EXHIBIT 1.1
2,200,000 SHARES(1)
REDENVELOPE, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
September___, 2003
X.X. Xxxxxxxxx + Co., LLC
Pacific Crest Securities Inc.
As Representatives of the several Underwriters
x/x X.X. Xxxxxxxxx + Co., LLC
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
RedEnvelope, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell up to an aggregate of 2,200,000 shares of its
authorized but unissued common stock, $0.001 par value per share (the "Common
Stock"), to the Underwriters (as hereinafter defined), for whom you (the
"Representatives") are acting as representatives (said 2,200,000 shares of
Common Stock to be issued and sold by the Company being herein called the
"Underwritten Stock"). The Company has also granted the Underwriters an option
to purchase up to an aggregate of 330,000 additional shares of Common Stock (the
"Option Stock," and the Option Stock together with the Underwritten Stock being
hereinafter referred to as the "Shares"). The Common Stock is more fully
described in the Registration Statement and the Prospectus hereinafter
mentioned.
The Company hereby confirms the agreements made with respect
to the purchase of the Shares by the Underwriters, named in Schedule 1 hereto
(herein collectively called the "Underwriters," which term shall, for purposes
of this Underwriting Agreement (the "Agreement") also include any underwriter
purchasing Shares pursuant to Section 3(b) hereof).
1. REGISTRATION STATEMENT. The Company has filed with
the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-1 (No. 333-106120), including the related preliminary
prospectus, for the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of the Shares. Copies of such registration statement and
of each amendment thereto, if any, including the related preliminary prospectus
----------------
(1) Plus an option to purchase from the Company up to an aggregate of
330,000 additional shares to cover over-allotments.
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission) heretofore filed by the Company with the Commission have been
delivered to you.
(a) The term "Registration Statement" as used in
this Agreement shall mean such registration statement, including all exhibits
and financial statements, all information omitted therefrom in reliance upon
Rule 430A and contained in the Prospectus referred to below, in the form in
which it became effective, and any registration statement filed pursuant to Rule
462(b) of the rules and regulations of the Commission with respect to the Shares
(herein called a "Rule 462(b) registration statement"), and, in the event of any
amendment thereto after the effective date of such registration statement (the
"Effective Date"), shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended (including any Rule 462(b)
registration statement). The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
"Preliminary Prospectus" as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it becomes
effective.
(b) The Registration Statement has been declared
effective under the Securities Act, and no post-effective amendment to the
Registration Statement has been filed as of the date of this Agreement. The
Company has caused to be delivered to you copies of each Preliminary Prospectus
and has consented to the use of such copies for the purposes permitted by the
Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to the Underwriters as follows:
(a) Neither the Commission nor any state
securities commission has issued any order preventing or suspending the use of
any Preliminary Prospectus or has instituted or, to the Company's knowledge,
threatened to institute any proceedings with respect to such an order. The
Registration Statement and the Prospectus comply, and on the Closing Date (as
hereinafter defined) and any later date on which the Option Stock is to be
purchased, the Prospectus will comply, in all material respects, with the
provisions of the Securities Act and the rules and regulations of the Commission
thereunder (the "Securities Act and Rules"). On the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and on the
Effective Date the Prospectus did not, and on the Closing Date and any later
date on which the Option Stock is to be purchased, will not, contain any untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein, or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that none of the representations and warranties
in this subparagraph 2(a) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in conformity
with information herein or otherwise furnished in writing to the Company by or
on behalf of the Underwriters expressly for use in the Registration Statement or
Prospectus.
2
(b) The Company (i) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, having full power and corporate authority to own or lease its
properties and to conduct its business as described in the Registration
Statement and the Prospectus; and (ii) is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary (except where the failure to be
so qualified would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company). The
Company has employees located solely in California and Ohio, and in no other
jurisdiction in the United States, and is duly qualified to do business as a
foreign corporation and is in good standing in California and Ohio which are the
only jurisdictions where the Company is required to be so qualified. The Company
has no subsidiaries and does not own any capital stock or other equity
securities in any other entity, except for instruments or interests held by the
Company solely for investment.
(c) The Company has the duly authorized and
validly issued outstanding capitalization as of June 29, 2003 set forth under
the caption "Capitalization" in the Prospectus and will have the adjusted
capitalization as of June 29, 2003 (giving effect to the closing of the offering
contemplated by this Agreement) set forth therein on the Closing Date and any
later date on which the Option Stock is to be purchased, based on the
assumptions set forth therein. The securities of the Company conform to the
descriptions thereof contained in the Registration Statement and the Prospectus.
The form of certificates for the Shares conforms to the requirements of the
Delaware General Corporation Law. The outstanding shares of the Company's
capital stock have been duly authorized and validly issued by the Company and
are fully paid and nonassessable and, except as otherwise described in the
Preliminary Prospectus, the Prospectus and the Registration Statement, were
issued in transactions that were exempt from the registration requirements of
the Securities Act, without violation of any preemptive rights, rights of first
refusal or similar rights. Except as created hereby or otherwise described in
the Registration Statement and the Prospectus, there are no outstanding options,
warrants, rights or other arrangements requiring the Company at any time to
issue any capital stock. No holders of outstanding shares of capital stock of
the Company are entitled as such to any preemptive or other rights to subscribe
for any of the Shares to be sold by the Company, and neither the filing of the
Registration Statement nor the offering or sale of the Shares to be sold by the
Company as contemplated by this Agreement gives rise to any rights, other than
those that have lapsed or have been waived or satisfied, for or relating to, the
registration of any securities of the Company. The Shares to be sold by the
Company are duly authorized, and will be, when sold to the Underwriters as
provided herein, validly issued, fully paid and nonassessable and conform to the
description thereof contained in the section of the Registration Statement and
the Prospectus entitled "Description of Capital Stock." No further approval or
authority of the stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares to be sold by the Company as
contemplated herein.
