thereto which have not been so described
and filed as required.
(ee) The Company has taken all necessary actions to ensure that, upon the
effectiveness of the Registration Statement, it will be in compliance with all
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and all rules and regulations
promulgated thereunder or implementing the provisions thereof (the
"XXXXXXXX-XXXXX ACT") that are then in effect and which the Company is required
to comply with as of the effectiveness of the Registration Statement, and is
actively taking steps to ensure that it will be in compliance with other
provisions of the Xxxxxxxx-Xxxxx Act not currently in effect, as and when such
provisions become applicable to the Company after the effectiveness of the
Registration Statement.
(ff) All United States federal income tax returns of the Company and its
subsidiaries required by law to be filed have been filed and all taxes shown by
such returns or otherwise assessed, which are due and payable, have been paid,
except assessments against which appeals have been or will be promptly taken and
as to which adequate reserves have been provided. The United States federal
income tax returns of the Company through the fiscal year ended January 2, 2006
have been settled and no assessment in connection therewith has been made
against the Company. The Company and its subsidiaries have filed all other tax
returns that are required to have been filed by them pursuant to applicable
foreign, state, local or other law except insofar as the failure to file such
returns would not,
9
singly or in the aggregate, result in a material adverse effect on the Company
and its subsidiaries taken as a whole, and has paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company and its
subsidiaries, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company in respect of any income and
corporation tax liability for any years not finally determined are adequate to
meet any assessments or re-assessments for additional income tax for any years
not finally determined, except to the extent of any inadequacy that would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries taken as a whole.
(gg) Any statistical and market-related data included in the Registration
Statement, the Time of Sale Prospectus and the Prospectus are based on or
derived from sources that the Company believes to be reliable and accurate. The
Company has obtained the written consent to the use of market data included in
the Registration Statement, the Time of Sale Prospectus and the Prospectus from
International Data Corporation Enterprise Group, and News Corporation.
(hh) Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee, affiliate or other person acting on behalf
of the Company or any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the "FCPA"), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any "foreign official" (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA and the Company and, to
the knowledge of the Company, its affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.
(ii) The operations of the Company are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "MONEY LAUNDERING LAWS"). No action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company with respect to the Money Laundering Laws is pending or,
to the best knowledge of the Company, threatened.
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(jj) Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee, affiliate or person acting on behalf of the
Company is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the Company
will not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
2. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Stockholder and Mellon
Investor Services LLC, as Custodian, relating to the deposit of the Shares to be
sold by such Selling Stockholder (the "CUSTODY AGREEMENT") and the Power of
Attorney appointing certain individuals as such Selling Stockholder's
attorneys-in-fact to the extent set forth therein, relating to the transactions
contemplated hereby and by the Registration Statement (the "POWER OF ATTORNEY")
will not contravene any provision of applicable law, or the certificate of
incorporation or by-laws or other charter documents of such Selling Stockholder
(if such Selling Stockholder is a corporation or other entity), or any agreement
or other instrument binding upon such Selling Stockholder or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over
such Selling Stockholder, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by such Selling Stockholder of its obligations under this Agreement
or the Custody Agreement or Power of Attorney of such Selling Stockholder,
except such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(c) Such Selling Stockholder has, and on the Closing Date will have, valid
title to, or a valid "security entitlement" within the meaning of Section 8-501
of the New York Uniform Commercial Code in respect of, the Shares to be sold by
such Selling Stockholder free and clear of all security interests, claims,
liens, equities or other encumbrances and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement, the
Custody Agreement and the Power of Attorney and to sell, transfer and deliver
the Shares to be sold by such Selling Stockholder or a security entitlement in
respect of such Shares.
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(d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Stockholder and are valid and
binding agreements of such Selling Stockholder.
(e) With respect to any Shares delivered by the Selling Stockholder in
certificated form endorsed to the Underwriters, delivery of the Shares to be
sold by such Selling Stockholder and payment therefor pursuant to this Agreement
will pass valid title to such Shares, free and clear of any adverse claim within
the meaning of Section 8-102 of the New York Uniform Commercial Code, to each
Underwriter who has purchased such Shares without notice of an adverse claim.
