1
EXHIBIT 1.01
__________ SHARES
ELOQUENT, INC.
COMMON STOCK
PURCHASE AGREEMENT
_____________________, 1999
U.S. BANCORP XXXXX XXXXXXX
Banc of America Securities LLC
Xxxxxx Xxxxxx Partners LLC
As Representatives of the several
Underwriters named in Schedule II hereto
c/o U.S. Bancorp Xxxxx Xxxxxxx
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Eloquent, Inc., a Delaware corporation (the "Company") proposes to sell
to the several Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of __________ shares (the "Firm Shares") of the Company's authorized
but unissued common stock, $0.001 par value per share (herein called "Common
Stock"). The Company has also granted to the several Underwriters an option to
purchase up to __________ additional shares of Common Stock on the terms and for
the purposes set forth in Section 3 hereof (the "Option Shares"). The Firm
Shares and any Option Shares purchased pursuant to this Purchase Agreement are
herein collectively called the "Securities."
The Company hereby confirms its agreement with respect to the sale of the
Securities to the several Underwriters, for whom you are acting as
Representatives (the "Representatives").
1. Registration Statement and Prospectus. A registration statement on
Form S-1 (File No. 333-89537) with respect to the Securities, including a
preliminary form of prospectus, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission; one or more amendments to such registration statement have also been
so prepared and have been, or will be, so filed; and, if the Company has elected
to rely upon Rule 462(b) of the Rules and Regulations to increase the size of
the offering registered under the Act, the Company will prepare and file with
the Commission a registration statement with respect to such increase pursuant
to Rule 462(b). Copies of such registration statement(s) and amendments and each
related preliminary prospectus have been delivered to you.
As part of the offering contemplated by this Agreement, U.S. Bancorp
Xxxxx Xxxxxxx (the "Designated Underwriter") has agreed to reserve out of the
Firm Shares purchased by it under this Agreement, up to ____________ shares, for
sale to the Company's directors, officers, employees and other parties
associated with the Company (collectively, "Participants"), as set forth in the
Prospectus (as defined herein) under the
2
heading "Underwriters" (the "Directed Share Program"). The Firm Shares to be
sold by the Designated Underwriter pursuant to the Directed Share Program (the
"Directed Shares") will be sold by the Designated Underwriter pursuant to this
Agreement at the public offering price. Any Directed Shares not orally confirmed
for purchase by a Participant by the end of the business day on which this
Agreement is executed will be offered to the public by the Underwriters as set
forth in the Prospectus.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus (including a term sheet meeting
the requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare and
file a prospectus (or a term sheet meeting the requirements of Rule 434)
pursuant to Rule 424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. Such registration statement as
amended at the time it is or was declared effective by the Commission, and, in
the event of any amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration statement as so
amended (but only from and after the effectiveness of such amendment), including
a registration statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the Act and
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rules 430A(b) and 434(d) of the Rules and
Regulations, is hereinafter called the "Registration Statement." The prospectus
included in the Registration Statement at the time it is or was declared
effective by the Commission is hereinafter called the "Prospectus," except that
if any prospectus (including any term sheet meeting the requirements of Rule 434
of the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 in order to meet the
requirements of Section 10(a) of the Rules and Regulations) filed by the Company
with the Commission pursuant to Rule 424(b) (and Rule 434, if applicable) of the
Rules and Regulations or any other such prospectus provided to the Underwriters
by the Company for use in connection with the offering of the Securities
(whether or not required to be filed by the Company with the Commission pursuant
to Rule 424(b) of the Rules and Regulations) differs from the prospectus on file
at the time the Registration Statement is or was declared effective by the
Commission, the term "Prospectus" shall refer to such differing prospectus
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) from and after the time such prospectus is filed with the
Commission or transmitted to the Commission for filing pursuant to such Rule
424(b) (and Rule 434, if applicable) or from and after the time it is first
provided to the Underwriters by the Company for such use. The term "Preliminary
Prospectus" as used herein means any preliminary prospectus included in the
Registration Statement prior to the time it becomes or became effective under
the Act and any prospectus subject to completion as described in Rule 430A or
434 of the Rules and Regulations.
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing thereof, did not contain an 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, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any Preliminary
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by you, or by any Underwriter through you, specifically
for use in the preparation thereof.
-2-
3
(ii) As of the time the Registration Statement (or any
post-effective amendment thereto, including a registration statement (if any)
filed pursuant to Rule 462(b) of the Rules and Regulations increasing the size
of the offering registered under the Act) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus (including any term sheet
meeting the requirements of Rule 434 of the Rules and Regulations)) and at the
First Closing Date and Second Closing Date (as hereinafter defined), (A) the
Registration Statement and the Prospectus (in each case, as so amended and/or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the Registration
Statement (as so amended) did not or will not include an 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, and (C) the Prospectus
(as so supplemented) did not or will not include an 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, in light of the circumstances in which
they are or were made, not misleading; except that the foregoing shall not apply
to statements in or omissions from any such document in reliance upon, and in
conformity with, written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation thereof. If the
Registration Statement has been declared effective by the Commission, no stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission.
(iii) The financial statements of the Company, together
with the notes thereto, set forth in the Registration Statement and the
Prospectus comply in all material respects with the requirements of the Act and
fairly present the financial condition of the Company as of the dates shown and
the results of operations and changes in cash flows for the periods therein
specified in conformity with United States generally accepted accounting
principles consistently applied throughout the periods involved; and the
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. No other financial statements or
schedules are required to be included in the Registration Statement or
Prospectus. PricewaterhouseCoopers LLP, which has expressed its opinion with
respect to the financial statements and schedules filed as a part of the
Registration Statement and included in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act and the
Rules and Regulations. The summary financial and other data included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation. The Company has full corporate power and authority to own its
properties and conduct its business as currently being carried on and as
described in the Registration Statement and the Prospectus, and is duly
qualified to do business as a foreign corporation in good standing in each
jurisdiction in which it owns or leases real property or in which the conduct of
its business makes such qualification necessary and in which the failure to so
qualify would have a material adverse effect on the assets or properties,
business, results of operations, or condition (financial or otherwise) of the
Company (a "Material Adverse Effect").