(d) The Company has full legal right, power and
authority to enter into this Agreement and to consummate the transactions
provided for herein. This Agreement has been duly authorized, executed and
delivered by the Company and, assuming it is a binding agreement of the
Underwriters, constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms (except as such
enforceability may
3
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws), and none of the Company's execution or delivery of this Agreement,
its performance hereunder, its consummation of the transactions contemplated
herein, its application of the net proceeds of the offering in the manner set
forth under the caption "Use of Proceeds" or the conduct of its business as
described in the Registration Statement and the Prospectus, conflicts or will
conflict with or results or will result in any breach or violation of any of the
terms or provisions of, or constitutes or will constitute a default under,
causes or will cause (or permits or will permit) the maturation or acceleration
of any liability or obligation or the termination of any right under, or result
in the creation or imposition of any lien, charge or encumbrance upon, any
property or assets of the Company pursuant to the terms of (i) the certificate
of incorporation or bylaws of the Company; (ii) any indenture, mortgage, deed of
trust, voting trust agreement, stockholders' agreement, note agreement or other
agreement or instrument to which the Company is a party or by which it is bound
or to which its respective property is subject; or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company of any government,
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or its activities or properties, which materially and adversely affect
the business or properties of the Company.
(e) The Common Stock has been approved for
quotation on The Nasdaq National Market and, prior to the Closing Date, (i) the
Common Stock shall be listed and duly admitted to trading on The Nasdaq National
Market and (ii) the Shares will be authorized for inclusion in The Nasdaq
National Market.
(f) The financial statements of the Company and
the related notes and schedules thereto included in the Registration Statement
and the Prospectus fairly present the financial position, results of operations,
stockholders' equity and cash flows of the Company at the dates and for the
periods specified therein. Such financial statements and the related notes and
schedules thereto have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise noted therein) and all adjustments necessary for a fair
presentation of results for such periods have been made; provided, however, that
the unaudited financial statements are subject to normal year-end audit
adjustments (which are not expected to be material) and do not contain all
footnotes required under generally accepted accounting principles. The summary
and selected financial and statistical data included in the Registration
Statement and the Prospectus present fairly the information shown therein and
such data have been prepared on a basis consistent with the financial statements
contained therein and in the books and records of the Company.
(g) Deloitte & Touche LLP, who have certified
our balance sheets as of March 31, 2002 and March 30, 2003, and our related
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended March 30, 2003, filed with the Commission as
part of the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the rules and regulations
promulgated thereunder. All auditing services and non-audit services, other than
de minimus services,
4
provided to the Company by Deloitte & Touche LLP since June 13, 2003, have been
preapproved by the audit committee of the Company's board of directors in
accordance with Section 10A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(h) 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. The Company has disclosure controls and procedures
(as defined in Rules 13a-14 and 15d-14 under the Exchange Act) to ensure that
material information relating to the Company is made known to the Company's
principal executive officer and the Company's principal financial officer or
persons performing similar functions.
(i) The Company has filed all necessary federal,
state and local income, franchise and other material tax returns and has paid
all taxes shown as due thereunder, and the Company has no tax deficiency that
has been or, to their knowledge, that might be assessed against the Company
that, if so assessed, would materially and adversely affect the business or
properties of the Company. All tax liabilities accrued through the date hereof
have been adequately provided for on the books of the Company.
(j) The Company maintains insurance underwritten
by insurers of recognized financial responsibility of the types and in amounts
and with such deductibles as customary for companies in the same or similar
business, all of which insurance is in full force and effect.
(k) Except as disclosed in the Registration
Statement and the Prospectus, there is no action, suit, claim, proceeding or
investigation pending or, to the Company's knowledge, threatened against the
Company before or by any court, regulatory body or administrative agency or any
other governmental agency or body, domestic or foreign, that (i) questions the
validity of the capital stock of the Company or this Agreement or any action
taken or to be taken by the Company pursuant to or in connection with this
Agreement; (ii) is required to be disclosed in the Registration Statement and
the Prospectus, which is not so disclosed (and such proceedings, if any, as are
summarized in the Registration Statement and the Prospectus are accurately
summarized in all material respects); or (iii) may have a material adverse
affect upon the business operations, financial condition or income of the
Company.
(l) All executed agreements or copies of
executed agreements filed or incorporated by reference as exhibits to the
Registration Statement have been duly and validly authorized, executed and
delivered by the Company and constitute the legal, valid and binding agreements
of the Company enforceable by and against it in accordance with their respective
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to enforcement of
creditors' rights generally, and general equitable principles relating to the
availability of remedies, and except as rights to
5
indemnity or contribution may be limited by federal or state securities laws and
the public policy underlying such laws). The descriptions in the Registration
Statement and the Prospectus of contracts and other documents are accurate and
fairly present the information required to be shown with respect thereto by the
Securities Act and Rules. There are no contracts or other documents that are
required by the Securities Act or Rules to be described in the Registration
Statement and the Prospectus or filed as exhibits to the Registration Statement
that are not described or filed as required. The exhibits that have been filed
are complete and correct copies of the documents of which they purport to be
copies. Except for such rights as are described in the Registration Statement
and the Prospectus, no party has any right to require the Company to register
any securities for sale under the Securities Act.
