EXHIBIT 1.1
$300,000,000
VENTRO CORPORATION
___% Convertible Subordinated Notes due 2007
FORM OF
UNDERWRITING AGREEMENT
___________, 2000
____________, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
Deutsche Bank Securities Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Ventro Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters"), an aggregate of $300,000,000 principal amount of its ___%
Convertible Subordinated Notes due 2007 (the "Firm Securities") to be issued
pursuant to the provisions of an Indenture dated as of __________, 2000 (the
"Indenture") among the Company and State Street Bank and Trust Company of
California, N.A., as Trustee (the "Trustee").
The Company also proposes to issue and sell to the several Underwriters not
more than an additional $45,000,000 aggregate principal amount of its ___%
Convertible Subordinated Notes due 2007 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 ___% Convertible Subordinated Notes due
2007 granted to the Underwriters in Section 2 hereof. The Firm Securities and
the Additional Securities are hereinafter collectively referred to as the
"Securities." The Securities will be convertible into shares of Common Stock of
the Company, $.0002 par value (the "Common Stock" and such reserved convertible
shares into which the Securities are convertible, the "Underlying Securities").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Securities. 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 Securities is hereinafter referred to as the
"Prospectus." If the Company has filed an abbreviated registration statement to
register additional Securities 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.
The Underwriters acknowledge that concurrently with the offering of the
Firm Securities, the Company and certain selling stockholders of the Company are
offering an aggregate of 1,825,000 shares of the Common Stock of the Company
pursuant to an underwriting agreement dated the date hereof among the Company,
such selling stockholders and the underwriters named therein, plus up to an
additional 273,750 shares of Common Stock to be
offered upon exercise of an option granted to such underwriters, pursuant to
such underwriting agreement, to cover over-allotments, if any (the "Common Stock
Offering"). The consummation of the offering of the Securities is not contingent
upon the consummation of the Common Stock Offering or vice versa.
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 and (iii) 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 (A) statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein or (B) that part
of the Registration Statement that constitutes Statement of Eligibility
(Form T-1) under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), of the Trustee.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the 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.
(d) 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 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 wholly-owned
subsidiary of the Company and the issued shares of capital stock of each
other subsidiary of the Company that are held by the Company have been duly
and
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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.
(e) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the 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 Prospectus.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding on the date hereof have
been duly authorized and are validly issued, fully paid and non-assessable.
(h) The Underlying Securities reserved for issuance upon conversion of
the Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable, and the
issuance of the Underlying Securities will not be subject to any preemptive
rights, rights of first refusal or other similar rights.
(i) This Agreement has been duly authorized, executed and delivered by
the Company.
(j) The Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized, executed and delivered by the Company and
is a valid and binding agreement of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and general principles of
equity.
(k) The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
(l) Except as set forth in the Prospectus, the Company does not have
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or
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commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations.
(m) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture and
the Securities will not contravene any provision of applicable law or the
certificate of incorporation or bylaws of the Company or 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 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, the Indenture and the Securities, 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 Securities.
(n) 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 Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(o) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and
its subsidiaries have not incurred any material liability or obligations,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of its
outstanding capital stock other than the repurchase of shares of its
capital stock in connection with employee terminations, 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 the Prospectus.
(p) There are no 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 or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(q) 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.
(r) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will
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not be required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(s) The Company and 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 have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Prospectus.
(t) 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, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(u) 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 could, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(v) The Company and its subsidiaries own or possess adequate licenses
or other rights to use all 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, trade names, and technology
necessary to conduct their business in the manner described in the
Prospectus; neither the Company nor any of its subsidiaries is obligated to
pay any material royalty, grant a material license, or provide other
material consideration to any third party in connection with its patents,
copyrights, trademarks, service marks, trade names, or technology other
than as disclosed in the Prospectus; and, except as disclosed in the
Prospectus, neither the Company nor any of its subsidiaries has received
any notice of infringement or conflict with (and neither the Company nor
any of its subsidiaries knows of any infringement or conflict with)
asserted rights of others with respect to any patents, copyrights,
trademarks, service marks, trade names, technology or know-how which could
result in any material adverse effect upon the Company and its
subsidiaries, taken as a whole; and, except as disclosed in the Prospectus,
the discoveries, inventions,
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products or processes of the Company and its subsidiaries referred to in
the Prospectus do not, to the best knowledge of the Company and its
subsidiaries, infringe or conflict with any right or valid and enforceable
patent of any third party, or any discovery, invention, product or process
which is the subject of a patent application filed by any third party,
known to the Company or any of its subsidiaries which could have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
Except as described in the Prospectus, no third party, including any
academic or governmental organization, possesses rights to the Company's or
any of its subsidiaries' patents, copyrights, trademarks, service marks,
trade names, or technology which, if exercised, could enable such third
party to develop products which compete with those of the Company and its
subsidiaries in a manner which could have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or a material adverse
effect on the ability of the Company and its subsidiaries to conduct their
business in the manner described in the Prospectus.