With respect to any Shares delivered by the Selling Stockholder through DTC
without ever being registered directly in the name of the Underwriters, upon
payment for the Shares to be sold by such Selling Stockholder pursuant to this
Agreement, delivery of such Shares, as directed by the Underwriters, to Cede &
Co. ("CEDE") or such other nominee as may be designated by the Depository Trust
Company ("DTC"), registration of such Shares in the name of Cede or such other
nominee and the crediting of such Shares on the books of DTC to securities
accounts of the Underwriters (assuming that neither DTC nor any such Underwriter
has notice of any adverse claim (within the meaning of Section 8-105 of the New
York Uniform Commercial Code (the "UCC")) to such Shares), (A) DTC shall be a
"protected purchaser" of such Shares within the meaning of Section 8-303 of the
UCC, (B) under Section 8-501 of the UCC, the Underwriters will acquire a valid
security entitlement in respect of such Shares and (C) no action based on any
"adverse claim", within the meaning of Section 8-102 of the UCC, to such Shares
may be asserted against the Underwriters with respect to such security
entitlement; for purposes of this representation, such Selling Stockholder may
assume that when such payment, delivery and crediting occur, (x) such Shares
will have been registered in the name of Cede or another nominee designated by
DTC, in each case on the Company's share registry in accordance with its
certificate of incorporation, bylaws and applicable law, (y) DTC will be
registered as a "clearing corporation" within the meaning of Section 8-102 of
the UCC and (z) appropriate entries to the accounts of the several Underwriters
on the records of DTC will have been made pursuant to the UCC.
(f) Such Selling Stockholder is not prompted by any information concerning
the Company or its subsidiaries which is not set forth in the Time of Sale
Prospectus to sell its Shares pursuant to this Agreement.
(g) To the extent that any statements or omissions made in the
Registration Statement, the Time of Sale Prospectus, the Prospectus, or any
amendments or supplements thereto are made in reliance upon and in conformity
with information furnished to the Company by such Selling Stockholder for use
therein, (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
12
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each
sale of the Shares in connection with the offering when the Prospectus is not
yet available to prospective purchasers and at the Closing Date (as defined in
Section 5), the Time of Sale Prospectus, as then amended or supplemented by the
Company, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(iv) each broadly available road show, if any, when considered together with the
Time of Sale Prospectus, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
(v) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $______ a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company and certain
Selling Stockholders agree to sell to the Underwriters the Additional Shares,
and the Underwriters shall have the right to purchase, severally and not
jointly, up to 1,252,500 Additional Shares at the Purchase Price. You may
exercise this right on behalf of the Underwriters in whole or from time to time
in part by giving written notice not later than 30 days after the date of this
Agreement. Any exercise notice shall specify the number of Additional Shares to
be purchased by the Underwriters and the date on which such shares are to be
purchased. Each purchase date must be at least one business day after the
written notice is given and may not be earlier than the closing date for the
Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 5 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an "OPTION CLOSING DATE"), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of
13
Firm Shares set forth in Schedule II hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("XXXXXXX XXXXX") on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise or (3) file any registration statement
with the Commission relating to the offering of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding paragraph shall not apply to
(a) the Shares to be sold hereunder, (b) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and (x) described in the Prospectus or
(y) of which the Underwriters have been advised in writing, (c) the issuance of
shares of, or options to purchase shares of, Common Stock to employees,
officers, directors, advisors or consultants of the Company pursuant to employee
benefit plans described in the Prospectus, provided that, prior to the issuance
of any such shares or the grant of any such options where the shares subject to
such option vest within the period ending 180 days after the date of the
Prospectus, the Company shall cause each recipient of such grant or issuance to
execute and deliver to you a "lock-up" agreement, substantially in the form of
Exhibit A hereto, (d) the filing of registration statements on Form S-8, (e)
transactions by a Selling Stockholder relating to shares of Common Stock or
other securities acquired in open market transactions after the completion of
the offering of the Shares, provided that no filing under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), shall be
required or shall be voluntarily made in connection with subsequent sales of
Common Stock or other securities acquired in such open market transactions, (f)
transfers by a Selling Stockholder of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift, or (g) distributions by a