(m) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as expressly contemplated therein, the Company has not incurred, other
than in the ordinary course of its business, any material liabilities or
obligations, direct or contingent, purchased any of its outstanding capital
stock, paid or declared any dividends or other distributions on its capital
stock or entered into any material transactions, and there has been no material
change in capital stock or debt or any material adverse change in the business,
properties, assets, net worth, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business.
(n) The Company is not, nor with the giving of
notice or lapse of time or both will it be, in violation of or in default under,
any term or provision of (i) its certificate of incorporation or bylaws; (ii)
any indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property is subject, or any
indebtedness, the effect of which breach or default singly or in the aggregate
may have a material adverse effect on the business, management, properties,
assets, rights, operations or condition (financial or otherwise) of the Company;
or (iii) any statute, judgment, decree, order, rule or regulation applicable to
the Company or of any arbitrator, court, regulatory body, administrative agency
or any other governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its activities or properties and the effect of
which violation or default singly or in the aggregate may have a material
adverse effect on the business, management, properties, assets, rights,
operations or condition (financial or otherwise) of the Company.
(o) The Company has not incurred any liability
for a fee, commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by this
Agreement other than as contemplated hereby.
(p) No labor disturbance by the employees of the
Company or principal suppliers or customers of the Company exists or, to the
Company's knowledge, is imminent.
(q) Except as disclosed in the Registration
Statement and the Prospectus, the Company owns, is licensed or otherwise
possesses all rights to use, all patents, patent rights, inventions, know-how
(including trade secrets and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
6
marks, trade names, copyrights and other intellectual property rights
(collectively, the "Rights") necessary for the conduct of its business as
described in the Registration Statement and the Prospectus. Except as disclosed
in the Registration Statement and the Prospectus, to the Company's knowledge, no
claims have been asserted against the Company by any person with respect to the
use of any such Rights or challenging or questioning the validity or
effectiveness of any such Rights. The continued use of the Rights in connection
with the business and operations of the Company does not, to the knowledge of
the Company, infringe on the rights of any person, which, if the subject of an
unfavorable decision, ruling or filing, would have a material adverse effect on
the financial condition, business or properties of the Company.
(r) The Company is conducting its businesses in
compliance with all applicable laws, ordinances or governmental rules or
regulations of the jurisdictions in which it is conducting business, except
where the failure to be so in compliance would not materially and adversely
affect the business or properties of the Company. Each approval, consent, order,
authorization, designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the consummation of
the transactions herein contemplated (except such additional steps as may be
required by the National Association of Securities Dealers, Inc. (the "NASD") to
qualify or exempt the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(s) Neither the Company, nor, to the Company's
knowledge, any of its officers, directors or affiliates (within the meaning of
the rules and regulations promulgated under the Securities Act), has taken or
may take, directly or indirectly, any action designed to cause or result in, or
that has constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock of the
Company, to facilitate the sale or resale of the Shares or otherwise.
(t) The Company is not, nor after giving effect
to the issuance and sale of the Shares by the Company will it be, an "investment
company" within the meaning of such term under the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
(u) There are no transfer taxes or similar fees
or charges under federal law or the laws of any state or foreign jurisdiction,
or any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the Shares.
(v) The Company has good and marketable title to
all properties and assets described in the Registration Statement and the
Prospectus as owned by it, free and clear of all liens, encumbrances, security
interests, equities, claims and defects, except such as are described in the
Registration Statement and Prospectus, or such as are not materially important
in relation to the business of the Company. The Company has valid and
enforceable leases for the properties described in the Registration Statement
and the Prospectus as leased by it, free and clear of all liens, encumbrances,
security interests, equities, claims and defects, except such as are not
material and do not interfere with the use made by the Company thereof and
except as disclosed in the Registration Statement and Prospectus. The Company
owns or leases all such
7
properties as are necessary to its operations as now conducted, as set forth in
the Registration Statement and the Prospectus, and the properties and businesses
of the Company conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(w) The Company holds all franchises, licenses,
permits, approvals, certificates and other authorizations from federal, state
and other governmental or regulatory authorities necessary for the ownership,
leasing and operation of its properties or required for the present conduct of
its business, and such franchises, licenses, permits, approvals, certificates
and other governmental authorizations are in full force and effect and the
Company is in compliance therewith in all material respects, except where the
failure so to hold, obtain, maintain or comply with would not have a materially
adverse effect on the business, financial condition or results of operations of
the Company.
(x) Except as would not individually or in the
aggregate result in a material adverse effect on the business, properties,
assets, rights, operations or condition (financial or otherwise) of the Company,
the Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
(herein called "ERISA"); no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan"; or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "Pension Plan"
for which the Company would have liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(y) No relationship, direct or indirect, exists
between or among the Company, on the one hand, and the current or prior
directors, officers, stockholders, customers or suppliers of the Company, on the
other hand, which is required to be described in the Registration Statement and
the Prospectus that is not so described.
(z) Neither the Company nor, to the Company's
knowledge, any director, officer, agent, employee or other person associated
with or acting on behalf of the Company has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provisions of the Foreign Corrupt Practices Act of 1972; or
made any bribe, rebate, payoff, influence, payment, kickback or other unlawful
payment.
(aa) Since July 30, 2002, the Company has not,
directly or indirectly, including through any subsidiary, extended or maintained
credit, arranged for the extension of credit or renewed an extension of credit
in the form of a personal loan to or for any director or executive officer in
violation of Section 13(k) of the Exchange Act.
