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ADVANCED DIGITAL INFORMATION CORPORATION
1,725,000 SHARES1
COMMON STOCK
(NO PAR VALUE)
UNDERWRITING AGREEMENT
March , 0000
XXXXXXXXX & XXXXX LLC
XXXX XXXXXXXX INCORPORATED
As Representatives of the Several
Underwriters Named on Schedule I hereto
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Advanced Digital Information Corporation, a Washington
corporation (herein called the Company), proposes to issue and sell 1,700,000
shares of its authorized but unissued Common Stock, no par value (herein called
the Common Stock), and a stockholder of the Company named in Schedule II hereto
(herein called the Selling Securityholder) proposes to sell 25,000 shares of
Common Stock of the Company (said 1,725,000 shares of Common Stock being herein
called the Underwritten Stock). The Company proposes to grant to the
Underwriters (as hereinafter defined) an option to purchase up to 258,750
additional shares of Common Stock (herein called the Option Stock and with the
Underwritten Stock herein collectively called the Stock). The Common Stock is
more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Securityholder severally hereby
confirm the agreements made with respect to the purchase of the Stock by the
several underwriters, for whom you are acting as Representatives, named in
Schedule I hereto (herein collectively called the Underwriters, which term shall
also include any underwriter purchasing Stock pursuant to Section 3(b) hereof).
You represent and warrant that you have been authorized by each of the other
Underwriters to enter into this Agreement on its behalf and to act for it in the
manner herein provided.
1. REGISTRATION STATEMENT. The Company has filed with the
Securities and Exchange Commission (herein called the Commission) a registration
statement on Form S-3 (No. 333- ), including the related preliminary prospectus,
for the registration under the Securities Act of 1933, as amended (herein called
the Securities Act) of the Stock. Copies of such registration statement and of
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission) heretofore filed by the Company with the Commission have been
delivered to you.
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1 Plus an option to purchase from the Company up to 258,750 additional
shares to cover over-allotments.
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The term Registration Statement as used in this agreement
shall mean such registration statement, including all documents incorporated by
reference therein, all exhibits and all financial statements and all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus, including the documents incorporated by reference therein, relating
to the Stock first filed with the Commission pursuant to Rule 424(b) and Rule
430A (or if no such filing is required, as included in the Registration
Statement) and, in the event of any supplement or amendment to such prospectus
after the Effective Date, shall also mean (from and after the filing with the
Commission of such supplement or of the effectiveness of such amendment) such
prospectus as so supplemented or amended. The term Preliminary Prospectus as
used in this Agreement shall mean each preliminary prospectus, including the
documents incorporated by reference therein, included in such registration
statement prior to the time it becomes effective.
The Registration Statement has been declared effective under
the Securities Act, and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The Company has
caused to be delivered to you copies of each Preliminary Prospectus and has
consented to the use of such copies for the purposes permitted by the Securities
Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLING SECURITYHOLDER.
(a) The Company hereby represents and warrants
as follows:
(i) Each of the Company and its
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, has
full corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement and the Prospectus and
as being conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary (except where the failure to be so qualified would not have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole). The Company
does not own or control, directly or indirectly, any corporation, association or
other entity other than ADIC Europe SARL.
(ii) Since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
there has not been any materially adverse change in the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, other than as set forth in the Registration
Statement and the Prospectus, and since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has entered
into any material transaction not referred to in the Registration Statement and
the Prospectus.
(iii) The Registration Statement and the
Prospectus comply, and on the Closing Date (as hereinafter defined) and any
later date on which Option Stock is to be
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purchased, the Prospectus will comply, in all material respects, with the
provisions of the Securities Act and the Exchange Act, and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and, on the
Effective Date the Prospectus did not and, on the Closing Date and any later
date on which Option Stock is to be purchased, will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that none of the
representations and warranties in this subparagraph (iii) shall apply to
statements in, or omissions from, the Registration Statement or the Prospectus
made in reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters for use
in the Registration Statement or the Prospectus.
(iv) The Company's outstanding capital
stock has been validly authorized, is fully paid and nonassessable, was issued
in compliance with the registration and qualification provisions of applicable
federal and state securities laws and was issued free of any preemptive right,
right of first refusal or similar right. The Stock is duly and validly
authorized, is (or, in the case of shares of the Stock to be sold by the
Company, will be, when issued and sold to the Underwriters as provided herein)
duly and validly issued, fully paid and nonassessable and conforms to the
description thereof in the Prospectus. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
transfer and sale of the Stock to be sold by the Selling Securityholder or the
issuance and sale of the Stock as contemplated herein. No preemptive right, or
right of first refusal in favor of stockholders, exists with respect to the
Stock, or the issue and sale thereof, pursuant to the Certificate of
Incorporation or Bylaws of the Company, and there is no contractual preemptive
right, right of first refusal, right of co-sale or similar right which exists
and has not been waived with respect to the issue and sale of the Stock or, to
the Company's knowledge, with respect to the Stock being sold by the Selling
Securityholder.