(v) Except as contemplated in the Registration Statement
and the Prospectus, subsequent to the date of the latest audited financial
statements included in the Prospectus, the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock; and there has not been any change in the
capital stock (other than a change in the number of outstanding Common Stock due
to the issuance of shares upon the exercise of outstanding options or warrants
or conversion of preferred stock), or any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock (other than pursuant to
-3-
4
the Company's equity incentive plans, which change is not material), of the
Company or any change that had a Material Adverse Effect, or any development
involving a prospective Material Adverse Effect.
(vi) Except as set forth in the Registration Statement
and the Prospectus, there is not pending or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the Company
is a party or to which any property or assets of the Company is subject before
or by any court or governmental agency, authority or body, or any arbitrator,
which could reasonably be expected to result in a Material Adverse Effect.
(vii) There are no contracts or documents of the Company
that are required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement by the Act or by the Rules and Regulations that
have not been so described or filed.
(viii) This Agreement has been duly authorized, executed
and delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The execution, delivery and performance
of this Agreement and the consummation of the transactions herein contemplated
(including without limitation the issuance and sale of the Securities) will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any agreement or instrument to which
the Company is a party or by which it is bound or to which any of its property
is subject, the Company's charter or by-laws, or any order, rule, regulation or
decree of any court or governmental agency or body having jurisdiction over the
Company or any of its properties; no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement or for the consummation of
the transactions contemplated hereby, including the issuance or sale of the
Securities by the Company, except such as may be required under the Act or state
securities or blue sky laws; and the Company has full power and authority to
enter into this Agreement and to authorize, issue and sell the Securities as
contemplated by this Agreement.
(ix) All of the issued and outstanding shares of capital
stock of the Company, including the outstanding Common Stock, are duly
authorized and validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities that were not waived and the capital stock of the
Company, including the Common Stock, conforms to the description thereof in the
Registration Statement and Prospectus. Except as otherwise stated in the
Registration Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting or
transfer of, any Common Stock pursuant to the Company's charter, bylaws or any
agreement or other instrument to which the Company is a party or by which the
Company is bound that does not expire upon the closing of the sale of the Firm
Shares. Except as described in the Registration Statement and the Prospectus,
there are no options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company or any subsidiary of the
Company any shares of the capital stock of the Company or any subsidiary of the
Company. The Company has an authorized and outstanding capitalization as of
December 31, 1999 as set forth in the Registration Statement and the Prospectus.
(x) The Securities have been duly authorized and, when
issued, delivered and paid for in accordance with the terms hereof, will have
been validly issued and will be fully paid and nonassessable, and the holders
thereof will not be subject to personal liability by reason of being such
holders, and conforms to the description thereof in the Registration Statement
and the Prospectus. No further approval
-4-
5
or authority of the stockholders of the Company or the Board of Directors of the
Company is required for the sale and issuance of the Securities hereunder.
(xi) Neither the filing of the Registration Statement nor
the offering or sale of the Securities as contemplated by this Agreement gives
rise to any rights for or relating to the registration of any Common Stock or
other securities of the Company and no person or entity holds a right to require
registration under the Securities Act of shares of capital stock of the Company
at any other time, except as disclosed in the Registration Statement and the
Prospectus.
(xii) The Company holds, and is operating in compliance
in all material respects with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all such
franchises, grants, authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect except where
failure to comply or hold any such franchise, grant, authorization, license,
permit, easement, consent, certificate or order would not have a Material
Adverse Effect; and the Company is in compliance in all material respects with
all applicable federal, state, local and foreign laws, regulations, orders and
decrees applicable to the Company.
(xiii) The Company has good and marketable title to all
property described in the Registration Statement and the Prospectus as being
owned by them, in each case free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Registration
Statement and the Prospectus; the property held under lease by the Company is
held by it under valid, subsisting and enforceable leases with only such
exceptions with respect to any particular lease as do not interfere in any
material respect with the conduct of the business of the Company.
(xiv) The Company owns or possesses all patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service xxxx registrations, copyrights, licenses, inventions, trade secrets
know-how, proprietary techniques, processes and rights ("Intellectual Property")
necessary for the conduct of the business of the Company as currently carried on
(including products, services and technology contemplated by current research
and development projects) and as described in the Registration Statement and the
Prospectus. Except as stated in the Registration Statement and the Prospectus,
no name that the Company uses and no other aspect of the business of the Company
infringes, or requires the payment of license or similar fees for, any
Intellectual Property of others material to the business or prospects of the
Company and the Company has not received any notice alleging any such
infringement or fee. To the knowledge of the Company, its Intellectual Property
is not being infringed by any third parties which infringement could reasonably
be expected, whether singly or in the aggregate, to have a Material Adverse
Effect.
(xv) The Company is not (i) in violation of its charter
or bylaws (ii) in breach of or otherwise in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other contract, lease or other instrument to
which it is subject or by which it may be bound, or to which any of the property
or assets of the Company is subject, nor has any event occurred that with notice
and/or the passage of time would give rise to such a breach or default or (iii)
is in violation of any law, ordinance, government rule, regulation or court
order or decree to which it is subject or by which it may be bound or to which
any of the property or assets of the Company is subject, except in the case of
clauses (ii) and (iii) for such breaches, defaults or violations that
individually or in the aggregate would not have a Material Adverse Effect.
(xvi) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is not in
default in the payment of any taxes that were payable
-5-
6
pursuant to said returns or any assessments with respect thereto, other than any
that the Company is contesting in good faith.
(xvii) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Act to be distributed by the
Company.
(xviii) The Securities have been duly authorized for
quotation on the Nasdaq National Market, subject to official notice of issuance,
and, on the date the Registration Statement became or becomes effective, the
Company's Registration Statement on Form 8-A or other applicable form under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), became or will
become effective.
(xix) The Company has no subsidiary or subsidiaries and
the Company owns no capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, limited liability company, joint
venture association, trust or other entity.
(xx) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (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
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxi) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby and except
as disclosed in the Prospectus and the Registration Statement there are no
contracts, agreements or understandings between the Company and any person that
would give rise to any such liability.
(xxii) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(xxiii) No labor dispute with the employees of the
Company exists or, to the knowledge of the Company, is threatened that could
have a Material Adverse Effect. The Company has not violated any applicable
safety or similar law applicable to its business nor any federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor any
applicable federal or state wage and hours law, nor any provisions of the
Employee Retirement Income Security Act or the rules and regulations promulgated
thereunder, the violation of any of which could have a Material Adverse Effect.