8
(bb) The business, operations and facilities of
the Company have been and are being conducted or operated in compliance with all
applicable laws, ordinances, rules, regulations, licenses, permits, approvals,
plans, authorizations or requirements relating to occupational safety and
health, pollution, protection of health or the environment (including, without
limitation, those relating to emissions, discharges, release or threatened
releases of pollutants, contaminants or hazardous or toxic substances, materials
or wastes into ambient air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) or otherwise relating to remediating real property in which
the Company has or has had any interest, whether owned or leased, of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state or political subdivision thereof and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, except for such failures to so comply as would not,
individually or in the aggregate, have a material adverse effect on the business
of the Company, and the Company has not received any notice from a governmental
instrumentality or any third party alleging any violation thereof or liability
thereunder (including, without limitation, liability for costs of investigating
or remediating sites containing hazardous substances or damage to natural
resources).
(cc) Neither the Company nor, to the Company's
knowledge, any officer or employee of the Company is a party to any contract or
commitment that restricts in any material respect the ability of the Company or
such individual to engage in the business of the Company as described in the
Registration Statement and the Prospectus.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) On the basis of the representations and
warranties and subject to the terms and conditions herein set forth, the Company
shall sell the Underwritten Stock to the Underwriters, and the Underwriters
agree to purchase from the Company, the Underwritten Stock. The price at which
such shares of Underwritten Stock shall be sold by the Company and purchased by
the Underwriters shall be [______] per share (the "Purchase Price"). In making
this Agreement, each Underwriter is contracting severally and not jointly; and
except as provided in paragraphs (b) and (c) of this Section 3, the agreement of
each Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule 1.
(b) If for any reason one of the Underwriters
shall fail or refuse (other than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 7 or 12 hereof) to
purchase and pay for the number of Shares agreed to be purchased by such
Underwriter, the non-defaulting Underwriters shall have the right within 24
hours after the receipt by you of notice of such failure or refusal to so
purchase, to purchase or procure one or more other Underwriters to purchase, in
such proportions as may be agreed upon between you and such purchasing
Underwriter and upon the terms herein set forth, all or any part of the Shares
that such defaulting Underwriter agreed to purchase. If a non-defaulting
Underwriter fails so to make such arrangements with respect to all such Shares
and portion, the number of Shares that such non-defaulting Underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis to absorb the remaining Shares
9
and portion that the defaulting Underwriter agreed to purchase; provided,
however, that such non-defaulting Underwriter shall not be obligated to purchase
the Shares and portion that such defaulting Underwriter agreed to purchase if
the aggregate number of such Shares exceeds 10% of the total number of Shares
that the Underwriters agreed to purchase under this Agreement. If the total
number of Shares that the defaulting Underwriter agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
referred to above, to make arrangements with other underwriters or purchasers
reasonably satisfactory to you for purchase of such Shares and portion on the
terms herein set forth. In any such case, either you or the Company shall have
the right to postpone the Closing Date determined as provided in Section 5
hereof for not more than seven business days after the date originally fixed as
the Closing Date pursuant to said Section 5 in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If such non-defaulting Underwriter or the Company does
not make arrangements (such arrangements being subject to the Underwriters'
approval, which shall not be unreasonably withheld) within the 24-hour periods
stated above for the purchase of all the Shares that such defaulting Underwriter
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company to the
non-defaulting Underwriter or on the part of the non-defaulting Underwriter to
the Company. Nothing in this paragraph 3(b), and no action taken hereunder,
shall relieve a defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
(c) On the basis of the representations,
warranties and covenants herein contained, and subject to the terms and
conditions herein set forth, the Company grants an option to the Underwriters to
purchase, severally and not jointly, the Option Stock at the Purchase Price.
Said option may be exercised only to cover over-allotments in the sale of the
Underwritten Stock by the Underwriters and may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
this agreement upon written or electronic notice by the Underwriters to the
Company setting forth the aggregate number of shares of Option Stock as to which
the Underwriters are exercising the option. Delivery of the certificates for the
shares of Option Stock, and payment therefor shall be made as provided in
Section 5 hereof. The number of shares of Option Stock to be purchased by each
Underwriter shall be in such amounts as the Underwriters shall agree upon prior
to the exercise of the option set forth hereunder.
4. OFFERING BY THE UNDERWRITERS.
(a) The terms of the initial public offering by
the Underwriters of the Shares to be purchased by them shall be as set forth in
the Prospectus. The Underwriters may from time to time change the public
offering price after the closing of the initial public offering and increase or
decrease the concessions and discounts to dealers as they may determine.
(b) The information set forth under the caption
"Plan of Distribution" in the Registration Statement, any Preliminary Prospectus
and the Prospectus relating to the Shares filed by the Company (insofar as such
information relates to the Underwriters or related persons) constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration Statement, any Preliminary Prospectus and the Prospectus, and you,
10
on behalf of the Underwriters, represent and warrant to the Company that the
statements made therein (insofar as they relate to the Underwriters or related
persons) are correct and do not omit any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of certificates for the shares of
the Underwritten Stock and the Option Stock (if the option granted by Section
3(c) hereof shall have been exercised not later than 8:00 A.M., San Francisco
time, on the date two business days preceding the Closing Date), and payment
therefor, shall be made at the office of Venture Law Group, 0000 Xxxx Xxxx Xxxx,
Xxxxx Xxxx, Xxxxxxxxxx 00000, on the third business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such third business day, as shall be agreed upon in writing by the
Company and you. The date and hour of such delivery and payment are herein
called the Closing Date.
(b) If the option granted by Section 3(c) hereof
shall be exercised after 8:00 A.M., San Francisco time, on the date two business
days preceding the Closing Date, delivery of certificates for the shares of
Option Stock, and payment therefor, shall be made at the office of Venture Law
Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, on the third business
day after the exercise of such Option, or at such time on such other day, not
later than seven full business days after such third business day, as shall be
agreed upon in writing by the Company and you.