(w) The Company and its subsidiaries possess all consents, approvals,
orders, certificates, authorizations and permits issued by, and has made
all declarations and filings with, all appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses and to own, lease, license and use their properties in the
manner described in the Prospectus; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such consent, approval, order,
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, or failure to
obtain or file, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the 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.
(y) No material labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in the 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 its principal suppliers, manufacturers or contractors that could have a
material adverse affect on the Company and its subsidiaries, taken as a
whole.
(z) Except as provided in writing and agreed to by Xxxxxx Xxxxxxx &
Co. Incorporated, each of the Company's executive officers and directors
and certain other stockholders holding in the aggregate approximately __%
of the outstanding shares of Common Stock, and all shares of Common Stock,
par value $.0002 per share, of the
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Company issuable to such executive officers, directors and certain other
stockholders upon the conversion, exercise or exchange of outstanding
securities convertible into or exercisable or exchangeable for shares of
Common Stock, including, without limitation, outstanding options issued
under the Company's 1998 Stock Plan or 1999 Directors' Stock Plan, are
subject to valid, binding and enforceable agreements (collectively, the
"Lock-up Agreements") that restrict the holders thereof from selling,
making any short sale of, granting any option for the purchase of, or
otherwise transferring or disposing of, any of such shares of Common Stock,
or any such securities convertible into or exercisable or exchangeable for
Common Stock, for a period of 90 days after the date of the Prospectus,
without the prior written consent of the Company or Xxxxxx Xxxxxxx & Co.
Incorporated.
(aa) The Common Stock has been approved for listing on the Nasdaq
National Market and the Securities have been approved for listing on the
New York Stock Exchange.
(bb) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
(cc) The Company has reviewed its operations, the operations of its
subsidiaries and the operations of any third parties with whom the Company
has a material relationship to evaluate the extent to which the business or
operations of the Company or any of its subsidiaries will be affected by
the Year 2000 Problem (that is, any significant risk that computer hardware
or software applications used by the Company and its subsidiaries will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000); as a result of such review, (i) the
Company has no reason to believe, and does not believe, that (A) there are
any issues related to the Company's preparedness to address the Year 2000
Problem that are of a character required to be described or referred to in
the Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year 2000
Problem will have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, or result in any material loss or
interference with the business or operations of the Company and its
subsidiaries, taken as a whole; and (ii) the Company reasonably believes,
after due inquiry, that the suppliers, vendors, customers or other material
third parties used or served by the Company and such subsidiaries are
addressing or will address the Year 2000 Problem in a timely manner, except
to the extent that a failure to address the Year 2000 Problem by any
supplier, vendor, customer or material third party would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole.
(dd) Ernst & Young LLP are independent public accountants with respect
to the Company and its subsidiaries, including Promedix, Inc., a Delaware
corporation that is a wholly-owned subsidiary of the Company ("Promedix")
and XxxxxxxxxxXX.xxx, Inc. a
7
Delaware corporation that is a wholly-owned subsidiary of the Company
("SpecialtyMD"), as required by the Securities Act.
(ee) The financial statements of the Company included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), together with related schedules and notes, present fairly the
financial position, results of operations and changes in financial position
of the Company on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; the supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be
stated therein; and the other financial and statistical information and
data set forth in the Registration Statement and Prospectus (and any
amendment or supplement thereto) are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of the Company.
(ff) The financial statements of each of Promedix and SpecialtyMD
included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), together with related schedules and
notes, present fairly the respective financial position, results of
operations and changes in financial position of each of Promedix and
SpecialtyMD on the basis stated therein at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; the supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be
stated therein; and the other financial and statistical information and
data set forth in the Registration Statement and Prospectus (and any
amendment or supplement thereto) regarding each of Promedix and
SpecialtyMD, respectively, are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of Promedix and SpecialtyMD, as the case may be.