The Company is not aware of any threatened or pending litigation between the
Company and any of its executive officers that, if adversely determined, could
have a Material Adverse Effect.
(xxiv) No transaction has occurred or relationship exists
between or among the Company and any of its officers or directors or any
affiliate or affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(xxv) The Company is insured by insurers of recognized
financial responsibility against such losses and risks in such amounts as are
customary in the business in which it is engaged; and the Company has no reason
to believe that it will not be able to renew its existing insurance coverage as
and
-6-
7
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.
(xxvi) To the Company's knowledge, there are no
affiliations with the National Association of Securities Dealers, Inc. (the
"NASD") among the Company's officers, directors or, to the best knowledge of the
Company, any five percent or greater stockholder of the Company, except as set
forth in the Registration Statement and the Prospectus or otherwise disclosed in
writing to the Representatives.
(xxvii) The Company is not and, after giving effect to
the sale and issuance of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder (the "Investment Company Act").
(xxviii) Neither the Company nor, to the knowledge of the
Company, any other person associated with or acting on behalf of the Company
including, without limitation, any director, officer, agent or employee of the
Company has, directly or indirectly, while acting on behalf of the Company or
any of its subsidiaries, (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(xxix) The Company has reviewed its operations and any
third parties with which 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 (defined below). As a
result of such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a Material Adverse Effect. The
"Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind 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.
(xxx) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Securities.
(xxxi) No consent, approval, authorization, or order of,
or filing with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance and sale of the Securities by the Company, except such as have
been obtained and made under the Act and such as may be required under state
securities laws.
(xxxii) The Company (i) has notified each holder of a
currently outstanding option issued under the Company's Equity Incentive Plan
and 1997 Equity Incentive Plan and each person who has acquired securities
pursuant to the exercise of any option granted under such option plans that
pursuant to the terms of such option plans, none of such options or shares may
be sold or otherwise transferred or disposed of for a period of 180 days after
the date of the initial public offering of the Offered Securities (such
restriction being referred to herein as the "Option Agreement Lock-up" and (ii)
has imposed a stop-transfer instruction with the Company's transfer agent in
order to enforce the foregoing lock-up provision.
-7-
8
(xxxiii) Except as disclosed in the Prospectus, all
outstanding Securities, and all securities convertible into or exercisable or
exchangeable for Securities, are subject to valid and binding agreements
(collectively, "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 Securities, or any such
securities convertible into or exercisable or exchangeable for Securities, for a
period of 180 days after the date of the Prospectus without the prior written
consent of U.S. Bancorp Xxxxx Xxxxxxx ("Xxxxx Xxxxxxx").
(xxxiv) The Company (i) has notified each stockholder who
is party to the Fourth Amended and Restated Investors' Rights Agreement dated
October 20, 1999 (the "Rights Agreement"), that pursuant to the terms of the
Rights Agreement, none of the shares of the Company's capital stock held by such
stockholder may be sold or otherwise transferred or disposed of for a period of
180 days after the date of the initial public offering of the Offered Securities
(such restriction being referred to herein as the "Rights Agreement Lock-up")
and (ii) has imposed a stop-transfer instruction with the Company's transfer
agent in order to enforce the foregoing lock-up provision imposed pursuant to
the Rights Agreement.
(xxxv) The Company has not offered, or caused the
Underwriters to offer, any Securities to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
(xxxvi) Furthermore, the Company represents and warrants
to the Underwriters that (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or supplements thereto
will comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and that (ii) no authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is necessary under the securities
law and regulations of foreign jurisdictions in which the Directed Shares are
offered outside the United States.
(xxxvii) Under the provisions of Rule 152 promulgated
under the Act, the Company's issuance of subordinated convertible promissory
notes and detachable warrants to purchase common stock on October 20, 1999 is
not integrated with the offering contemplated hereby. Such issuance was exempt
from the registration requirements of Section 5 of the Act pursuant to Section
4(2) thereof.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel pursuant to this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
3. Purchase, Sale and Delivery of Securities.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell __________ Firm Shares to the
several Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm Share
shall be $_____ per share. The obligation of each Underwriter to the Company
shall be to purchase from the Company that number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraph (c) of this Section 3 and in Section 8
-8-
9
hereof, the agreement of each Underwriter is to purchase only the respective
number of Firm Shares specified in Schedule I.
The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by certified or official bank check or other next day funds payable to
the order of the Company, as appropriate, at the offices of U.S. Bancorp Xxxxx
Xxxxxxx, Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or
such other location as may be mutually acceptable, at 9:00 a.m. Central time on
the third (or if the Securities are priced, as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business
day following the date hereof, or at such other time and date as you and the
Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, such time
and date of delivery being herein referred to as the "First Closing Date." If
the Representatives so elect, delivery of the Firm Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives. Certificates representing the Firm Shares, in
definitive form and in such denominations and registered in such names as you
may request upon at least two business days' prior notice to the Company, will
be made available for checking and packaging not later than 10:30 a.m., Central
time, on the business day next preceding the First Closing Date at the offices
of U.S. Bancorp Xxxxx Xxxxxxx, Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually acceptable.
(b) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters an option to
purchase all or any portion of the Option Shares at the same purchase price as
the Firm Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the effective date of this Agreement upon notice (confirmed in writing) by
the Representatives to the Company setting forth the aggregate number of Option
Shares as to which the several Underwriters are exercising the option, the names
and denominations in which the certificates for the Option Shares are to be
registered and the date and time, as determined by you, when the Option Shares
are to be delivered, such time and date being herein referred to as the "Second
Closing" and "Second Closing Date", respectively; provided, however, that the
Second Closing Date shall not be earlier than the First Closing Date nor earlier
than the second business day after the date on which the option shall have been
exercised. The number of Option Shares to be purchased by each Underwriter shall
be the same percentage of the total number of Option Shares to be purchased by
the several Underwriters as the number of Firm Shares to be purchased by such
Underwriter is of the total number of Firm Shares to be purchased by the several
Underwriters, as adjusted by the Representatives in such manner as the
Representatives deem advisable to avoid fractional shares. No Option Shares
shall be sold and delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by certified or official bank check or wire transfer or other next day
funds payable to the order of the Company, as appropriate, at the offices of
U.S. Bancorp Xxxxx Xxxxxxx, Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually acceptable at
9:00 a.m., Central time, on the Second Closing Date. If the Representatives so
elect, delivery of the Option Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives. Certificates representing the Option Shares in definitive form
and in such denominations and registered in such names as you have set forth in
your notice of option exercise, will be made available for checking and
packaging not later than 10:30 a.m., Central time, on the business day next
preceding the Second Closing Date at the office of U.S. Bancorp Xxxxx Xxxxxxx,
Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such
other location as may be mutually acceptable.