Selling Stockholder of shares of Common Stock or any security convertible into
Common Stock to limited partners or stockholders of the Selling Stockholder;
provided that in the case of any transfer or distribution pursuant to clause (f)
or (g), (i) each donee or distributee shall enter into a written agreement
accepting the restrictions set forth in the preceding paragraph and this
paragraph as if it were a Selling Stockholder and (ii) no filing under Section
16(a) of the Exchange Act, reporting a reduction in beneficial ownership of
shares of Common Stock, shall be required or shall be
14
voluntarily made in respect of the transfer or distribution during the 180-day
restricted period. In addition, each Selling Stockholder, agrees that, without
the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx
on behalf of the Underwriters, it will not, during the period ending 180 days
after the date of the Prospectus, make any demand for, or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. Each Selling
Stockholder consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of any Shares held
by such Selling Stockholder except in compliance with the foregoing
restrictions. Notwithstanding the foregoing, if (1) during the last 17 days of
the 180-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 180-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 180-day period, the restrictions imposed by this agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event. The
Company shall promptly notify Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx
Xxxxx of any earnings release, news or event that may give rise to an extension
of the initial 180-day restricted period.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at $___
a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at
a price that represents a concession not in excess of $____ a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $___ a share, to any Underwriter or to
certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on December ___, 2006, or at such other time on the same or such other
date, not later than December __, 2006, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"CLOSING DATE."
Payment for any Additional Shares shall be made to the Company and the
Selling Stockholders in Federal or other funds immediately available in New York
City against delivery of such Additional Shares for the respective accounts of
the several Underwriters at 10:00 a.m., New York City time, on the date
specified in the corresponding notice described in Section 3 or at such other
time
15
on the same or on such other date, in any event not later than December __,
2006, as shall be designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:00 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the securities of the
Company or any of its subsidiaries by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 6(a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
16
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, outside counsel for
the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Time of Sale Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;
(ii) each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the Time
of Sale Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the section entitled
"Description of Capital Stock" in each of the Time of Sale Prospectus and
the Prospectus;
(iv) the shares of Common Stock (including the Shares to be sold by
the Selling Stockholders) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are validly
issued, fully paid and non-assessable;
(v) all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(vi) the Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and
17
the issuance of such Shares will not be subject to any preemptive or
similar rights pursuant to the Company's Certificate of Incorporation or
Bylaws, the Delaware General Corporation Law (the "DGCL") or to such
counsel's knowledge, pursuant to any contract or agreement;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable federal or Washington law or
the DGCL or the certificate of incorporation or by-laws of the Company or,
to the best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries that is filed as an
exhibit to the Registration Statement pursuant to Item 601 of Regulation
S-K, or to such counsel's knowledge after due inquiry any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Shares;
(ix) the statements relating to legal matters, documents or
proceedings included in (A) the Time of Sale Prospectus and the Prospectus
under the captions "Management-Committees of the Board of Directors,"
"Management-Director Compensation," "Management-Employment Agreements and
Change of Control Arrangements," "Management-Employee Benefit Plans,"
"Management-Limitations on Liability and Indemnification Matters,"
"Certain Relationships and Related Party Transactions," "Description of
Capital Stock," "Shares Eligible For Future Sale" and "Material United
States Federal Tax Considerations for Non-United States Holders of Common
Stock," (B) the Time of Sale Prospectus and the Prospectus under the
caption "Underwriters" and (C) the Registration Statement in Items 14 and
15, in each case fairly summarize in all material respects such matters,
documents or proceedings;
(x) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any
of its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement, the Time of Sale Prospectus or
the Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement, the Time of Sale Prospectus or the Prospectus or
18
to be filed as exhibits to the Registration Statement that are not