(v) The Registration Statement has
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and, to the Company's knowledge, no proceeding
for that purpose has been instituted or is contemplated by the Commission.
(vi) This Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Representatives, constitutes a
valid and binding obligation of the Company enforceable in accordance with its
terms, except as rights to indemnity or contribution may be limited by federal
or state securities laws and except as enforcement (i) may be limited by the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance and other similar laws relating to or affecting the rights
of creditors generally, (ii) is subject to general principles of equity and
similar principles, including, without limitation, concepts of materiality,
reasonableness, unconscionability, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable
remedies, regardless of whether considered in a proceeding in equity or at law,
or (iii) is subject to the effect of public policy.
(vii) The execution and delivery by the
Company of, and the performance by the Company of its obligations under, this
Agreement, and the issue and sale by the Company of the shares of Stock to be
sold by the Company as provided herein will not conflict with,
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or result in a breach of, the Certificate of Incorporation or Bylaws of the
Company or any material agreement or instrument to which the Company is a party
or any applicable law or regulation, or any judgment, order, writ, injunction or
decree, of any jurisdiction, court or governmental instrumentality binding on
the Company.
(viii) No holders of securities of the
Company have rights to the registration of shares of Common Stock, or other
securities, because of the filing of the Registration Statement by the Company.
(ix) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except such as have been
(or will before the Closing Date have been) obtained under the Securities Act,
the Exchange Act, or the rules and regulations of the National Association of
Securities Dealers, Inc. (the NASD) and such as may be required under state
securities or blue sky laws in connection with the purchase and distribution of
the Stock by the Underwriters.
(x) To the best of its knowledge, the
Company is not infringing or otherwise violating any patent, copyright, trade
secret, trademark, service xxxx, trade name, technology, know-how or other
proprietary information or material of others. The Company has not received any
notice of infringement or conflict with (and the Company knows of no conflict or
infringement 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 on the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(xi) The Company owns or possesses
sufficient licenses or other rights to use all patents, copyrights, trade
secrets, trademarks, service marks, trade names, technology, know-how or other
proprietary information or materials necessary to conduct the business now being
conducted by the Company as described in the Prospectus.
(xii) There is no legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any of its subsidiaries is a party or to which any of the properties
of the Company or its subsidiaries is subject that is required to be described
in the Registration Statement or the Prospectus and is not so described, nor is
there any statute, regulation, contract or other document that is required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described or filed.
(xiii) The Company has all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all governmental
authorities, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except to the
extent that the failure to obtain or file such would not have a material adverse
effect on the business, properties, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole.
(xiv) The Company is familiar with the
Investment Company Act of 1940, as amended (the 1940 Act), and the rules and
regulations thereunder, and has in the past conducted its affairs in such a
manner as to ensure that it is not an "investment company" within the meaning of
the 1940 Act and such rules and regulations.
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(xv) The Stock has been approved for listing
on the National Association of Securities Dealers Automated Quotation (Nasdaq)
National Market. The Company has duly filed a Nasdaq National Market
Notification Form for Listing of Additional Shares and a Form 10-C with respect
to the sale and issuance of the Stock in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. (herein
called the NASD).
(xvi) The Company has not distributed and
will not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Stock other than the Preliminary
Prospectus, the Prospectus, the Registration Statement and the other materials
permitted by the Securities Act.
(xvii) Each of the Company and its
subsidiaries maintains insurance of the types and in the amounts generally
deemed adequate for its business, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect. The Company has not been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition (financial or otherwise), operations or business of the Company and
its subsidiaries, taken as a whole.
(xviii) Neither the Company nor any of its
subsidiaries has at any time during the last five (5) years in any jurisdiction
(A) made any unlawful contribution to any candidate for office, or failed to
disclose fully any contribution in violation of law, or (B) made any payment to
any governmental officer or official, or other person charged with similar
public or quasi-public duties other than payments required or permitted by the
laws of the United States.
(xix) Neither the Company nor any of its
affiliates does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075, Florida
Statutes.
(xx) Each of the Company and its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to its assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
differences.
(xxi) Each of the Company and its
subsidiaries has filed all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown thereon as due, and there is
no tax deficiency that has been or, to the best of the Company's knowledge,
might be asserted against the Company or any of its subsidiaries that could have
a material adverse effect on the business, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a whole; and
all tax liabilities are adequately provided for on the books of the Company and
its subsidiaries.
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(xxii) To the best of Company's knowledge,
no labor disturbance by the employees of the Company or its subsidiaries exists
or is imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, value added
resellers or distributors that might reasonably be expected to have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole. No collective
bargaining agreement exists with any of the Company's or its subsidiaries'
employees and, to the best of the Company's knowledge, no such agreement is
imminent.
(xxiii) The consolidated financial
statements, including the notes thereto, and supporting schedules included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the dates indicated
and the results of its operations for the periods specified. Such consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved, are
correct and complete, and are in accordance with the books and records of the
Company in all material respects.