-9-
10
(c) It is understood that you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company, on behalf of any Underwriter for the Securities to
be purchased by such Underwriter. Any such payment by you shall not relieve any
such Underwriter of any of its obligations hereunder. Nothing herein contained
shall constitute any of the Underwriters an unincorporated association or
partner with the Company.
4. Covenants
(a) The Company covenants and agrees with the several
Underwriters as follows:
(i) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts to
cause the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify you promptly
of the time when the Registration Statement or any post-effective amendment to
the Registration Statement has become effective or any supplement to the
Prospectus (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or the Prospectus or
additional information; if the Company has elected to rely on Rule 430A of the
Rules and Regulations, the Company will prepare and file a Prospectus (or term
sheet within the meaning of Rule 434 of the Rules and Regulations) containing
the information omitted therefrom pursuant to Rule 430A of the Rules and
Regulations with the Commission within the time period required by, and
otherwise in accordance with the provisions of, Rules 424(b), 430A and 434, if
applicable, of the Rules and Regulations; if the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file a
registration statement with respect to such increase with the Commission within
the time period required by, and otherwise in accordance with the provisions of,
Rule 462(b); the Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or the Prospectus (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations) that, in your opinion, may be necessary or advisable
in connection with the distribution of the Securities by the Underwriters; and
the Company will not file any amendment or supplement to the Registration
Statement or Prospectus (including any term sheet within the meaning of Rule 434
of the Rules and Regulations) to which you shall reasonably object by notice to
the Company after having been furnished a copy a reasonable time prior to the
filing.
(ii) Within the time during which a prospectus (including
any term sheet within the meaning of Rule 434 of the Rules and Regulations)
relating to the Securities is required to be delivered under the Act, the
Company will comply as far as it is able with all requirements imposed upon it
by the Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof
and the Prospectus. If during such period any event occurs as a result of which
in the opinion of counsel for the Company or of counsel for the Underwriters the
Prospectus would include an 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 then existing, not misleading, or if during such period it is in
the opinion of counsel for the Company or of counsel for the Underwriters
necessary to amend the Registration Statement or supplement the Prospectus to
comply with the Act, the Company will promptly notify you and will forthwith
amend the Registration Statement or supplement the Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.
(iii) The Company will use its best efforts to qualify
the Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the Company shall
not be required
-10-
11
in connection therewith to qualify as a foreign corporation or to execute a
general consent to service of process in any state. 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 Securities.
(iv) The Company will furnish to the Underwriters copies
of the Registration Statement (five of which will be signed and will include all
exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and
supplements (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to such documents, in each case as soon as available and
in such quantities as you may from time to time reasonably request. The
Prospectus shall be so furnished on or prior to 3:00 P.M., New York time, on the
business day following the later of the execution and delivery of this Agreement
or the effective date of the Registration Statement. All other documents shall
be so furnished promptly after they become available. 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. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(v) During a period of five years commencing with the
date hereof, the Company will furnish to the Representatives and, upon request,
to each of the other Underwriters, as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such year; and the
Company will furnish to the Representatives (i) promptly after they become
available, a copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
stockholders, and (ii) from time to time, such other information concerning the
Company as U.S. Bancorp Xxxxx Xxxxxxx may reasonably request.
(vi) The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a 12-month period beginning after
the effective date of the Registration Statement that shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(vii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented from
becoming effective under the provisions of Section 9(a) hereof or is terminated,
will pay or cause to be paid (A) all expenses (including transfer taxes
allocated to the respective transferees) incurred in connection with the
delivery to the Underwriters of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company's accountants
and counsel but, except as otherwise provided below, not including fees of the
Underwriters' counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits thereto), the
Securities, each Preliminary Prospectus, the Prospectus, and any amendment
thereof or supplement thereto, and the printing, delivery, and shipping of this
Agreement and other underwriting documents, including Blue Sky Memoranda, (C)
all filing fees and fees and disbursements of the Underwriters' counsel incurred
in connection with the qualification of the Securities for offering and sale by
the Underwriters or by dealers under the securities or blue sky laws of the
states and other jurisdictions which you shall designate in accordance with
Section 4(d) hereof, (D) the fees and expenses of any transfer agent or
registrar, (E) the filing fees incident to any required review by the NASD of
the terms of the sale of the Securities, (F) listing fees, if any, and (G) all
other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein. If the sale
of the Securities provided for herein is not consummated by reason of action by
the Company pursuant to Section 9(a) hereof which prevents this Agreement from
becoming effective, or by reason of any failure, refusal or inability on the
part of the
-11-
12
Company to perform any agreement on its or their part to be performed, or
because any other condition of the Underwriters' obligations hereunder required
to be fulfilled by the Company is not fulfilled, the Company will reimburse the
several Underwriters for all out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company shall not
in any event be liable to any of the Underwriters for loss of anticipated
profits from the transactions covered by this Agreement.
(viii) The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes set forth in
the Prospectus and will file such reports with the Commission with respect to
the sale of the Securities and the application of the proceeds therefrom as may
be required in accordance with Rule 463 of the Rules and Regulations.
(ix) The Company will not, without your prior written
consent, from the date of execution of this Agreement and continuing to and
including the date 180 days after the date of the Prospectus (the "Lock-Up
Period") (A) offer for sale, sell, contract to sell, pledge, grant any option
for the sale of or otherwise issue or dispose of, directly or indirectly (or
publicly disclose the intention to make any such offer, sale, pledge, grant,
issuance or disposition), any Common Stock or any securities convertible into or
exchangeable for, or any options or rights to purchase or acquire, Common Stock,
except to the Underwriters pursuant to this Agreement and except for the
issuance of options pursuant to the Company's 1999 Equity Incentive Plan
(provided that no such options shall vest and become exercisable prior to the
expiration of the Lock-Up Period) and the 1999 Employee Stock Purchase Plan and
pursuant to the exercise of stock options or warrants outstanding on the date
hereof or (B) file with the Commission a registration statement under the Act
relating to any securities or publicly disclose the intention to make any such
filing (other than registration statements on Form S-8 limited in scope to the
1999 Equity Incentive Plan and the 1999 Employee Stock Purchase Plan). The
Company agrees not to accelerate the vesting of any option or warrant or the
lapse of any repurchase right prior to the expiration of the Lock-Up Period.