(gg) The unaudited pro forma combined condensed financial information,
included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), together with related schedules and notes
complies as to form in all material respects to the accounting requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder, and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable. All
necessary pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such
information presents fairly with respect to the respective combined
entities presented therein the financial position, results of operations
and other information purported to be shown therein at the respective dates
and for the respective periods specified on a basis consistent with the
audited financial statements included in the Registration Statement and the
Prospectus. No other financial statements or schedules are required by Form
S-1 or otherwise to be included in the Registration Statement or the
Prospectus.
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2. Agreements to Sell and Purchase. The Company 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 the
Company the respective principal amounts of Firm Securities set forth in
Schedule I hereto opposite its name at a purchase price of 100% of their
principal amount (the "Purchase Price"), plus accrued interest, if any, from
_____________, 2000, to the date of payment and delivery.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company hereby agrees to
sell to the Underwriters the Additional Securities and the Underwriters shall
have a one-time right to purchase, from time to time during the 30 days after
the date of this Agreement, severally and not jointly, up to an aggregate of
$45,000,000 principal amount of Additional Securities at the Purchase Price. If
you, on behalf of the Underwriters, elect to exercise such option, you shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Securities to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Securities may be purchased as provided in
Section 4 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Securities. If any Additional
Securities are to be purchased, each Underwriter agrees, severally and not
jointly, to purchase the number of Additional Securities (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Securities to be purchased as
the number of Firm Securities set forth in Schedule I hereto opposite the name
of such Underwriter bears to the total number of Firm Securities.
The Company hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, (A) 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 (B) 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 (A) or (B)
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 (i) the Securities
to be sold hereunder and the Common Stock to be sold in the Common Stock
Offering; (ii) 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 as described in the Prospectus or of which the Underwriters have
been advised in writing; (iii) the grant of any options or other rights to
purchase or acquire any shares of Common Stock pursuant to the 1998 Stock Plan
or the 1999 Directors' Stock Plan; (iv) the issuance by the Company of shares of
Common Stock pursuant to the 1999 Employee Stock Purchase Plan; (v) the issuance
of any shares of Common Stock or grant of other right to acquire shares of
capital stock of the Company pursuant to equipment or lease financing activities
entered into in the ordinary course of the Company's business; or (vi) the
issuance by the Company of Common Stock or securities convertible into or
exchangeable
9
for common stock in connection with mergers or the acquisition of securities,
businesses, property or other assets.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Securities are to be offered to the public initially at
100% of their principal amount (the "Public Offering Price") plus accrued
interest, if any, from __________, 2000 to the date of payment and delivery and
to certain dealers selected by you at a price that represents a concession not
in excess of __% of their principal amount, and that any Underwriter may allow,
and such dealers may reallow, a concession, not in excess of ___% at their
principal amount, to any Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Securities to be sold by the
Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery of such Firm Securities for the
respective accounts of the several Underwriters at 9:00 a.m., New York City
time, on ___, 2000, or at such other time on the same or such other date, not
later than ___, 2000, 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 Securities shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Securities for the respective accounts of the several
Underwriters at 9:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than ___, 2000, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Option Closing Date."
Certificates for the Firm Securities and Additional Securities shall be in
definitive form and/or global form, as specified by you and as required under
the terms of the Indenture, and 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 Option Closing Date, as the case may be.
The certificates evidencing the Firm Securities and Additional Securities shall
be delivered to you on the Closing Date or the 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 Securities to the
Underwriters duly paid, against payment of the Purchase Price therefore, plus
accrued interest, if any, to the date of payment and delivery.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Securities to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Securities on the Closing Date
are subject to the condition that the Registration Statement shall have become
effective not later than 5:30 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
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(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
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 Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market
the Securities on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by the chief executive
officer and chief financial officer of the Company, to the effect set forth
in Section 5(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.
The officers signing and delivering such certificate may rely upon the
best of his or her respective knowledge as to proceedings threatened.