(c) Payment for the Shares purchased from the
Company shall be made to the Company or its order by wire transfer or one or
more certified or official bank check or checks in same day funds. Such payment
shall be made upon delivery of certificates for the Shares to you against
receipt therefor signed by you. Certificates for the Shares to be delivered to
you shall be registered in the name or names and shall be in such denominations
as you may request at least one business day before the Closing Date, in the
case of Underwritten Stock, and at least one business day prior to the purchase
thereof, in the case of Option Stock. Such certificates will be made available
to the Underwriters for inspection, checking and packaging on the business day
preceding the Closing Date or, in the case of Option Stock, by 12:00 P.M., San
Francisco time, on the business day preceding the date of purchase.
6. COVENANTS OF THE COMPANY. The Company covenants and
agrees as follows:
(a) The Company will (i) prepare and timely file
with the Commission under Rule 424(b) a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A; and (ii) not file with the Commission any amendment to
the Registration Statement or supplement to the Prospectus (A) of which the
Underwriters shall not previously have been advised and furnished with a copy a
reasonable period of time prior to the proposed filing and as to which filing
the Underwriters shall not have given their consent or (B) of which is not in
compliance with the Securities Act or the rules and regulations of the
Commission thereunder.
11
(b) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Underwriters (i) of any request
made by the Commission for amendment of the Registration Statement, for
supplement to the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or the institution or threat of any action,
investigation or proceeding for that purpose; or (iii) the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction, or the receipt by it of notice of
the initiation or threatening of any proceeding for that purpose. The Company
will use its best efforts to prevent the issuance of any such order and, if
issued, to obtain the lifting or withdrawal thereof as soon as possible.
(c) The Company will (i) on or before the
Closing Date, deliver to the Underwriters a signed copy of the Registration
Statement as originally filed and of each amendment thereto filed prior to the
time the Registration Statement becomes effective and, promptly upon the filing
thereof, a signed copy of each post-effective amendment, if any to the
Registration Statement (together with, in each case, all exhibits thereto unless
previously delivered to the Underwriters); (ii) as promptly as possible deliver
to the Underwriters, at such office as the Underwriters may designate, as many
copies of the Prospectus as the Underwriters may reasonably request; and (iii)
thereafter from time to time during the period in which a prospectus is required
by law to be delivered by an Underwriter or a dealer, likewise send to the
Underwriters as many additional copies of the Prospectus and as many copies of
any supplement to the Prospectus and of any amended prospectus, filed by the
Company with the Commission, as the Underwriters may reasonably request for the
purposes contemplated by the Securities Act.
(d) If at any time during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer any
event relating to or affecting the Company, or of which the Company shall be
advised in writing by the Underwriters, shall occur as a result of which it is
necessary, in the opinion of counsel for the Company or of counsel for the
Underwriters, to supplement or amend the Prospectus in order to make the
Prospectus not misleading in light of the circumstances existing at the time it
is delivered to a purchaser of the Shares, the Company will forthwith prepare
and file with the Commission a supplement to the Prospectus or an amended
prospectus so that the Prospectus as so supplemented or amended will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the Shares
by the Underwriters and during such period, the Underwriters shall propose to
vary the terms of the offering thereof by reason of changes in general market
conditions or otherwise, you will advise the Company in writing of the proposed
variation, and, if in the opinion either of counsel for the Company or of
counsel for the Underwriters such proposed variation requires that the
Prospectus be supplemented or amended, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an amended prospectus
setting forth such variation. The Company authorizes the Underwriters and all
dealers to whom any of the Shares may be sold by the Underwriters to use the
Prospectus, as from time to time amended or supplemented, in connection with the
sale of the Shares in accordance with the applicable provisions of the
Securities Act and the applicable rules and regulations thereunder for such
period.
12
(e) Prior to the filing thereof with the
Commission, the Company will submit to you, for your information, a copy of any
post-effective amendment to the Registration Statement and any supplement to the
Prospectus or any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as
requested by you, in the qualification of the Shares for offer and sale under
the securities or blue sky laws of such jurisdictions as you may designate and,
during the period in which a prospectus is required by law to be delivered by an
Underwriter or a dealer, in keeping such qualifications in good standing under
said securities or blue sky laws; provided, however, that the Company shall not
be required to qualify as a foreign corporation or file any general consent to
service of process in any jurisdiction in which it is not so qualified. The
Company will from time to time, prepare and file such statements, reports and
other documents as are or may be required to continue such qualifications in
effect for so long a period as you may reasonably request for distribution of
the Shares.
(g) The Company agrees to pay the costs and
expenses relating to the following matters: (A) the preparation, printing or
reproduction and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of them; (B)
the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and all
amendments or supplements to any of them, as may, in each case, be reasonably
requested for use in connection with the offering and sale of the Shares; (C)
the preparation, printing, authentication, issuance and delivery of certificates
for the Shares, including the transfer agent fees and any stamp or transfer
taxes in connection with the original issuance and sale of the Shares; (D) the
printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Shares; (E) the registration of
the Shares under the Exchange Act and the listing of the Shares on the Nasdaq
National Market; (F) any registration or qualification of the Shares for offer
and sale under the securities or blue sky laws of the several states and any
other jurisdictions (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such registration and
qualification); (G) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to such
filings); (H) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Shares; (I) the fees and expenses of the Company's accountants
and the fees and expenses of counsel (including local and special counsel) for
the Company; and (J) all other costs and expenses incident to the performance by
the Company of its obligations hereunder.