(x) The Company either has caused to be delivered to you
or will cause to be delivered to you prior to the effective date of the
Registration Statement a letter (the "Lock-Up Agreement") from each of the
Company's directors, officers and other stockholders and each holder of
securities convertible into or exercisable for shares of the Company's capital
stock stating that such person agrees that, during the Lock-Up Period, he or she
will not publicly or privately announce any intention to, will not allow any
affiliate or subsidiary, if applicable, to, and will not itself, without the
prior written consent of U.S. Bancorp Xxxxx Xxxxxxx on behalf of the
Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell any
option or contract to purchase, purchase any option to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any Common Stock or any securities convertible into, or exercisable
or exchangeable for, Common Stock, or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of any Common Stock or any securities convertible into, or
exercisable or exchangeable for, 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), in each case,
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) or otherwise controlled by the stockholder on
the date of the Lock-Up Agreement or thereafter acquired; provided, however,
that, if the stockholder is an individual, the stockholder may, without the
prior written consent of U.S. Bancorp Xxxxx Xxxxxxx on behalf of the
Underwriters, transfer Common Stock or any securities convertible into, or
exercisable or exchangeable for, Common Stock either during his or her lifetime
or, on death, by will or intestacy to members of the stockholder's immediate
family or to trusts exclusively for the benefit of members of the stockholder's
immediate family or in connection with bona fide gifts, provided that, prior to
any such transfer, such transferee executes an agreement, satisfactory to U.S.
Bancorp Xxxxx Xxxxxxx, pursuant to which such transferee agrees to receive and
hold such shares subject
-12-
13
to the provisions of the Lock-Up Agreement and that there shall be no further
transfer except in accordance with the provisions of the Lock-Up Agreement. For
purposes of this paragraph, "immediate family" shall mean the stockholder's
spouse, lineal descendant, father, mother, brother or sister.
(xi) The Company will (A) use its best efforts to enforce
the terms of each agreement between the Company, and each holder of the
Company's capital stock or securities convertible into or exercisable for shares
of the Company's capital stock which agreement contains restrictions on transfer
or disposition of such securities in substance similar to the Lock-Up Agreement
("Stock Restriction Agreements"); and (B) issue stop-transfer instructions to
the transfer agent for the Securities with respect to any transaction or
contemplated transaction that would constitute a breach of or default under a
Stock Restriction Agreement or Lock-Up Agreement. In addition, except with the
prior written consent of U.S. Bancorp Xxxxx Xxxxxxx, the Company agrees not to
amend or terminate, or waive any right under, any Lock-up Agreement or Stock
Restriction 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 or Stock Restriction Agreement, prior to the
expiration of the Lock-Up Period.
(xii) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities, and has not effected any sales of Common Stock that
are required to be disclosed in response to Item 701 of Regulation S-K under the
Act that have not been so disclosed in the Registration Statement.
(xiii) The Company will not incur any liability for any
finder's or broker's fee or agent's commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, other than the selling commission paid to the Underwriters.
(xiv) The Company will inform the Florida Department of
Banking and Finance at any time prior to the consummation of the distribution of
the Securities by the Underwriters if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba. Such
information will be provided within 90 days after the commencement thereof or
after a change occurs with respect to previously reported information.
(xv) The Company is familiar with the Investment Company
Act and will conduct its affairs in such a manner to ensure that the Company is
not and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act.
(xvi) The Company will use its best efforts to effect and
maintain the quotation of the Common Stock on the Nasdaq National Market.
(xvii) In connection with the Directed Share Program, the
Company will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the "NASD") or
the NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of the
Registration Statement. The Designated Underwriter will notify the Company as to
which Participants will need to be so restricted. The Company will direct the
transfer agent to place stop transfer instructions upon such securities for such
period of time.
(xviii) The Company will pay all fees and disbursements
of counsel incurred by the Underwriters in connection with the Directed Shares
Program and stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Directed Share Program.
-13-
14
(xix) Furthermore the Company covenants with the
Underwriters that the Company will comply with all applicable securities and
other applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed Share
Program.
5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and the Second Closing Date (as if
made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company contained herein, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central time, on the date of this Agreement, or such later
time and date as you, as Representatives of the several Underwriters, shall
approve and all filings required by Rules 424, 430A and 434 of the Rules and
Regulations shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereof shall have
been issued; no proceedings for the issuance of such an order shall have been
initiated or threatened; and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) The legality and sufficiency of the sale of the Securities
hereunder and the validity and form of the certificates representing the Stock,
all corporate proceedings and other legal matters incident to the foregoing, and
the form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or prior to
the Closing Date by Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Underwriters.
(c) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations), contains an untrue statement of fact that, in your opinion, is
material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(d) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries shall have
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; and there
shall not have been any change in the capital stock (other than a change in the
number of outstanding Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries, or any material adverse change or any
development involving a prospective material adverse change (whether or not
arising in the ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects, net
worth or results of operations of the Company and its subsidiaries, taken as a
whole, that, in your judgment, makes it impractical or inadvisable to offer or
deliver the Securities on the terms and in the manner contemplated in the
Registration Statement or the Prospectus.
-14-
15
(e) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, the opinion of Xxxxxx Godward
LLP, general counsel for the Company, dated such Closing Date and addressed to
you, covering the matters set forth in Schedule II hereto.
In rendering such opinion such counsel may rely (i) as to matters of law
other than California and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Company and its subsidiaries
provided that the extent of such reliance is specified in such opinion.
(f) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, such opinion or opinions from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, special counsel for
the several Underwriters, dated such Closing Date and addressed to you, with
respect to the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as you reasonably may request, and such
counsel shall have received such papers and information as they request to
enable them to pass upon such matters.