(c) the Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, 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 State of
Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus;
(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 Prospectus;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(iv) the Securities have been duly authorized by the Company and,
when executed and authenticated in accordance with the provisions of
the Indenture and
11
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity;
(v) (A) the Underlying Securities reserved for issuance upon
conversion of the Securities have been duly authorized and reserved
and, when issued upon conversion of the Securities in accordance with
the terms of the Securities, will be validly issued, fully paid and
non-assessable, and (B) the issuance of the Underlying Securities will
not be subject to any preemptive rights, rights of first refusal or
other similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under this Agreement,
the Indenture and the Securities will not contravene any provision of
any applicable law or the certificate of incorporation or bylaws of
the Company or, to the best of such counsel's knowledge, (A) 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, to the best of such counsel's knowledge, (B) 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 performance by the
Company of its obligations under this Agreement, the Indenture and the
Securities, 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 Securities;
(ix) the statements (A) in the Prospectus under the captions
"Business--Our Strategic Relationships," "Board of Directors," "Board
Committees," "Employee Stock Plans," "Limitation of Liability and
Indemnification Matters," "Related Party Transactions," "Description
of Capital Stock," "Description of Notes," "Certain Federal Income Tax
Consequences" and "Underwriters," and (B) in the Registration
Statement in Items 14 and 15, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, do not contain any misstatements with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(x) after due inquiry, such counsel does not know of any legal,
regulatory 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 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 or the Prospectus or 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 Securities 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;
(xii) to the knowledge of such counsel: (A) the Registration
Statement has become effective under the Securities Act, no stop order
proceedings with respect thereto have been instituted or are pending
or threatened under the Securities Act,
13
and nothing has come to such counsel's attention to lead it to believe
that such proceedings are contemplated, and (B) any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b)
under the Securities Act has been made in the manner and within the
time period required by such Rule 424(b); and
(xiii) such counsel shall also state that (A) such counsel believes
that the Registration Statement and Prospectus (except for financial
statements and schedules and other financial and statistical data
included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) such counsel has no reason to believe that
(except for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not
express any belief) the Registration Statement and the prospectus
included therein 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 and (C) such counsel has no
reason to believe that (except for financial statements and schedules
and other financial and statistical data included therein as to which
such counsel need not express any belief) the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Venture Law Group, a Professional Corporation, outside counsel
for the Company, dated the Closing Date, to the effect that:
(i) the Company is duly qualified to transact business in
California and Utah and to such counsel's knowledge neither the
conduct of its business or its ownership nor 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 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 sub subsidiaries, taken as a whole;
(iii) the shares of Common Stock (including the Shares to be sold by
the Selling Stockholders) outstanding on the date hereof have been
duly authorized and are validly issued, fully paid and non-assessable;
(iv) 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 or
through a subsidiary, free and clear of all liens, encumbrances,
equities or claims; and
13
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx Xxxxxx White & XxXxxxxxx, a Partnership of Professional
Corporations, special regulatory counsel to the Company, dated the Closing
Date, to the effect that:
(i) in connection with this offering, such counsel represents the
Company with respect to regulatory matters;
(ii) such counsel has read the portions of the Registration
Statement and the Prospectus entitled "Risk Factors--We are subject to
government regulation that exposes us to potential liability and
negative publicity" and "Business--Government Regulation" (such
portions being herein collectively referred to as the "Regulatory
Portions"), and in such counsel's opinion, the descriptions of the
laws, rules and regulations set forth in the Regulatory Portions are
fair and accurate summaries of such laws, rules and regulations; and
(iii) nothing has come to such counsel's attention that leads it to
believe that the statements contained in the Regulatory Portions of
the Registration Statement or the Prospectus at the time it 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 or that, at the Closing
Date, the information contained in the Regulatory Portions of the
Prospectus or any amendment or supplement to the Regulatory Portions
of the Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx & West LLP, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5(c)(iv),
5(c)(vi), 5(c)(vii), 5(c)(ix) (but only as to the statements in the
Prospectus under "Description of Capital Stock," "Description of Notes" and
"Underwriters") and 5(d)(xii) above.
With respect to Section 5(c)(xiii) above, Xxxxx Xxxx & Xxxxxxxx and Xxxxxxx
& West LLP may state that their opinion and belief are based upon their
participation in the
14
preparation of the Registration Statement and 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 5(c)(v)(B), 5(c)(vii)(B), 5(c)(x) and
5(c)(xi) above, Xxxxx Xxxx & Xxxxxxxx may state that their opinion is based upon
a company certificate with respect to factual matters. With respect to Section
5(c)(viii)(A), Xxxxx Xxxx & Xxxxxxxx may state that their opinion is limited to
agreements filed as Exhibits to the Registration Statement.