(xxiv) The Company and its subsidiaries have
good and marketable title to all the properties and assets reflected as owned in
the financial statements (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in the financial statements (or elsewhere in the Prospectus), or (ii)
those which are not material in amount and do not materially adversely affect
the use made and proposed to be made of such property by the Company. The
Company holds its leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of the
Company. Except as disclosed in the Prospectus, the Company owns or leases all
such properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(xxv) Neither the Company, its subsidiaries
nor, to the Company's knowledge, any other party is in violation or breach of,
or in default with respect to complying with, any material provision of any
contract, agreement, instrument, lease, license, arrangement or understanding
which is material to the Company, and each such contract, agreement, instrument,
lease, license, arrangement and understanding is in full force and is the legal,
valid and binding obligation of the Company and, to the Company's knowledge, the
other parties thereto and is enforceable against the Company and, to the
Company's knowledge, against the other parties thereto in accordance with its
terms except as enforcement (i) may be limited by the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors generally,
(ii) is subject to general principles of equity and similar principles,
including, without limitation, concepts of materiality, reasonableness,
unconscionability, good faith and fair dealing and the possible unavailability
of specific performance, injunctive relief or other equitable remedies,
regardless of whether considered in a proceeding in equity or at law or (iii) is
subject to the effect of public policy. Each of the Company and its subsidiaries
enjoys peaceful and undisturbed possession under all leases and licenses under
which it is operating. Each of the Company and its subsidiaries is not in
violation or breach of, or in default with respect to, any term of its
Certificate of Incorporation or Bylaws.
(xxvi) Each of the Company and its
subsidiaries (A) is 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 (herein called Environmental Laws), (B) has received
all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and
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(C) is 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 business,
properties, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(xxvii) There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of the members of the
families of any of them, except as disclosed in the Registration Statement and
the Prospectus.
(xxviii)Except for the proxy statement
relating to the Company's 1997 annual meeting of shareholders, the Company has
duly filed on a timely basis with the Commission all reports, registration
statements and other documents required by the Securities Act, the Exchange Act,
or the rules and regulations of the Commission promulgated pursuant to the
Securities Act or the Exchange Act. All of such reports, registration statements
and other documents conformed in all material respects to the requirements of
the Securities Act, the Exchange Act or the rules and regulations of the
Commission promulgated pursuant to the Securities Act or Exchange Act, as
appropriate. None of such reports, registration statements or other documents,
at the time of their filing with the Commission, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(b) The Selling Securityholder hereby represents and
warrants as follows:
(i) The Selling Securityholder has good and
marketable title to all the shares of Stock to be sold by such Selling
Securityholder hereunder, free and clear of all liens, encumbrances, equities,
security interests and claims whatsoever, with full right and authority to
deliver the same hereunder, subject to the rights of ChaseMellon Shareholder
Services, as Custodian (herein called the Custodian), and that upon the delivery
of and payment for such shares of the Stock hereunder, the several Underwriters
will receive good and marketable title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever. There is no
contractual preemptive right, right of first refusal, right of co-sale or
similar right that exists with respect to the stock being sold by the Selling
Securityholder.
(ii) Certificates in negotiable form for the
shares of the Stock to be sold by such Selling Securityholder have been placed
in custody under a Custody Agreement (as hereinafter defined) for delivery under
this Agreement with the Custodian; such Selling Securityholder specifically
agrees that the shares of the Stock represented by the certificates so held in
custody for such Selling Securityholder are subject to the interests of the
several Underwriters and the Company, that the arrangements made by such Selling
Securityholder for such custody, including the Power of Attorney provided for in
such Custody Agreement, are to that extent irrevocable, and that the obligations
of such Selling Securityholder shall not be terminated by any act of such
Selling Securityholder or by operation of law, whether by the death or
incapacity of such Selling Securityholder (or, in the case of a Selling
Securityholder that is not an individual, the dissolution or liquidation of such
Selling Securityholder) or the occurrence of any other event; if any such death,
incapacity, dissolution, liquidation or other such event should occur before the
delivery of such shares of the Stock hereunder, certificates for such shares of
the Stock shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such death,
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incapacity, dissolution, liquidation or other event had not occurred, regardless
of whether the Custodian shall have received notice of such death, incapacity,
dissolution, liquidation or other event.
(iii) Such Selling Securityholder has
reviewed the Registration Statement and Prospectus and, although such Selling
Securityholder has not independently verified the accuracy or completeness of
all the information contained therein, nothing has come to the attention of such
Selling Securityholder that would lead such Selling Securityholder to believe
that on the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus contained and, on the
Closing Date and any later date on which Option Stock is to be purchased,
contains any untrue statement of a material fact or omitted or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(iv) All information furnished in writing by
or on behalf of such Selling Securityholder for use in the Registration
Statement and Prospectus is, and on the Closing Date will be, true, correct, and
complete, and does not, and on the Closing Date will not, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make such information not misleading.
(v) Such Selling Securityholder has no
reason to believe that any representation or warranty of the Company set forth
in Section 2(a) above is untrue or inaccurate in any material respect.