(g) On each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of PricewaterhouseCoopers LLP, dated
such Closing Date and addressed to you:
(i) confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualifications of accountants under Rule
2-01 of Regulation S-X of the Commission,
(ii) stating that, in their opinion, the audited
consolidated financial statements and schedules examined by them and included in
the Registration Statement and the Prospectus comply in form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations,
(iii) stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date of such letter), the conclusions
and findings of said firm with respect to the financial information and other
matters covered by its letter delivered to you concurrently with the execution
of this Agreement, and the effect of the letter so to be delivered on such
Closing Date shall be to confirm the conclusions and findings set forth in such
prior letter,
(iv) stating that, at a specific date not more than five
business days prior to the date of such letter, there were any changes in the
capital stock or long-term debt of the Company or any decrease in net current
assets or stockholders' equity of the Company in each case compared with amounts
shown on the December 31, 1998 audited consolidated balance sheet included in
the Registration Statement and the Prospectus, or for the period from January 1,
1998 to such specified date there were any decreases, as compared with the
comparable period of the prior fiscal quarter, in total sales of services and
license fees, income before taxes or total or per share amounts of net income of
the Company, except in all instances for changes, decreases or increases set
forth in such letter,
(v) stating that they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentaged and financial information that are derived from the general
accounting records of the Company and are included in the Registration Statement
and the Prospectus, including the amounts, percentages and financial information
included under the captions
-15-
16
"Summary Consolidated Financial and Operating Data," "Capitalization," "Selected
Consolidated Financial and Operating Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and have compared
such amounts, percentages and financial information with such records of the
Company and with information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation.
(vi) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards No. 71,
Interim Financial Information, on the unaudited financial statements included in
the Registration Statements;
(vii) on the basis of the review referred to in clause
(ii) above, a reading of the latest available interim financial statements of
the Company, inquiries of officials of the Company who have responsibility for
financial and accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that:
(1) the unaudited financial statements included
in the Registration Statements do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the related published Rules
and Regulations or any material modifications should be
made to such unaudited financial statements for them to
be in conformity with generally accepted accounting
principles;
(2) at the date of the latest available balance
sheet read by such accountants, or at a subsequent
specified date not more than three business days prior to
the date of such letter, there was any change in the
capital stock or deferred revenue or any increase in
long-term debt, total or current liabilities or
stockholders' deficit, or any decrease in current assets
or total assets of the Company and its consolidated
subsidiaries, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
(3) for the period from the closing date of the
latest statement of operations included in the Prospectus
to a specified date not more than three business days
prior to the date of such letter, there were any
decreases, as compared with the corresponding period of
the previous year and with the period of corresponding
length in the previous quarter, in total revenues, or
increases in loss from operations, comprehensive loss or
the total amounts of the net loss;
(h) On each Closing Date, there shall have been furnished to you,
as Representatives of the Underwriters, a certificate, dated such Closing Date
and addressed to you, signed by the chief executive officer and by the chief
financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, in all material respects, as if made at and
as of such Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to such Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment thereof or the
qualification of the Securities for offering or sale has been issued, and no
proceeding for that purpose has been instituted or, to the best of their
knowledge, is contemplated by the Commission or any state or regulatory body;
and
-16-
17
(iii) The signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any amendments
thereof or supplements thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), and (A) such documents contain all
statements and information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and the Prospectus,
as amended or supplemented, does not include any untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (B)
since the effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented prospectus which
has not been so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, neither
the Company nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions,
not in the ordinary course of business, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock, and except
as disclosed in the Prospectus, there has not been any change in the capital
stock (other than a change in the number of outstanding shares of Common Stock
due to the issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt, or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company, or any of its subsidiaries, or any
Material Adverse Effect or any development involving a prospective Material
Adverse Effect, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the Company
or any of its subsidiaries is a party before or by any court or governmental
agency, authority or body, or any arbitrator, which might result in any Material
Adverse Effect.
(i) Subsequent to the execution of this Agreement or, if earlier,
the dates as of which information is given in the Registration Statement
(exclusive of any amendment thereto) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in subparagraph (h) of this
Section 5 or (ii) any change, or any development involving a prospective change
(including without limitation a change in management or control of the Company),
in or affecting the business or properties of the Company and its subsidiaries
the effect of which, in any case referred to in clause (i) or (ii) above, is, in
the judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto);
(j) At the execution of this Agreement, the Company shall have
furnished to the Representatives a letter from each director, executive officer,
stockholder and holder of securities convertible or exercisable for shares of
capital stock of the Company an executed copy of the Lock-Up Agreement addressed
to the Representatives; prior to the commencement of the offering of the
Securities, the Securities shall have been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance; and
(k) The Company shall have furnished to you and counsel for the
Underwriters such additional documents, certificates and evidence as you or they
may have reasonably requested.
All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are satisfactory in
form and substance to you and counsel for the Underwriters. The Company will
furnish you with such conformed copies of such opinions, certificates, letters
and other documents as you shall reasonably request.
-17-
18
6. Indemnification and Contribution.
(a)
(i) The Company agrees to indemnify and hold harmless
each Underwriter, its partners, directors and officers and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness pursuant to Rules 430A and
434(d) of the Rules and Regulations, if applicable, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by it in connection with investigating or defending against
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof.
(ii) The Company agrees to indemnify and hold harmless
the Designated Underwriter and each person, if any, who controls the Designated
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (the "Designated Entities"), from and against all
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) (A) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by the Company for distribution to Participants in connection with the Directed
Share Program 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; (B) caused by the failure of any Participant to pay for
and accept delivery of Directed Shares that the Participant agreed to purchase,
or (C) related to, arising out of, or in connection with the Directed Share
Program, other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the bad
faith or gross negligence of the Designated Entities.
(iii) In addition to their other obligations under this
Section 6(a), the Company agrees that, as an interim measure during the pendency
of 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 this Section 6(a), they will reimburse each Underwriter on a
monthly basis for all reasonable legal fees or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Underwriter that received such
payment shall promptly return it to the party or parties that made such payment,
together with interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by
-18-
19
____________________ (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities which
the Company or the Selling Stockholders may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, its partners, directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto (including
any term sheet within the meaning of Rule 434 of the Rules and Regulations), or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any such amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company by you,
or by such Underwriter through you, specifically for use in the preparation
thereof, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
against any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party. In case any such action shall be
brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if, in the sole judgment of the Representatives, it is advisable for the
Underwriters to be represented as a group by separate counsel, the
Representatives shall have the right to employ a single counsel to represent the
Representatives and all Underwriters who may be subject to liability arising
from any claim in respect of which indemnity may be sought by the Underwriters
under subsection (a) of this Section 6, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Underwriters as incurred (in accordance with the
provisions of the second paragraph in subsection (a) above). An indemnifying
party shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
Notwithstanding anything contained herein to the contrary, if indemnity may be
sought pursuant to Section 6(a)(ii) hereof in respect of such action or
proceeding, then in addition to such separate firm for the indemnified parties,
the indemnifying party shall be liable for the reasonable fees and expenses of
not more than one separate firm (in addition to any local counsel) for the
Designated Underwriter for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control the Designated Underwriter within the meaning of the either Section
15 of the Act of Section 20 of the Exchange Act.