The opinions of Xxxxx Xxxx & Xxxxxxxx, Venture Law Group, a
Professional Corporation and Xxxxxx Xxxxxx White & XxXxxxxxx, a Partnership of
Professional Corporations, described in Sections 5(c), 5(d) and 5(e), above,
respectively, shall each be rendered to the Underwriters at the request of the
Company 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 Ernst & Young LLP, independent auditors, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(h) The Lock-Up Agreements, each substantially in the form of Exhibit
A hereto, between you and certain stockholders, officers and directors 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.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed in compliance with the provisions
hereof only if counsel for the Underwriters shall be satisfied that they comply
in form and scope.
The several obligations of the Underwriters to purchase Additional
Securities hereunder are subject to the delivery to you on the 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
Securities and other matters related to the issuance of the Additional
Securities and an opinion or opinions of Xxxxx Xxxx & Xxxxxxxx, Venture Law
Group, a Professional Corporation, and Xxxxxx Xxxxxx White & XxXxxxxxx, a
Partnership of Professional Corporations, in form and substance satisfactory to
Fenwick & West LLP, counsel for the Underwriters.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other 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
15
in Section 6(c) below, as many copies of 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 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) If, during such period after the first date of the public offering
of the Securities as in the opinion of counsel for the Underwriters the
Prospectus 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 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 Securities 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 is delivered to a purchaser, be misleading or so that
the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and to pay all expenses (including fees and disbursements of
counsel) in connection with such qualification and in connection with any
review of the offering of the Securities by the National Association of
Securities Dealers, Inc.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending June 30, 2001 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its stockholders and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or
any national securities exchange.
(g) The Company will apply the proceeds from the sale of the
Securities in the manner set forth under "Use of Proceeds" in the
Prospectus.
(h) The Company will use its best efforts to obtain and maintain in
effect the quotation of the Securities on the Nasdaq National Market and
will take all necessary steps to cause the Securities to be included on the
Nasdaq National Market as promptly as practicable and to maintain such
inclusion for a period of seven years after the date hereof
16
or until such earlier date as the Securities shall be listed for regular
trading privileges on another national securities exchange approved by you.
(i) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act which may from time to time be
applicable to the Company.
(j) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(k) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or
cause to be paid all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including but not limited
to all expenses incident to: (i) the fees, disbursements and expenses of
the Company's counsel and the Company's accountants in connection with the
registration and delivery of the Securities 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 Prospectus 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 Securities 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
Securities under state securities laws and all expenses in connection with
the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters
in connection with such qualification and in connection with the Blue Sky
or Legal Investment memorandum, (iv) 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
Securities by the National Association of Securities Dealers, Inc., (v) the
cost of printing certificates representing the Securities, (vi) the costs
and charges of any transfer agent, registrar or depositary, (vii) 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
Securities, including, without limitation, 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
the cost of any aircraft chartered in connection with the road show, (viii)
any fees charged by the rating agencies for the rating of the Securities,
(ix) the costs and charges of any trustee (including the fees and expenses
of counsel) and
17
(x) all other costs and expenses incident to the performance of the
obligations of the C7ompany hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in
this Section, Section 7 entitled "Indemnity and Contribution," and the last
paragraph of Section 9 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 Securities by them and any
advertising expenses connected with any offers they may make.
(l) The Company agrees: (i) to enforce the terms of each Lock-up
Agreement and (ii) issue stop-transfer instructions to the transfer agent
for the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the
applicable Lock-up Agreement. In addition, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated, the Company agrees: (i) not
to amend or terminate, or waive any right under, any Lock-up Agreement, or
take any other action that would directly or indirectly have the same
effect as an amendment or termination, or waiver of any right under, any
Lock-up Agreement, that would permit any holder of shares of Common Stock,
or securities convertible into or exercisable or exchangeable for Common
Stock, to (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
other than the exercise of options granted under the 1998 Stock Plan or
1999 Directors' Stock Plan or the purchase of shares of Common Stock under
the 1999 Employee Stock Purchase Plan 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 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
(ii) not to consent to any of the foregoing. Notwithstanding the foregoing,
the Company may issue a total of up to _______ shares of its Common Stock
during the 90 days after the date of the Prospectus (the "Lock-up Period")
in connection with acquisitions, strategic alliances, technology licensing
transactions, joint ventures or similar transactions ("Excepted
Transactions"); provided, however, that: (i) the Company shall give Xxxxxx
Xxxxxxx & Co. Incorporated reasonable prior written notice of any such
issuance describing the Excepted Transaction in reasonable detail and
stating the number of shares of Common Stock proposed to be issued in the
Excepted Transaction, (ii) all shares of Common Stock issued in connection
with the Excepted Transaction shall remain subject to the lock-up
restrictions of this paragraph 6(m) for the remainder of the Lock-up
Period, (iii) prior to any such issuance of Common Stock, each person that
is to acquire any such shares of Common Stock shall execute and deliver an
agreement substantially in the form of Exhibit A covering all such shares
for the remainder of the Lock-up Period and (iv) no such issuance shall be
made unless and until the requirements and conditions in the foregoing
clauses (i), (ii) and (iii) have been complied with and satisfied.