(vi) The sale of the Stock by such Selling
Securityholder pursuant hereto is not prompted by any adverse information
concerning the Company which is not set forth in the Registration Statement and
Prospectus.
(vii) The execution and delivery by such
Selling Securityholder of, and the performance by such Selling Securityholder of
its obligations under, this Agreement, the Custody Agreement signed by such
Selling Securityholder and the Custodian, relating to the deposit of the Stock
to be sold by such Selling Securityholder (the Custody Agreement) and the power
of attorney appointing certain individuals as such Selling Securityholder'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 or
articles of incorporation or by-laws of such Selling Securityholder (if such
Selling Securityholder is a corporation), or any agreement or other instrument
binding upon such Selling Securityholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Securityholder, and no consent, approval, authorization or order of or
qualification with any court or governmental body or agency is required for the
performance by such Selling Securityholder of its obligations under this
Agreement, the Custody Agreement or the Power of Attorney of such Selling
Securityholder, except such as may be required under the Securities Act, by the
NASD, or by the securities or Blue Sky laws of various states in connection with
the offer and sale of the Stock by the Underwriters.
(viii) Such Selling Securityholder has, and
on the Closing Date will have, 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 in the
manner provided in this Agreement the shares of Stock to be sold by such Selling
Securityholder.
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(ix) Each of this Agreement, the Custody
Agreement and the Power of Attorney has been duly authorized, executed and
delivered by or on behalf of such Selling Securityholder and, assuming due
authorization, execution and delivery by the other parties thereto, constitutes
a valid and binding obligation of such Selling Securityholder enforceable in
accordance with its terms, except as rights to indemnity or contribution may be
limited by federal or state securities laws and except as enforcement (i) may be
limited by the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting the rights of creditors generally, (ii) is subject to general
principles of equity and similar principles, including, without limitation,
concepts of materiality, reasonableness, unconscionability, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether considered in a
proceeding in equity or at law or (iii) is subject to the effect of public
policy.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and
warranties and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell 1,700,000 shares of the Underwritten Stock to the
several Underwriters, the Selling Securityholder agrees to sell to the several
Underwriters the number of shares of the Underwritten Stock set forth in
Schedule II opposite the name of such Selling Securityholder, and each of the
Underwriters agrees to purchase from the Company and the Selling Securityholder
the respective aggregate number of shares of Underwritten Stock set forth
opposite its name in Schedule I. The price at which such shares of Underwritten
Stock shall be sold by the Company and the Selling Securityholder and purchased
by the several Underwriters shall be $____ per share. The obligation of each
Underwriter to the Company and the Selling Securityholder shall be to purchase
from the Company and the Selling Securityholder that number of shares of the
Underwritten Stock which represents the same proportion of the total number of
shares of the Underwritten Stock to be sold by each of the Company and the
Selling Securityholder pursuant to this Agreement as the number of shares of the
Underwritten Stock set forth opposite the name of such Underwriter in Schedule I
hereto represents of the total number of shares of the Underwritten Stock to be
purchased by all Underwriters pursuant to this Agreement, as adjusted by you in
such manner as you deem advisable to avoid fractional shares. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters
shall fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 8 or 9 hereof) to
purchase and pay for the number of shares of the Stock agreed to be purchased by
such Underwriter or Underwriters, the Company or the Selling Securityholder
shall immediately give notice thereof to you, and the non-defaulting
Underwriters shall have the right within 24 hours after the receipt by you of
such notice to purchase, or procure one or more other Underwriters to purchase,
in such proportions as may be agreed upon between you and such purchasing
Underwriter or Underwriters and upon the terms herein set forth, all or any part
of the shares of the Stock which such defaulting Underwriter or Underwriters
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agreed to purchase. If the non-defaulting Underwriters fail so to make such
arrangements with respect to all such shares and portion, the number of shares
of the Stock which each non-defaulting Underwriter is otherwise obligated to
purchase under this Agreement shall be automatically increased on a pro rata
basis to absorb the remaining shares and portion which the defaulting
Underwriter or Underwriters agreed to purchase; provided, however, that the
non-defaulting Underwriters shall not be obligated to purchase the shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase if
the aggregate number of such shares of the Stock exceeds 10% of the total number
of shares of the Stock which all Underwriters agreed to purchase hereunder. If
the total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed to purchase shall not be purchased or absorbed in accordance
with the two preceding sentences, the Company and the Selling Securityholder
shall have the right, within 24 hours next succeeding the 24-hour period above
referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such shares and portion on the terms herein
set forth. In any such case, either you or the Company and the Selling
Securityholder shall have the right to postpone the Closing Date determined as
provided in Section 5 hereof for not more than seven business days after the
date originally fixed as the Closing Date pursuant to said Section 5 in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If neither the non-defaulting
Underwriters nor the Company and the Selling Securityholder shall make
arrangements within the 24-hour periods stated above for the purchase of all the
shares of the Stock which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company or the Selling
Securityholder to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company or the Selling
Securityholder. Nothing in this paragraph (b), and no action taken hereunder,
shall relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties
and covenants herein contained, and subject to the terms and conditions herein
set forth, the Company grants an option to the several Underwriters to purchase,
severally and not jointly, up to 258,750 shares of the Option Stock from the
Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made as provided in Section 5 hereof. The number of shares of the
Option Stock to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Stock, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the public offering by the
Underwriters of the Stock to be purchased by them shall be as set forth in the
Prospectus. The Underwriters may from time to time change the public offering
price after the closing of the initial public offering and increase or decrease
the concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph
on the front cover page and under "Underwriting" in the Registration Statement,
any Preliminary Prospectus and the Prospectus relating to the Stock filed by the
Company (insofar as such information relates to the Underwriters) constitutes
the only information furnished by the Underwriters to the Company for inclusion
in the Registration Statement, any Preliminary Prospectus, and the Prospectus,
and you on
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behalf of the respective Underwriters represent and warrant to the Company that
the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the
Underwritten Stock and the Option Stock (if the option granted by Section 3(c)
hereof shall have been exercised not later than 7:00 a.m., San Francisco time,
on the date two business days preceding the Closing Date), and payment therefor,
shall be made at the office of Xxxxxxx Coie, 0000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxxxxx 00000-0000 at 7:00 a.m., Seattle time, on the fourth
business day after the date of this Agreement, or at such time on such other
day, not later than seven full business days after such fourth business day, as
shall be agreed upon in writing by the Company, the Selling Securityholder and
you. The date and hour of such delivery and payment (which may be postponed as
provided in Section 3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof
shall be exercised after 7:00 a.m., San Francisco time, on the date two business
days preceding the Closing Date, delivery of certificates for the shares of
Option Stock, and payment therefor, shall be made at the office of Xxxxxxx Coie,
0000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000 at 7:00 a.m.,
Seattle time, on the third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company
shall be made to the Company or its order, and payment for the Stock purchased
from the Selling Securityholder shall be made to the Custodian, for the account
of the Selling Securityholder, in each case by one or more certified or official
bank check or checks in same day funds. Such payment shall be made upon delivery
of certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco Securities Corporation, 0 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 on the business day prior to the Closing Date or, in the
case of the Option Stock, by 3:00 p.m., New York time, on the business day
preceding the date of purchase.
It is understood that you, individually and not on behalf of
the Underwriters, may (but shall not be obligated to) make payment to the
Company and the Selling Securityholder for shares to be purchased by any
Underwriter whose check shall not have been received by you on the Closing Date
or any later date on which Option Stock is purchased for the account of such
Underwriter. Any such payment by you shall not relieve such Underwriter from any
of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING
SECURITYHOLDER. Each of the Company and the Selling Securityholder, as
applicable, respectively covenants and agrees as follows:
(a) The Company will (i) prepare and timely file with
the Commission under Rule 424(b) a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been advised
and furnished with a copy or to which you shall have reasonably objected in
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writing or which is not in compliance with the Securities Act or the rules and
regulations of the Commission.
(b) The Company will promptly notify each Underwriter
in the event of (i) the request by the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, (iii) the institution or notice
of intended institution of any action or proceeding for that purpose, (iv) the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Stock for sale in any jurisdiction, or (v) the receipt by
it of notice of the initiation or threatening of any proceeding for such
purpose. The Company will make every reasonable effort to prevent the issuance
of such a stop order and, if such an order shall at any time be issued, to
obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing
Date, deliver to you a signed copy of the Registration Statement as originally
filed and of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a signed copy
of each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless previously furnished
to you) and will also deliver to you, for distribution to the Underwriters, a
sufficient number of additional conformed copies of each of the foregoing (but
without exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as possible deliver to you and send to the several
Underwriters, at such office or offices as you may designate, as many copies of
the Prospectus as you may reasonably request, and (iii) thereafter from time to
time during the period in which a prospectus is required by law to be delivered
by an Underwriter or dealer, likewise send to the Underwriters as many
additional copies of the Prospectus and as many copies of any supplement to the
Prospectus and of any amended prospectus, filed by the Company with the
Commission, as you may reasonably request for the purposes contemplated by the
Securities Act.
(d) If at any time during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer any
event relating to or affecting the Company, or of which the Company shall be
advised in writing by you, shall occur as a result of which it is necessary, in
the opinion of counsel for the Company or of counsel for the Underwriters, to
supplement or amend the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser of the Stock, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended prospectus
so that the Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time such Prospectus is delivered to such purchaser, not misleading. If,
after the initial public offering of the Stock by the Underwriters and during
such period, the Underwriters shall propose to vary the terms of offering
thereof by reason of changes in general market conditions or otherwise, you will
advise the Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters such
proposed variation requires that the Prospectus be supplemented or amended, the
Company will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The Company
authorizes the Underwriters and all dealers to whom any of the Stock may be sold
by the several Underwriters to use the Prospectus, as from time to time amended
or supplemented, in connection with the sale of
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the Stock in accordance with the applicable provisions of the Securities Act and
the applicable rules and regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission,
the Company will submit to you, for your information, a copy of any
post-effective amendment to the Registration Statement and any supplement to the
Prospectus or any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested
by you, in the qualification of the Stock for offer and sale under the
securities or blue sky laws of such jurisdictions as you may designate and,
during the period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, in keeping such qualifications in good standing under
said securities or blue sky laws; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to qualify as
a foreign corporation in any jurisdiction in which it is not so qualified. The
Company will, from time to time, prepare and file such statements, reports, and
other documents as are or may be required to continue such qualifications in
effect for so long a period as you may reasonably request for distribution of
the Stock.