described or filed as required;
(xi) the Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Time of Sale Prospectus and the Prospectus will not be,
required to register as an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended; and
(xii) in the opinion of such counsel, the Registration Statement and
the Prospectus (except for the financial statements included therein, as
to which such counsel need not express any belief) appear on their face to
be appropriately responsive in all material respects to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder. In addition, the opinion shall include a statement
from such counsel to the effect that (i) such counsel has participated in
conference with certain officers and other representatives of the Company,
the representatives of the Underwriters, counsel for the Underwriters and
the independent public accountants of the Company, at which conferences
the contents of the Registration Statement, Time of Sale Prospectus, and
Prospectus and related matters were reviewed and discussed, and (ii)
although such counsel does not assume any responsibility for accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Time of Sale Prospectus or the Prospectus, except as
specifically stated in such opinion nothing has come to the attention of
such counsel that causes such counsel to believe that (1) the Registration
Statement or the prospectus included therein (except for the financial
statements, financial statement schedules and other financial data
included therein, as to which such counsel need not express any belief) at
each time the Registration Statement became effective 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, (2) the Time of Sale Prospectus (except for the financial
statements, financial statement schedules and financial data included
therein), as to which such counsel need not express any belief as of the
date of this Agreement or as amended or supplemented, if applicable, as of
the Closing Date contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading or (3) the Prospectus (except for the
financial statements, financial statement schedules and other financial
data included therein, as to which such counsel need not express any
belief) as of its date or as amended or supplemented, if applicable, as of
the Closing Date contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
19
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Selling Stockholders, dated the Closing Date, to the
effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(ii) the execution and delivery by each Selling Stockholder
of, and the performance by such Selling Stockholder of its
obligations under, this Agreement and the Custody Agreement and
Powers of Attorney of such Selling Stockholder will not contravene
any provision of applicable law, or the certificate of
incorporation, by-laws or other charter documents of such Selling
Stockholder (if such Selling Stockholder is a corporation or other
entity), or, to the best of such counsel's knowledge, any agreement
or other instrument binding upon such Selling Stockholder or, to the
best of such counsel's knowledge, any judgment, order or decree of
any governmental body, agency or court having jurisdiction over such
Selling Stockholder, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Stockholder of its
obligations under this Agreement or the Custody Agreement or Power
of Attorney of such Selling Stockholder, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with offer and sale of the Shares;
(iii) each of the Selling Stockholders has valid title to, or
a valid security entitlement in respect of, the Shares to be sold by
such Selling Stockholder free and clear of all security interests,
claims, liens, equities and other encumbrances, and each of the
Selling Stockholders has the legal right and power, and all
authorization and approval required by law, to enter into this
Agreement and the Custody Agreement and Power of Attorney of such
Selling Stockholder and to sell, transfer and deliver the Shares to
be sold by such Selling Stockholder or a security entitlement in
respect of such Shares;
(iv) the Custody Agreement and the Power of Attorney of each
Selling Stockholder have been duly authorized, executed and
delivered by such Selling Stockholder and are valid and binding
agreements of such Selling Stockholder;
(v) With respect to Shares delivered by the Selling
Stockholders in certificated form, delivery of stock certificates
representing the Shares to be sold by the Selling Stockholders,
endorsed to the Underwriters and payment therefor pursuant to this
Agreement will pass valid title to such Shares, free and clear of
any adverse claim within the meaning of Section 8-102 of the New
York Uniform Commercial Code, to each Underwriter who has purchased
such Shares without notice
20
of an adverse claim. With respect to Shares delivered by the Selling
Stockholders through DTC without ever being registered directly in
the name of the Underwriters, upon payment for the Shares to be sold
by the Selling Stockholders pursuant to this Agreement, delivery of
such Shares, as directed by the Underwriters, to Cede or such other
nominee as may be designated by DTC, registration of such Shares in
the name of Cede or such other nominee and the crediting of such
Shares on the books of DTC to securities accounts of the
Underwriters (assuming that neither DTC nor any such Underwriter has
notice of any adverse claim within the meaning of Section 8-105 of
the UCC to such Shares), (A) DTC shall be a "protected purchaser" of
such Shares within the meaning of Section 8-303 of the UCC, (B)