(m) The Company agrees to place a restrictive legend on any shares of
Common Stock acquired by a stockholder who has signed a Lock-Up Agreement
pursuant to the exercise, after the date hereof and prior to the expiration
of the 90-day period after the date of the Prospectus, of any option
granted under the Company's 1998
18
Stock Plan or 1999 Directors' Stock Plan, which legend shall restrict the
transfer of such shares prior to the expiration of such 90-day period. In
addition, the Company agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated, it will not release any stockholder or
option holder from the market standoff provision imposed by the Company
pursuant to its 1998 Stock Plan or 1999 Directors' Stock Plan earlier than
90 days after the date of the public offering of the Shares.
7. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (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 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, 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; provided however that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter, or any person controlling such Underwriter,
from whom the person asserting any losses, claims, damages or liabilities
purchased Shares, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not set or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability,
unless such failure is the result of noncompliance by the Company with
Section 8(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the directors and officers of the Company
who sign the Registration Statement and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriter, 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 Prospectus or any
amendments or supplements thereto.
(c) 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 7(a) or 7(b), 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 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
19
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 the fees and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties 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 of any
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx &
Co. Incorporated. 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. 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. 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 such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) 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 Securities or (ii) if the allocation provided by clause
7(d)(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
7(d)(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 Company on
the one hand and the Underwriters on the other hand in connection with the
offering of the Securities shall be deemed to be in the same respective
proportions as the proceeds from the offering of the Securities (before
deducting expenses) received by each Company 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 Securities.
The relative fault of the Company 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 Company 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 7 are several in
proportion to the respective number of Securities they have purchased
hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 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 7(d). The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph 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 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 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 7 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.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company 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 or any person
controlling any Underwriter or on behalf of the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
8. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) 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 National Association
of Securities Dealers, Inc., 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 general moratorium on commercial banking
activities in New York shall have been declared by
21
either Federal or New York State authorities or (iv) 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 (b) in the case of any of the events specified in clauses 8(a)(i)
through 8(a)(iv), such event, singly or together with any other such event,
makes it, in your judgment, impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Securities that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Securities 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 Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Firm
Securities set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Securities 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 Securities that any Underwriter has agreed to purchase pursuant to
this Agreement be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such number of Securities without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Securities and the aggregate number of Firm
Securities with respect to which such default occurs is more than one-tenth of
the aggregate number of Firm Securities to be purchased, and arrangements
satisfactory to you and the Company for the purchase of such Firm Securities are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the Company.
In any such case, either you or the Company 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 and in the Prospectus or
in any other documents or arrangements may be effected. If, on the Option
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Securities and the aggregate number of Additional Securities with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Securities to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Securities or (ii) purchase not less than the number of Additional
Securities 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 the Company comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company 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
22
incurred by such Underwriters in connection with this Agreement or the offering
contemplated hereunder.
10. 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.
11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. 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.
[The remainder of this page is intentionally left blank.]
23
Very truly yours,
VENTRO CORPORATION
By:______________________
Name:
Title:
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
Deutsche Bank Securities Inc.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:_______________________________________
Name:
Title:
[Signature Page to Underwriting Agreement]
24
SCHEDULE I
Principal Amount
of Securities
Underwriter to be Purchased
----------- ----------------
Xxxxxx Xxxxxxx & Co. Incorporated................ $
FleetBoston Xxxxxxxxx Xxxxxxxx Inc...............
Chase Securities Inc.............................
Deutsche Bank Securities Inc..................... ----------
Total................................... ==========
EXHIBIT A
[FORM OF LOCK-UP LETTER]
March __, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
Deutsche Bank Securities Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Ventro Corporation, 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, par value $0.0002 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 90 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 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) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. 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 90 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.
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.
This Agreement shall terminate and be of no further effect if the
registration statement for the Public Offering is not declared effective by the
Securities and Exchange Commission by July 31, 2000.
Very truly yours,
-----------------------------------
(Signature)
-----------------------------------
(Print name)
-----------------------------------
-----------------------------------
(Address)