-19-
20
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying 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 subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other 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 shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (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 account of the equitable considerations
referred to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), 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 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 6 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. Substitution of Underwriters.
-20-
21
(a) If any Underwriter or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters to
be purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule II
hereto, the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule II hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters to
be purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased aggregates more than
10% of the total amount of Firm Shares set forth in Schedule II hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section
4(a)(viii), Section 4(b)(ii) and Section 6 hereof) nor shall any Underwriter
(other than an Underwriter who shall have failed, otherwise than for some reason
permitted under this Agreement, to purchase the amount of Firm Shares agreed by
such Underwriter to be purchased hereunder) be under any liability to the
Company (except to the extent provided in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased by
the non-defaulting Underwriters or by any other party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8.
9. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at 10:00 a.m., Central
time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; provided, that if the Registration Statement
is effective at the time this Agreement is executed, this Agreement shall become
effective at such time as you in your discretion shall first release the
Securities for sale to the public. For the purpose of this Section, the
Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except that the
provisions of Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at
all times be effective.
(b) You, as Representatives of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be cancelled at any time prior to
the Second Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to such Closing Date, to perform any agreement on its part
to be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange or the American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange or the
-21-
22
American Stock Exchange, by such Exchange or by order of the Commission or any
other governmental authority having jurisdiction, (v) a banking moratorium shall
have been declared by Federal or New York authorities, or (vi) there has
occurred any material adverse change in the financial markets in the United
States or an outbreak of major hostilities (or an escalation thereof) in which
the United States is involved, a declaration of war by Congress, any other
substantial national or international calamity or any other event or occurrence
of a similar character shall have occurred since the execution of this Agreement
that, in your judgment, makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Securities. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at
all times be effective.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company and an Attorney-in-Fact, on behalf of the Selling Stockholders, shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company elects to prevent this Agreement from becoming effective, you and an
Attorney-in-Fact, on behalf of the Selling Stockholders, shall be notified by
the Company by telephone or telegram, confirmed by letter.
10. Default by the Company. If the Company shall fail at the First
Closing Date to sell and deliver the number of Securities which it is obligated
to sell hereunder, then this Agreement shall terminate without any liability on
the part of any non-defaulting party.
No action taken pursuant to this Section shall relieve the Company so
defaulting from liability, if any, in respect of such default.
11. Information Furnished by Underwriters. The statements set forth in
the last paragraph of the cover page and under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the written information
furnished by or on behalf of the Underwriters referred to in Section 2 and
Section 6 hereof.
12. 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 the Representatives c/o U.S. Bancorp
Xxxxx Xxxxxxx, Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, except that notices given to an Underwriter pursuant to Section
6 hereof shall be sent to such Underwriter at the address stated in the
Underwriters' Questionnaire furnished by such Underwriter in connection with
this offering; if to the Company, shall be mailed, telegraphed or delivered to
it at 0000 Xxxxxxx xx xxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer; or in each case to such other address as the
person to be notified may have requested in writing. All notices given by
telegram shall be promptly confirmed by letter. Any party to this Agreement may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6. 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 Securities from any of
the several Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
[Signature Page Follows]
-22-
23
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the
Company, the Selling Stockholders and the several Underwriters in accordance
with its terms.
Very truly yours,
ELOQUENT, INC.
By
-------------------------------
Name:
----------------------------
Title:
---------------------------
Confirmed as of the date first above mentioned, on behalf of themselves and the
other several Underwriters named in Schedule II hereto.
U.S. BANCORP XXXXX XXXXXXX
By
------------------------------------
Managing Director
BANC OF AMERICA SECURITIES LLC
By
------------------------------------
Managing Director
XXXXXX XXXXXX PARTNERS LLC
By
------------------------------------
Managing Director
24
SCHEDULE I
Underwriter Number of Firm Shares (1)
----------- -------------------------
--------------------
Total .............................
====================
(1) The Underwriters may purchase up to an additional __________ Option
Shares, to the extent the option described in Section 3(b) of the
Agreement is exercised, in the proportions and in the manner described in
the Agreement.
25
SCHEDULE II
MATTERS TO BE COVERED IN THE OPINION OF
XXXXXX GODWARD LLP
COUNSEL FOR THE COMPANY
Capitalized terms not defined in this Schedule shall have the meanings ascribed
to them in the Purchase Agreement.
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The Company is duly qualified to transact business and is in good
standing as a foreign corporation in each state of the United States
where the character of their activities requires such qualification,
except where the failure to be so qualified would not have a Material
Adverse Effect. The Company has full corporate power and authority to
own its properties and conduct its business as currently being carried
on as described in the Registration Statement and the Prospectus.
(ii) All of the issued and outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, and conform to the description thereof contained in the
Prospectus under the heading "Description of Capital Stock"; and the
stockholders of the Company have no preemptive rights with respect to
the Securities. Except as disclosed in the Registration Statement and
the Prospectus, to the best of such counsel's knowledge, as of December
31, 1999, there were no (a) outstanding securities of the Company
convertible into or evidencing the right to purchase or subscribe for
any shares of capital stock of the Company, (b) outstanding or
authorized options, warrants, rights or any other agreements of any
character obligating the Company to issue and shares of its capital
stock or (c) any securities convertible into or evidencing the right to
purchase or subscribe for any shares of such capital stock.
(iii) The Registration Statement has become effective under
the Securities Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b), or if the Rule 434
Term Sheet was used, the required filing has been made in the manner and
within the time period required by Rule 434; and, to the best of such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or, to such counsel's knowledge, have been
threatened by the Commission.
(iv) The Registration Statement and the Prospectus (except as
to financial statements and schedules, related notes, other financial
data and statistical data derived therefrom included therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with
the Rules and Regulations.