under Section 8-501 of the UCC, the Underwriters will acquire a
valid security entitlement in respect of such Shares and (C) no
action based on any "adverse claim" (within the meaning of Section
8-102 of the UCC) to such Shares may be asserted against the
Underwriters with respect to such security entitlement; in giving
this opinion, counsel for the Selling Stockholders may assume that
when such payment, delivery and crediting occur, (x) such Shares
will have been registered in the name of Cede or another nominee
designated by DTC, in each case on the Company's share registry in
accordance with its certificate of incorporation, bylaws and
applicable law, (y) DTC will be registered as a "clearing
corporation" within the meaning of Section 8-102 of the UCC and (z)
appropriate entries to the accounts of the several Underwriters on
the records of DTC will have been made pursuant to the UCC; and
(vi) (A) in the opinion of such counsel, the Registration
Statement and the Prospectus (except for the financial statements
included therein, as to which such counsel need not express any
opinion) appear on their face to be appropriately responsive in all
material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, and
(B) nothing has come to the attention of such counsel that causes
such counsel to believe that (1) the Registration Statement or the
prospectus included therein (except for the financial statements and
financial data derived from such financial statements included
therein, as to which such counsel need not express any belief) at
the time the Registration Statement became effective 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, (2) the Time of Sale Prospectus
(except for the financial statements and financial data derived from
such financial statements included therein, as to which such counsel
need not express any belief) as of the date of this Agreement or as
amended or supplemented, if applicable, as of the Closing Date
contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading or (3) the Prospectus (except
for the financial statements and financial data derived
21
from such financial statements included therein, as to which such counsel
need not express any belief) as of its date or as amended or supplemented,
if applicable, as of the Closing Date contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Underwriters shall have received on the Closing Date an opinion of
Fenwick & West LLP, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Sections 6(c)(vi), 6(c)(vii), 6(c)(ix) but
only as to the statements in each of the Time of Sale Prospectus and the
Prospectus under "Underwriters," "Description of Capital Stock" and 6(c)(xii)
above.
(f) The Underwriters shall have received on the Closing date an opinion of
Knobbe, Martens, Xxxxx & Bear, LLP ("KMOB") to the effect that nothing has come
to the attention of KMOB that causes KMOB to believe that (1) the Registration
Statement or the prospectus included therein at each time the Registration
Statement became effective contained any untrue statement of a material fact in
the sections identified on Exhibit 1 as such sections relate to the Company's
patents, patent applications or claims by third parties of potential patent
infringement or use of patents (collectively, the "INTELLECTUAL PROPERTY
INFORMATION") or omitted to state a material fact relating to Intellectual
Property Information required to be stated therein or necessary to make the
statements therein not misleading, (2) the Time of Sale Prospectus as of the
date of this Agreement or as amended or supplemented, if applicable, as of the
Closing Date contained or contains any untrue statement of a material fact
relating to Intellectual Property Information or omitted or omits to state a
material fact relating to Intellectual Property Information necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading or (3) the Prospectus, as of its Date and as of
the Closing Date contained or contains any untrue statements of a material fact
relating to Intellectual Property Information necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
With respect to Section 6(c)(xii) above, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation and Fenwick & West LLP and with respect to Section
6(d)(vi) above, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, may
state that their opinions and beliefs are based upon their participation in the
preparation of the Registration Statement, the Time of Sale Prospectus and the
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification,
except as specified. With respect to Section 6(d) above, Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, Professional Corporation may rely upon an opinion or opinions of
counsel for any Selling Stockholders and, with respect to factual matters to the
extent such counsel deems appropriate, upon the representations of
22
each Selling Stockholder contained herein and in the Custody Agreement and Power
of Attorney of such Selling Stockholder and in other documents and instruments;
provided that (A) each such counsel for the Selling Stockholders is satisfactory
to your counsel, (B) a copy of each opinion so relied upon is delivered to you
and is in form and substance satisfactory to your counsel, (C) copies of such
Custody Agreements and Powers of Attorney and of any such other documents and
instruments shall be delivered to you and shall be in form and substance
satisfactory to your counsel and (D) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation shall state in their opinion that they are justified in
relying on each such other opinion.