(g) During a period of five years commencing with the
date hereof, the Company will furnish to you, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports filed
with the Commission.
(h) Not later than the 45th day following the end of
the fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act and
Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, including
all costs and expenses incident to (i) the preparation, printing and filing with
the Commission and the National Association of Securities Dealers, Inc. (NASD)
of the Registration Statement, any Preliminary Prospectus and the Prospectus,
(ii) the furnishing to the Underwriters of copies of any Preliminary Prospectus
and of the several documents required by paragraph (c) of this Section 6 to be
so furnished, (iii) the printing of this Agreement and related documents
delivered to the Underwriters, (iv) the preparation, printing and filing of all
supplements and amendments to the Prospectus referred to in paragraph (d) of
this Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees. The Selling Securityholder will pay any transfer taxes incident to the
transfer to the Underwriters of the shares of the Stock being sold by the
Selling Securityholder.
(j) The Company agrees to reimburse you, for the
account of the several Underwriters, for reasonable fees and related
disbursements (including counsel fees and disbursements and costs of
photocopying memoranda for the Underwriters) paid by or for the account of the
Underwriters or their counsel in qualifying the Stock under state securities or
blue sky laws and in the review of the offering by the NASD.
(k) The provisions of paragraphs (i) and (j) of this
Section are intended to relieve the Underwriters from the payment of the
expenses and costs which the Company and the Selling Securityholder hereby agree
to pay and shall not affect any agreement which the Company
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and the Selling Securityholder may make, or may have made, for the sharing of
any such expenses and costs.
(l) The Company hereby agrees that, without the prior
written consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, the
Company will not, for a period of ninety (90) days following the commencement of
the public offering of the Stock by the Underwriters, directly or indirectly,
(i) sell, offer, contract to sell, make any short sale, pledge, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) 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 Stock to be sold to the Underwriters pursuant to this
Agreement, (B) shares of Common Stock issued by the Company upon the exercise of
options granted under the stock option or stock purchase plans of the Company
(the Plans), all as described in footnote (1) to the table under the caption
"Capitalization" in the Preliminary Prospectus, and (C) options to purchase
Common Stock granted under the Plans.
(m) The Company is familiar with the 1940 Act and
will in the future conduct its affairs, in such a manner to ensure that the
Company will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of 1940 Act, and the rules and
regulations thereunder.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of
this Section 7, the Company, and the Selling Securityholder severally and not
jointly agree to indemnify and hold harmless each Underwriter and each person
(including each partner or officer thereof) who controls any Underwriter within
the meaning of Section 15 of the Securities Act from and against any and all
losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise, and the Company and the
Selling Securityholder severally and not jointly agree to reimburse each such
Underwriter and controlling person for any legal or other expenses (including,
except as otherwise hereinafter provided, reasonable fees and disbursements of
counsel) incurred by the respective indemnified parties in connection with
defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding which may
be brought against, the respective indemnified parties, in each case arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the Prospectus
as part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreements of the Company
and the Selling Securityholder contained in this paragraph (a) shall not apply
to any such losses, claims, damages, liabilities or expenses if such statement
or omission was made in reliance upon and in
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conformity with information furnished as herein stated or otherwise furnished in
writing to the Company by or on behalf of any Underwriter for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto and (2) the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Stock which
is the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Stock a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person (excluding the documents incorporated
therein by reference) and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
noncompliance by the Company with paragraph (c) of Section 6 hereof. The
indemnity agreements of the Company and the Selling Securityholder contained in
this paragraph (a) and the representations and warranties of the Company, and
the Selling Securityholder contained in Section 2 hereof shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the delivery of and payment
for the Stock.
(b) Each Underwriter severally agrees to indemnify
and hold harmless the Company, each of its officers who signs the Registration
Statement on his own behalf or pursuant to a power of attorney, each of its
directors, each other Underwriter and each person (including each partner or
officer thereof) who controls the Company or any such other Underwriter within
the meaning of Section 15 of the Securities Act, and the Selling Securityholder
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or the common law or otherwise and
to reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of such
indemnifying Underwriter for use in the Registration Statement or the Prospectus
or any such amendment thereof or supplement thereto. The indemnity agreement of
each Underwriter contained in this paragraph (b) shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the delivery of and payment for the
Stock.