26
(v) The registration of the Company's Common Stock under
Section 12(g) of the Exchange Act has become effective.
(vi) 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 an "investment
company" as such term is defined in the Investment Company Act.
(vii) Neither the issue and sale by the Company of the
Securities as contemplated by this Agreement nor the execution of this
Agreement by the Company nor the consummation of any other transactions
contemplated by this Agreement will (with or without the passage of time
and/or notice) conflict with, or result in a breach or violation of or
constitute a default under (A) the Certificate of Incorporation or
bylaws of the Company, (B) any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit to the
Registration Statement, (C) any statute, law or regulation (other than
state securities and blue sky laws, as to which such counsel need not
express an opinion), or (D) so far as is known to such counsel, any
order, writ, injunction or decree, of any jurisdiction, court or
governmental instrumentality entered against the Company.
(viii) Such counsel does not know of any franchises,
contracts, leases or other documents which in the opinion of such
counsel are of a character required under the Act and the Rules to be
described or referred to in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement, which are not
described, referred to and filed as required.
(ix) To such counsel's knowledge, there is no pending or
overtly threatened action, suit, investigation or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its property or assets of a character
required to be disclosed in the Registration Statement or the Prospectus
that is not disclosed in the Prospectus to the extent required under the
Act and the Rules, and the statements in the Prospectus under the
heading "Shares Eligible for Future Sale," to the extent they constitute
a description of legal matters or documents, are correct in all material
respects.
(x) No consent, approval, waiver, license, authorization,
order or other action by or filing with any United States federal or
state court or governmental agency, body or authority is required for
the execution and delivery by the Company of the this Agreement or for
the issue and sale of the Securities by the Company or the consummation
of any other transactions contemplated by this Agreement, except for
filings and other actions required pursuant to the Securities Act and/or
the Exchange Act, as amended, and the Rules and Regulations, required by
the NASD and such as may be required under state securities or blue sky
laws in connection with the purchase and distribution of the Securities
by the Underwriters.
(xi) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to
-2-
27
any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement, or, except as
described in the Registration Statement and the Prospectus, in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
(xii) This Agreement has been duly authorized, executed,
delivered by the Company and constitutes a valid, legal and binding
obligation of the Company enforceable in accordance with its terms
(except as rights to indemnity and contribution hereunder may be limited
by federal or state laws and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity and limitations on the availability of equitable
remedies) and all corporate authorizations and consents necessary for
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been given.
(xiii) The statements under the headings "Use of Proceeds,"
"Business" and "Description of Capital Stock," insofar as such
statements refer to material contracts, indentures, mortgages, loan
agreements, notes, leases, employment agreements and other agreements or
instruments to which the Company is a party, are accurate and adequate
in all material respects, and summarize such agreements and instruments
to the extent required by the Act and the Rules.
(xiv) To the best knowledge of such counsel, there is no
litigation, action, suit or governmental proceeding or investigation
pending or threatened to which the Company is a party or to which any
property of the Company is subject or that seeks to restrain, enjoin or
prevent the execution and delivery of this Agreement, or the
consummation of the transactions contemplated thereby, or that questions
the legality or validity of any such transaction or that seeks to
recover damages or obtain other relief in connection with any such
transactions, or which would could be reasonably be expected to have a
Material Adverse Effect, if determined adversely to the Company.
(xv) The statements set forth in the Prospectuses describing
legal matters, documents or proceedings under the headings "Management"
and "Shares Eligible for Future Sale" have been reviewed by such counsel
and are insofar as they describe legal matters, documents, proceedings
or conclusions and insofar as they describe the contents of certain
provisions of the Company's Certificate of Incorporation or bylaws; and
the statements set forth under the heading "Description of Capital
Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company,
provide summaries of such provisions to the extent required by the Act
and the Rules.
(xvi) The description of the Option Plans and options that may
be granted thereunder and the options granted otherwise than under such
plans set forth in the Prospectus accurately presents the information
with respect to such plans and options and summarizes such information
to the extent required by the Act and the Rules.
-3-
28
(xvii) The Securities have been duly approved for inclusion on
The Nasdaq National Market, subject to the consummation of the
transactions contemplated by this Agreement and to official notice of
issuance.
(xviii) The Common Stock conforms in all material respects to
the description thereof contained in the Prospectus under the heading
"Description of Capital Stock;" no further approval or authority of the
stockholders of the Board of Directors of the Company is required for
the issuance and sale of the Common Stock; and such Common Stock will
have been duly authorized and, when delivered and in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable.
(xix) The Company has all requisite corporate power and
authority to issue, sell and deliver the Common Stock being issued and
sold by it in accordance with and upon the terms and conditions set
forth in this Agreement; all corporate action required to be taken by
the Company for the due and proper authorization, issuance, sale and
delivery of the Common Stock has been validly and sufficiently taken;
the filing of the Registration Statement and the Prospectus with the
Commission has been duly authorized by and on behalf of the Company and
the Registration Statement has been duly executed by the Company.
(xx) The certificates for the Securities, in the form filed as
an exhibit to the Registration are in due and proper form under Delaware
law.
In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that: (a) during
the course of the preparation of the Registration Statement, such counsel
participated in conferences with the Representatives, counsel to the
Representatives, officers and other representatives of the Company and the
Company's independent public accountants at which the contents of the
Registration Statement and Prospectus were discussed; (b) while such counsel has
not independently verified and is not passing upon the accuracy, completeness or
fairness of the statements made in the Registration Statement and Prospectus,
except as set forth in paragraphs ii, ix, xiii, xv and xviii above, on the basis
of the foregoing, no facts have come to such counsel's attention that have
caused it to believe that the Registration Statement, as of the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date or the
date hereof, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need express no comment with respect to the
financial statements and schedules, related notes, other financial data and
statistical data derived therefrom included in the Registration Statement and
Prospectus.
Counsel rendering the foregoing opinion may also rely as to questions of
law not involving the laws of the United Stated or of the State of California,
upon opinions of local counsel satisfactory in form and scope to counsel for the
Underwriters. Copies of any opinions so relied upon shall be delivered to the
Representatives and to counsel for the Underwriters and the foregoing opinion
shall also state that counsel knows of no reason the Underwriters are not
entitled to relay upon the opinions of such local counsel.
-4-