(h) As soon as practicable, but in any event not
later than 45 days after the end of the first fiscal quarter first occurring
after the first anniversary of the Effective Date, the Company will make
generally available to its security holders, in the manner specified in Rule
158(b) of the rules and regulations promulgated under the Securities Act, an
earnings statement that will be in the detail required by, and will otherwise
comply with, the provisions of Section 11(a) of the Securities Act and Rule
158(a) of the rules and regulations promulgated thereunder.
13
(i) During a period of three years after the
date hereof, the Company will furnish or make available to the Underwriters
copies of all periodic and special reports furnished to the stockholders of the
Company and copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Report on Form 8-K or any other information,
documents or reports filed with the Commission.
(j) The Company will maintain a transfer agent
and, if necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its Common
Stock.
(k) The Company will not, directly or
indirectly, without the prior written consent of X.X. Xxxxxxxxx + Co., LLC, on
behalf of the Underwriters, issue, offer, sell, grant any option to purchase or
otherwise dispose (or announce any issuance, offer, sale, grant of any option to
purchase or other disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock for
a period of 180 days following the commencement of the public offering of the
Shares by the Underwriters, except (i) pursuant to this Agreement, (ii) pursuant
to the exercise of warrants outstanding on the date hereof and as described in
the Prospectus or (iii) pursuant to the exercise of stock options outstanding on
the date hereof, or granted subsequent to the date hereof, pursuant to a stock
option or other employee benefit plan in existence on the date hereof and as
described in the Prospectus.
(l) The Company will cause the Shares to be duly
included for quotation on the Nasdaq National Market prior to the Closing Date.
(m) The Company will not take, directly or
indirectly, and will use its best efforts to cause its officers, directors or
affiliates not to take, directly or indirectly, any action designed to, or that
might in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any securities of the Company.
(n) The Company will apply the net proceeds of
the offering received by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(o) The Company will use its best efforts to
timely file all such reports, forms or other documents as may be required from
time to time, under the Securities Act, the rules and regulations promulgated
thereunder, the Exchange Act and the rules and regulations promulgated
thereunder, and all such reports, forms and documents filed will comply as to
form and substance with the applicable requirements under the Securities Act,
the rules and regulations promulgated thereunder, the Exchange Act and the rules
and regulations promulgated thereunder.
(p) The Company is familiar with the Investment
Company Act of 1940, as amended, and has in the past conducted its affairs, and
will in the future conduct its affairs, in such a manner to ensure that the
Company was not and 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.
14
(q) 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 (i)
each of the Company's directors, executive officers, and five percent (5%)
stockholders stating that such person agrees that he or she will not, without
the prior written consent of X.X. Xxxxxxxxx + Co., LLC directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Exchange Act or otherwise dispose
of (or enter into any transaction that is designed to, or could be expected to,
result in the disposition by any person of) any shares of Common Stock, options
or warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (within the meaning of Rule
13d-3 under the Exchange Act) by him or her, or publicly announce his or her
intention to do any of the foregoing, for a period of 180 days after the first
date any Underwritten Stock is released by the Underwriters for sale to the
public and (ii) certain of the Company's other stockholders containing identical
restrictions to the Lock-Up Agreements referred to in (i) above.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The
obligations of the several Underwriters under this Agreement are subject to the
performance by the Company on and as of the Closing Date or any later date on
which Option Stock is to be purchased, as the case may be, of its respective
covenants and agreements hereunder, and the following additional conditions:
(a) The Registration Statement shall have become
effective, and no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or the
Underwriters, shall be contemplated by the Commission.
(b) The Underwriters shall be satisfied that (i)
as of the Effective Date, the statements made in the Registration Statement and
the Prospectus were true and correct and neither the Registration Statement nor
the Prospectus omitted to state a fact required to be stated therein or that is
necessary to make the statements therein not misleading; (ii) since the
Effective Date, no event has occurred that should have been set forth in a
supplement or amendment to the Prospectus that has not been set forth in an
effective supplement or amendment; (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in the business, properties, financial condition or
results of operations of the Company, whether or not arising from transactions
in the ordinary course of business, and since such dates, except in the ordinary
course of business, the Company has not entered into any material transaction
not referred to in the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein; (iv) the Company does not
have any material contingent obligations that are not disclosed in the
Registration Statement and the Prospectus; (v) there are no pending or, to the
Company's knowledge, threatened legal proceedings to which the Company is a
party or of which property of the Company is subject that are material and that
are not disclosed in the Registration Statement and the Prospectus; (vi) there
are not any franchises, contracts, leases or other documents that are required
to be filed as exhibits to the Registration
15
Statement that have not been filed as required; and (vii) the representations
and warranties of the Company herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be.
(c) On or prior to the Closing Date, the
legality and sufficiency of the sale of the Shares hereunder and the validity
and form of the certificates representing the Shares, 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 and financial information contained therein), shall have been
approved at or prior to the Closing Date by Xxxxxxxx & Xxxxxxxx LLP, counsel for
the Underwriters. The Underwriters shall have received from counsel to the
Underwriters, such opinion or opinions with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as the Underwriters reasonably may request and such counsel shall have
received such documents and other information as they request to enable them to
pass upon such matters.