(c) Each party indemnified under the provision of
paragraphs (a) and (b) of this Section 7 agrees that, upon the service of a
summons or other initial legal process upon it in
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any action or suit instituted against it or upon its receipt of written
notification of the commencement of any investigation or inquiry of, or
proceeding against, it in respect of which indemnity may be sought on account of
any indemnity agreement contained in such paragraphs, it will promptly give
written notice (herein called the Notice) of such service or notification to the
party or parties from whom indemnification may be sought hereunder. No
indemnification provided for in such paragraphs shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceeding to
which the Notice would have related and was prejudiced by the failure to give
the Notice, but the omission so to notify such indemnifying party or parties of
any such service or notification shall not relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party shall be entitled at its own expense to participate in the
defense of any action, suit or proceeding against, or investigation or inquiry
of, an indemnified party. Any indemnifying party shall be entitled, if it so
elects within a reasonable time after receipt of the Notice by giving written
notice (herein called the Notice of Defense) to the indemnified party, to assume
(alone or in conjunction with any other indemnifying party or parties) the
entire defense of such action, suit, investigation, inquiry or proceeding, in
which event such defense shall be conducted, at the expense of the indemnifying
party or parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense. If,
within a reasonable time after receipt of the Notice, an indemnifying party
gives a Notice of Defense and the counsel chosen by the indemnifying party or
parties is reasonably satisfactory to the indemnified party or parties, the
indemnifying party or parties will not be liable under paragraphs (a) through
(c) of this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this
Section 7 is unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) of this Section 7, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but
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also the relative fault of each indemnifying party in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Securityholder on the one hand and the Underwriters on the other shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Stock received by the Company and the Selling
Securityholder and the total underwriting discount received by the Underwriters,
as set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Stock. Relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by each indemnifying party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling
Securityholder will, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Underwriter or any person who
controls such Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
(f) The liability of the Selling Securityholder under
the indemnity, contribution and reimbursement agreements contained in the
provisions of this Section 7 and Section 11 hereof shall be limited to an amount
equal to the initial public offering price of the Stock sold by the Selling
Securityholder to the Underwriters. In addition, the Selling Securityholder
shall not be liable under the expense, indemnity and contribution agreements of
Sections 6, 7 and Section 11 hereof unless and until the Underwriters have made
written demand on the Company for payment
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under such Sections which shall not have been paid by the Company within 60 days
after receipt of such demand. The Company and the Selling Securityholder may
agree, as between themselves and without limiting the rights of the Underwriters
under this Agreement, as to the respective amounts of such liability for which
they each shall be responsible.
8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company and the
Selling Securityholder if after the date of this Agreement trading in the Common
Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock Exchange,
the American Stock Exchange or The Nasdaq Stock Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities, (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States or (vii) any material change in the market for
securities in general or in political, financial or economic conditions from
those reasonably foreseeable as to render it impracticable in your reasonable
judgment to make a public offering of the Stock, or a material adverse change in
market levels for securities in general (or those of companies in particular) or
financial or economic conditions which render it inadvisable to proceed. If this
Agreement shall be terminated pursuant to this Section 8, there shall be no
liability of the Company or the Selling Securityholder to the Underwriters and
no liability of the Underwriters to the Company or the Selling Securityholder;
provided, however, that in the event of any such termination the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company and the Selling
Securityholder under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Stock shall be subject to
the performance by the Company and by the Selling Securityholder of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become
effective; and no stop order suspending the effectiveness thereof shall have
been issued and no proceedings therefor shall be pending or threatened by the
Commission.
(b) The legality and sufficiency of the sale of the
Stock hereunder and the validity and form of the certificates representing the
Stock, all corporate proceedings and other legal matters incident to the
foregoing, and the form of the Registration Statement and of the Prospectus
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(except as to the financial statements contained therein), shall have been
approved at or prior to the Closing Date by Fenwick & West LLP, counsel for the
Underwriters.
(c) You shall have received from Xxxxxxx Coie,
counsel for the Company and the Selling Securityholder, an opinion, addressed to
the Underwriters and dated the Closing Date, covering the matters set forth in
Annex A hereto, and if Option Stock is purchased at any date after the Closing
Date, an additional opinion from such counsel, addressed to the Underwriters and
dated such later date, confirming that the statements expressed as of the
Closing Date in such opinions remain valid as of such later date.
(d) You shall be satisfied that (i) as of the
Effective Date, the statements made in the Registration Statement and the
Prospectus were true and correct and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not misleading,
(ii) since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment, (iii) since the respective dates as of
which information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business,
neither the Company nor any of its subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form in which
it originally became effective and the Prospectus contained therein, (iv)
neither the Company nor any of its subsidiaries has any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus, (v) there are not any pending or known threatened legal proceedings
to which the Company or any of its subsidiaries is a party or of which property
of the Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus, (vi)
there are not any franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement which have not
been filed as required, (vii) the representations and warranties of the Company
herein are true and correct in all material respects as of the Closing Date or
any later date on which Option Stock is to be purchased, as the case may be, and
(viii) there has not been any material change in the market for securities in
general or in political, financial or economic conditions from those reasonably
foreseeable as to render it impracticable, in your reasonable judgment, to make
a public offering of the Stock, or a material adverse change in market levels
for securities in general (or those of companies in particular) or financial or
economic conditions which render it inadvisable to proceed.