The opinions of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
and Fenwick & West LLP described in Sections 6(c) and 6(d) above (and any
opinions of counsel for any Selling Stockholder referred to in the immediately
preceding paragraph) shall be rendered to the Underwriters at the request of the
Company or one or more of the Selling Stockholders, as the case may be, and
shall so state therein.
(g) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
PricewaterhouseCoopers LLP, independent registered public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement, the Time of Sale Prospectus and the Prospectus; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier than
one day prior to the date hereof or the Closing Date, as the case may be.
(h) The "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and each stockholder, optionee, officer and director of the
Company relating to sales and certain other dispositions of shares of Common
Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
7. Covenants of the Company. The Company covenants with each Underwriter as
follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other
23
Underwriter a conformed copy of the Registration Statement (without exhibits
thereto) and to furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Sections 7(e) or 7(f) below, as
many copies of the Time of Sale Prospectus, the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may reasonably
request.
(b) Before amending or supplementing the Registration Statement, the Time
of Sale Prospectus or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) To furnish to you a copy of each proposed free writing prospectus to be
prepared by or on behalf of, used by, or referred to by the Company and not to
use or refer to any proposed free writing prospectus to which you reasonably
object. If at any time following issuance of an Issuer Free Writing Prospectus
during the period in which a Prospectus is required to be delivered under the
Securities Act or the rules promulgated thereunder there occurred or occurs an
event or development as a result of which such Issuer Free Writing Prospectus
conflicted or would conflict with the information contained in the Registration
Statement relating to the Shares or included or would include an untrue
statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances, prevailing at that subsequent time, not misleading, the Company
will promptly notify Xxxxxx Xxxxxxx and Xxxxxxx Xxxxx and will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or omission.
(d) Not to take any action that would result in an Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy
the Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Time of Sale Prospectus in order to make
the statements therein, in the light of the circumstances, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement then on file, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to
24
the Underwriters and to any dealer upon request, either amendments or
supplements to the Time of Sale Prospectus so that the statements in the Time of
Sale Prospectus as so amended or supplemented will not, in the light of the
circumstances when delivered to a prospective purchaser, be misleading or so
that the Time of Sale Prospectus, as amended or supplemented, will no longer
conflict with the Registration Statement, or so that the Time of Sale
Prospectus, as amended or supplemented, will comply with applicable law.
(f) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus (or
in lieu thereof the notice referred to in Rule 173(a) under the Securities Act)
is required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities Act) is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or in lieu thereof the notice referred to in
Rule 173(a) under the Securities Act) is delivered to a purchaser, be misleading
or so that the Prospectus, as amended or supplemented, will comply with law.
(g) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(h) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering a period of at least
twelve months beginning with the first fiscal quarter of the Company occurring
after the date of this Agreement which shall satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(i) The Company and its subsidiaries will prior to the filing of its first
quarterly report on Form 10-Q (as defined in Rule 13a-15 under the Exchange Act
establish and thereafter will maintain disclosure controls and procedures. Such
disclosure controls and procedures will be designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company's principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared. Such disclosure controls and procedures will be effective in timely
alerting the
25
Company's principal executive officer and principal financial officer to
material information required to be included in the Company's periodic reports
required under the Exchange Act.
8. Expenses. Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, the Sellers agree to pay or
cause to be paid all expenses incident to the performance of their obligations
under this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel, the Company's accountants and counsel for the Selling
Stockholders in connection with the registration and delivery of the Shares
under the Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company
and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 7(g) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification, (iv) all expenses in
connection with any offer and sale of the Shares outside of the United States,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection with offers and sales outside of the United
States, (v) all filing fees and the reasonable fees and disbursements of counsel
to the Underwriters incurred in connection with the review and qualification of
the offering of the Shares by the National Association of Securities Dealers,
Inc., (vi) all fees and expenses in connection with the preparation and filing
of the registration statement on Form 8-A relating to the Common Stock and all
costs and expenses incident to listing the Shares on the Nasdaq Global Market,
(vii) the cost of printing certificates representing the Shares, (viii) the
costs and charges of any transfer agent, registrar, custodian or depositary,
(ix) the costs and expenses of the Company relating to investor presentations on
any "road show" undertaken in connection with the marketing of the offering of
the Shares, including, without limitation, expenses associated with the
preparation or dissemination of any electronic roadshow, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
one-half of the cost of any aircraft chartered in connection with the road show,
(x) the document production charges and expenses associated with printing this
Agreement and (xi) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is
26
understood, however, that except as provided in this Section, Section 10
entitled "Indemnity and Contribution" and the last paragraph of Section 12
below, the Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any offers
they may make.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Covenants of the Underwriters. Each Underwriter severally covenants with
the Company not to take any action that would result in the Company being
required to file with the Commission under Rule 433(d) a free writing prospectus
prepared by or on behalf of such Underwriter that otherwise would not be
required to be filed by the Company thereunder, but for the action of the
Underwriter.
10. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus, the Time of Sale
Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under
the Securities Act, any Company information that the Company has filed, or is
required to file, pursuant to Rule 433(d) of the Securities Act, or the
Prospectus or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement
27
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, Time of Sale Prospectus, any issuer free
writing prospectus as defined in Rule 433(h) under the Securities Act, any
Company information that the Company has filed, or is required to file, pursuant
to Rule 433(d) of the Securities Act, or the Prospectus or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information relating to the
Selling Stockholder and furnished by or on behalf of the Selling Stockholder
specifically for use therein; provided, however, that the liability of a Selling
Stockholder pursuant to this subsection (b) hereof shall be limited to an amount
equal to the aggregate Public Offering Price of the Shares sold by such Selling
Stockholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Stockholders, the directors
of the Company, the officers of the Company who sign the Registration Statement
and each person, if any, who controls the Company or any Selling Stockholder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing
prospectus as defined in Rule 433(h) under the Securities Act, any Company
information that the Company has filed, or is required to file, pursuant to Rule
433(d) of the Securities Act, or the Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use in the Registration Statement, any preliminary prospectus, the Time of
Sale Prospectus, any issuer free writing prospectus or the Prospectus or any
amendment or supplement thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 10(a), 10(b) or 10(c), such person
(the "INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and
28
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act or who are affiliates of any
Underwriter within the meaning of Rule 405 under the Securities Act, (ii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either such Section and (iii) the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Selling Stockholders and all
persons, if any, who control any Selling Stockholder within the meaning of
either such Section, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Underwriters
and such control persons and affiliates of any Underwriters, such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx. In
the case of any such separate firm for the Company, and such directors, officers
and control persons of the Company, such firm shall be designated in writing by
the Company. In the case of any such separate firm for the Selling Stockholders
and such control persons of any Selling Stockholders, such firm shall be
designated in writing by the persons named as attorneys-in-fact for the Selling
Stockholders under the Powers of Attorney. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless
29
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 10(a), 10(b)
or 10(c) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 10(e)(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 10(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 10 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 10(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 10(e) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has
30
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 10 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 10
and the representations, warranties and other statements of the Company and the
Selling Stockholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, any Selling
Stockholder or any person controlling any Selling Stockholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
11. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq Global Market, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Time of Sale Prospectus or the
Prospectus.
12. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
31
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you, the
Company and the Selling Stockholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Stockholders. In any such case either you or the relevant Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement, in the Time of Sale Prospectus, in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
13. Entire Agreement. (a) This Agreement, together with any contemporaneous
written agreements and any prior written agreements (to the extent not
superseded by this Agreement) that relate to the offering of the Shares,
represents the entire agreement between the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other, with respect
to the preparation of any preliminary prospectus, the Time of Sale Prospectus,
the Prospectus, the conduct of the offering, and the purchase and sale of the
Shares.
32
(b) The Company and the Selling Stockholders acknowledge that in connection
with the offering of the Shares: (i) the Underwriters have acted at arms length,
are not agents of, and owe no fiduciary duties to, the Company, the Selling
Stockholders or any other person, (ii) the Underwriters owe the Company and the
Selling Stockholders only those duties and obligations set forth in this
Agreement and prior written agreements (to the extent not superseded by this
Agreement), if any, and (iii) the Underwriters may have interests that differ
from those of the Company and the Selling Stockholders. The Company and the
Selling Stockholders waive to the full extent permitted by applicable law any
claims it may have against the Underwriters arising from an alleged breach of
fiduciary duty in connection with the offering of the Shares.
14. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
16. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
17. Notices. All communications hereunder shall be in writing and effective
only upon receipt and if to the Underwriters shall be delivered, mailed or sent
to you in care of Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Equity Syndicate Desk, with a copy to the Legal
Department and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
_________________________; if to the Company shall be delivered, mailed or sent
to Isilon Systems, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: ___________ and if to the Selling Stockholders shall be delivered,
mailed or sent to them c/o Isilon Systems, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, Attention: ___________.
Very truly yours,
ISILON SYSTEMS, INC.
By: _______________________________
Name:
Title:
33
The Selling Stockholders named in
Schedule I hereto, acting severally
By:
----------------------------------------
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx & Company, LLC
RBC Capital Markets Corp.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Acting severally on behalf of themselves and
the several Underwriters named in
Schedule II hereto
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
-------------------------------
Name:
Title:
34
SCHEDULE I
MAXIMUM NUMBER OF
FIRM MAXIMUM NUMBER OF OPTION
SELLING STOCKHOLDER SHARES TO BE SOLD SHARES TO BE SOLD
------------------- ----------------- -----------------
Xxxxxxx Kodak Company 0
SVB Financial Group 0
Horizon Technology Funding Company II LLC 0
Horizon Technology Funding Company III LLC 0
----------------- -------------------------
Total:....................... 0
================= =========================
I-1
SCHEDULE II
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated................
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx & Company, LLC...........................
RBC Capital Markets Corp.........................
---------------------
Total:............................
=====================
II-1
SCHEDULE III
TIME OF SALE PROSPECTUS
1. Preliminary Prospectus issued November 24, 2006
2. [identify all free writing prospectuses filed by the Company under Rule
433(d) of the Securities Act]
3. [free writing prospectus containing a description of terms that does not
reflect final terms, if the Time of Sale Prospectus does not include a
final term sheet] or the final term sheet attached hereto as Exhibit B
4. [orally communicated pricing information to be included on Schedule II if
a final term sheet is not used] [to be discussed]
III-1
EXHIBIT A
FORM OF LOCK-UP LETTER
August __, 2006
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx & Company, LLC
RBC Capital Markets Corp.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Isilon Systems, Inc., a Delaware corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including Xxxxxx Xxxxxxx (the "UNDERWRITERS"), of ___
shares (the "SHARES") of the Common Stock ($0.00001 par value per share) of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending [180] days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise.
The foregoing sentence shall not apply to (a) transactions relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the Public Offering, provided that no filing under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") shall be required or shall be voluntarily made in connection
with subsequent sales of Common Stock or other securities acquired in such open
market transactions, (b) transfers of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift, or (c) distributions of
shares of Common Stock or any security convertible into Common Stock to limited
partners or stockholders of the undersigned; provided that in the case of any
transfer or distribution pursuant to clause (b) or (c), (i) each donee or
distributee shall sign and deliver a lock-up letter substantially in the form of
this letter and (ii) no filing under Section 16(a) of the Exchange Act,
reporting a reduction in beneficial ownership of shares of Common Stock, shall
be required or shall be voluntarily made during the restricted period referred
to in the foregoing sentence. In addition, the undersigned agrees that, without
the prior written consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it
will not, during the period commencing on the date hereof and ending 180 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of the
undersigned's shares of Common Stock except in compliance with the foregoing
restrictions.
If:
(1) during the last 17 days of the restricted period the Company issues an
earnings release or material news or a material event relating to the Company
occurs; or
(2) prior to the expiration of the restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the restricted period;
the restrictions imposed by this agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
The undersigned shall not engage in any transaction that may be restricted
by this agreement during the 34-day period beginning on the last day of the
initial restricted period unless the undersigned requests and receives prior
written confirmation from the Company or Xxxxxx Xxxxxxx that the restrictions
imposed by this agreement have expired.
The undersigned understands that the Company and the Underwriters are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
2
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
-------------------------------------
(Name)
-------------------------------------
(Address)
3