(d) On the Closing Date, and if Option Stock is
purchased at any date after the Closing Date, on such later date, the
Underwriters shall have received an opinion addressed to the Underwriters, dated
the Closing Date or, if related to the later sale of Option Stock, such later
date, of Venture Law Group, counsel to the Company, to the effect set forth in
Exhibit A hereto. In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
(e) You shall have received from Deloitte &
Touche LLP a letter addressed to the Underwriters dated the Closing Date and any
later date on which Option Stock is purchased, confirming that Deloitte & Touche
LLP are independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and regulations
thereunder and based upon the procedures described in their letter delivered to
the Underwriters concurrently with the execution of this Agreement (the
"Original Letter"), but carried out to a date not more than three business days
prior to the Closing Date or such later date on which Option Stock is purchased
(i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such later
date, as the case may be; and (ii) setting forth any revisions and additions to
the statements and conclusions set forth in the Original Letter that are
necessary to reflect any changes in the facts described in the Original Letter
since the date of the Original Letter or to reflect the availability of more
recent financial statements, data or information. The letters shall not disclose
any change, or any development involving a prospective change, in or affecting
the business or properties of the Company which in your sole judgment makes it
impractical or inadvisable to proceed with the public offering of the Shares or
the purchase of the Option Stock as contemplated by the Prospectus.
(f) The Company shall deliver to you a copy of a
letter from Deloitte & Touche LLP, addressed to the Company, stating that their
review of the Company's internal accounting controls, to the extent they deemed
necessary in establishing the scope of their examination of the Company's
balance sheets as of March 31, 2002 and as of March 30, 2003 and the related
statements of operations, stockholders' equity and cash flows for the three year
16
period ending March 30, 2003, did not disclose any weakness in internal controls
that they considered to be material weaknesses.
(g) Prior to the Closing Date, and on any later
date on which Option Stock is purchased, you shall have received a certificate,
dated the Closing Date or such later date, as the case may be, signed by the
Chief Executive Officer and Chief Financial Officer of the Company stating that
the respective signers of said certificate have carefully examined the
Registration Statement in the form in which it originally became effective and
the Prospectus contained therein and any amendments or supplements thereto and
this Agreement, and that the statements included in paragraph (b) of this
Section 7 are true and correct.
(h) Prior to the Closing Date, and on any later
date on which Option Stock is purchased, you shall have received a certificate,
dated the Closing Date or such later date, as the case may be, signed by the
Secretary of the Company to the effect that, as of the Closing Date or any later
date on which Option Stock is purchased, as the case may be, the Secretary
certifies as to the accuracy of the Company's charter and bylaws, the
resolutions of the Board of Directors relating to the offering contemplated
hereby, the form of stock certificate representing the Shares, and copies of all
written communications with the Commission; as to the execution and delivery of
this Agreement; as to the incumbency and signature of persons signing this
Agreement, the Registration Statement and other related documents; as to the
approval of the Shares for listing on the Nasdaq National Market; as to the
Company's compliance with all agreements and performance or satisfaction of all
conditions required hereunder; as to the consideration received for all
outstanding shares of the Company's Common Stock; and as to such other matters
as Underwriters' counsel may reasonably request.
(i) Prior to the Closing Date, the Company shall
have furnished to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
(j) You shall have been furnished evidence in
the usual written or electronic form from the appropriate authorities of the
several jurisdictions, or other evidence satisfactory to you, of the
qualification referred to in paragraph (f) of Section 6 hereof.
(k) Prior to the Closing Date, the Shares shall
have been duly authorized for inclusion on the Nasdaq National Market, subject
only to official notice of issuance.
(l) On or prior to the Closing Date, X.X.
Xxxxxxxxx + Co., LLC shall have received from at least ninety-five percent (95%)
of the stockholders of the Company (calculated on a fully-diluted basis),
including but not limited to all directors, executive officers, and five percent
(5%) stockholders, agreements, reasonably satisfactory to X.X. Xxxxxxxxx + Co.,
LLC, stating that such person or entity will not, without the prior written
consent of X.X. Xxxxxxxxx + Co., LLC, offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by such person or entity or any affiliate of such person or entity or
any person in privity with such person or entity or any affiliate of such person
or entity) directly or indirectly,
17
including the filing (or participation in the filing) of a registration
statement with the Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, any other shares of Common Stock
or any securities convertible into, or exercisable, or exchangeable for, shares
of Common Stock; or publicly announce an intention to effect any such
transaction, for a period of 180 days after the Closing Date.
In case any of the conditions specified in this Section 7
shall not be fulfilled, this Agreement may be terminated by you by giving notice
to the Company. Any such termination shall be without liability of the Company
to the Underwriters and without liability of the Underwriters to the Company;
provided, however, that (i) in the event of such termination, the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company under this
Agreement, including all costs and expenses referred to in paragraph (g) of
Section 6 hereof; and (ii) if this Agreement is terminated by you because of any
refusal or failure on the part of the Company to perform any of its obligations
or agreements contained herein, to fulfill any of the conditions herein, or to
comply with any provision hereof other than by reason of a default by the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
transactions contemplated hereby.
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
(a) The obligations of the Company to deliver the Shares
shall be subject to the conditions that (i) the Registration Statement shall
have become effective and (ii) no stop order suspending the effectiveness
thereof shall be in effect and no proceedings therefor shall be pending or
threatened by the Commission.