(e) You shall have received on the Closing Date and
on any later date on which Option Stock is purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the Chief
Executive Officer, the Chief Operating Officer and the Chief Accounting Officer
of the Company, stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein and any supplements or
amendments thereto, and that the statements included in clauses (i) through
(vii) of paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from Price Waterhouse
LLP, a letter or letters, addressed to the Underwriters and dated the Closing
Date and any later date on which Option Stock is purchased, confirming that they
are independent public accountants with respect to the
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Company within the meaning of the Securities Act and the applicable published
rules and regulations thereunder and based upon the procedures described in
their letter delivered to you concurrently with the execution of this Agreement
(herein called the Original Letter), but carried out to a date not more than
three business days prior to the Closing Date or such later date on which Option
Stock is purchased (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing Date
or such later date, as the case may be, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company or
any of its subsidiaries which, in your sole judgment, makes it impractical or
inadvisable to proceed with the public offering of the Stock or the purchase of
the Option Stock as contemplated by the Prospectus.
(g) You shall have received from Price Waterhouse LLP
a letter stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as at October
31, 1996, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(h) You shall have been furnished evidence in usual
written or telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued
and sold by the Company shall have been duly authorized for listing by the
Nasdaq National Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have
received from all directors and officers and each stockholder holding at least
5% all of the outstanding shares of Common Stock agreements, in form reasonably
satisfactory to Xxxxxxxxx & Xxxxx LLC, stating that without the prior written
consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters such person will
not, for a period of ninety (90) days following the commencement of the public
offering of the Stock by the Underwriters, directly or indirectly, sell, offer,
contract to sell, transfer the economic risk of ownership in, make any short
sale, pledge, or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire Common Stock.
All the agreements, opinions, certificates and letters
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if Fenwick & West LLP, counsel for
the Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9
shall not be fulfilled, this Agreement may be terminated by you by giving notice
to the Company and to the Selling Securityholder. Any such termination shall be
without liability of the Company or the Selling Securityholder to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholder; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholder agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholder
under this Agreement, including all costs and expenses referred to in paragraphs
(i)
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and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company or the
Selling Securityholder to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE
SELLING SECURITYHOLDER. The obligation of the Company and the Selling
Securityholder to deliver the Stock shall be subject to the conditions that (a)
the Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10
shall not be fulfilled, this Agreement may be terminated by the Company and the
Selling Securityholder by giving notice to you. Any such termination shall be
without liability of the Company and the Selling Securityholder to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholder; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company and the Selling Securityholder under this Agreement, including all costs
and expenses referred to in paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their
other obligations under Section 7 of this Agreement (and subject, in the case of
the Selling Securityholder, to the provisions of paragraph (f) of Section 7),
the Company and the Selling Securityholder hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of the Company, the Selling Securityholder and the
several Underwriters and, with respect to the provisions of Section 7 hereof,
the several parties (in addition to the Company, the Selling Securityholder and
the several Underwriters) indemnified under the provisions of said Section 7,
and their respective personal representatives, successors and assigns. Nothing
in this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Xxxxxxxxx & Xxxxx
LLC, Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attn:
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Xxxxxxx Xxx (with a copy to the General Counsel); and if to the Company or the
Selling Securityholder, shall be mailed, telegraphed or delivered to it at its
office, 00000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. xxx
Xxxxx. All notices given by telegraph shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or the Selling Securityholder or their respective
directors or officers, and (c) delivery and payment for the Stock under this
Agreement; provided, however, that if this Agreement is terminated prior to the
Closing Date, the provisions of paragraph (l) of Section 6 hereof shall be of no
further force or effect.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
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Please sign and return to the Company and to the Selling
Securityholder in care of the Company the enclosed duplicates of this letter,
whereupon this letter will become a binding agreement among the Company, the
Selling Securityholder and the several Underwriters in accordance with its
terms.
Very truly yours,
ADVANCED DIGITAL INFORMATION CORPORATION
By:___________________________________________________
Xxxxx X. xxx Xxxxx, President and
Chief Executive Officer
SELLING SECURITYHOLDER:
By:____________________________________________________
Xxxxx X. xxx Xxxxx, Attorney-in-Fact for the Selling
Securityholder named in Schedule II hereto
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
XXXX XXXXXXXX INCORPORATED
By Xxxxxxxxx & Xxxxx LLC
By:_____________________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
Number of Shares
Underwriters to be Purchased
------------ ----------------
Xxxxxxxxx & Xxxxx LLC..................................
Xxxx Xxxxxxxx Incorporated.............................
Total......................................... 1,725,000
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SCHEDULE II
SELLING SECURITYHOLDER
Number of Shares
of Underwritten
Name of Selling Securityholder Stock to be Sold
------------------------------ ----------------
Foundation for the Future 25,000
Total..................................... 25,000
======