(b) In case either of the conditions specified in
paragraph (a) of this Section 8 shall not be fulfilled, this Agreement may be
terminated by the Company by giving notice to you. Any such termination shall be
without liability of the Company to the Underwriters and without liability of
the Underwriters to the Company; provided, however, that in the event of any
such termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraph (g) of Section 6 hereof.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (d) of this
Section 9, the Company agrees to indemnify and hold harmless each Underwriter
(and any person participating in the distribution who is deemed to be an
underwriter (as defined in Section 2(11) of the Securities Act) and each person
(including each member or officer thereof), if any, who controls any Underwriter
or such person deemed to be an underwriter (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act), from and against any and
all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which such indemnified parties or any of them may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, and the
18
Company agrees to reimburse each such Underwriter or any other such indemnified
party and each such officer, director and controlling person for any legal or
other expenses (including, except as otherwise hereinafter provided, reasonable
fees and disbursements of counsel) as incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages or
liabilities, or in connection with any investigation or inquiry of, or other
proceeding that may be brought against, the respective indemnified parties, in
each case arising out of or that are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement (including the Prospectus as part thereof and any Rule 462(b)
registration statement) or any post-effective amendment thereto (including any
Rule 462(b) registration statement) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, (ii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they were
made, not misleading, and (iii) any untrue statement or alleged untrue statement
of any material fact contained in any audio or visual materials provided by the
Company or based upon written information furnished by or on behalf of the
Company including, without limitation, slides, videos, films or tape recordings,
used in connection with the marketing of the Shares, including without
limitation, any untrue or alleged untrue statements communicated to securities
analysts employed by the Underwriters; provided, however, that (i) the indemnity
agreement of the Company contained in this paragraph (a) shall not apply to any
such loss, claim, damage, liability or action if such statement or omission was
made in reliance upon and in conformity with information furnished as herein
stated or otherwise furnished in writing to the Company by or on behalf of any
Underwriter expressly for use in any Preliminary Prospectus or the Registration
Statement or the Prospectus or any such amendment thereof or supplement thereto
and (ii) the indemnity agreement contained in this paragraph (a) with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter (or
such persons) if the person asserting any such loss, claim, damage, liability or
action purchased Shares that are the subject thereof to the extent that any such
loss, claim, damage, liability or action (A) results from the fact that such
Underwriter (or such persons) failed to send or give a copy of the Prospectus
(as amended or supplemented) to such person at or prior to the confirmation of
the sale of such Shares to such person in any case where such delivery is
required by the Securities Act and (B) arises out of or is based upon an untrue
statement or alleged untrue statement or omission alleged omission of a material
fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (as amended and supplemented), unless such failure resulted from
non-compliance by the Company with paragraph (c) of Section 6 hereof and that
the indemnity agreement contained in this paragraph (a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld). The indemnity agreements of the Company
contained in this paragraph (a) and the representations and warranties of the
Company contained in Section 2 hereof shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery and payment for the Shares.
19
(b) Each Underwriter severally agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the other Underwriters against any and all
losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject, under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise and to reimburse each of them for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding that may be brought against, the respective indemnified parties, in
each case arising out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
or (ii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading, in each case to the extent, but only to the extent, that such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing by or
on behalf of such indemnifying Underwriter to the Company expressly for use in
the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and will reimburse, as incurred, all legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided however, that the indemnity agreement in
this paragraph (b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Underwriters (which consent will not be unreasonably
withheld). The indemnity agreement of each Underwriter contained in this
paragraph (b) shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any indemnified party and shall
survive the delivery and payment for the Shares.
(c) Each party indemnified under the provisions
of paragraph (a) or (b) of this Section 9 agrees that, upon the service of a
summons or other initial legal process upon it in any action or suit instituted
against it or upon its receipt of written notification of the commencement of
any investigation or inquiry of, or proceeding against it, in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, such indemnified party will promptly notify any party or parties
from whom indemnification may be sought hereunder of the commencement thereof in
writing. No indemnification provided for in such paragraphs shall be available
to any party who shall fail to give such notice if the party to whom such notice
was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which such notice would have related and was prejudiced by the
failure to give the notice, but the omission to notify such indemnifying party
or parties of any such service or
20
notification shall not relieve such indemnifying party or parties from any
liability that it or they may have to the indemnified party for contribution or
otherwise than on account of such indemnity agreement. Any indemnifying party or
parties against which a claim is to be made will be entitled, at its own
expense, to participate in the defense of such action, suit, investigation or
inquiry of, an indemnified party. Any indemnifying party shall be entitled, if
it so elects within a reasonable time after receipt of notice from the
indemnified party or parties of an action, suit, investigation or inquiry to
which indemnity may be sought, to assume the entire defense thereof (alone or in
conjunction with any other indemnifying party or parties), at its own expense,
in which case such defense shall be conducted by counsel reasonably satisfactory
to the indemnified party or parties; provided, however, that (i) if the
indemnified party or parties has reasonably concluded that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct such defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties; and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 9 for any legal or other expenses (other than the
reasonable costs of investigation) subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified party
has employed such counsel in connection with the assumption of different or
additional legal defenses in accordance with the proviso to the immediately
preceding sentence; or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. If no such notice to assume the defense of such action has
been given within a reasonable time of the indemnified party's or parties'
notice to such indemnifying party or parties, the indemnifying party or parties
shall be responsible for any and all reasonable legal or other expenses incurred
by the indemnified party or parties in connection with the defense of the
action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this
Section 9 is unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) above in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) referred to in paragraphs (a) and (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by each of the
contributing parties from the offering of the Shares; or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified, on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, shall be deemed to be in
21
the same proportion as the total net proceeds from the offering of the Shares
(after deducting the underwriting discount but before deducting expenses) and
the total underwriting discount received by the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Shares. 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 indemnifying party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable consideration referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph (d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount applicable to the Shares purchased by the Underwriter hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect to which a claim for contribution may be made
against another party or parties under this paragraph (d), it will promptly
notify such party or parties from whom contribution may be sought, but the
omission to notify such party or parties shall not relieve the party or parties
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise (except as specifically provided in paragraph (c) of this
Section 9). The contribution agreement set forth above shall be in addition to
any liabilities that any indemnifying party may have at common law or otherwise.
(e) No indemnifying party will, without the
prior written consent of the indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such indemnified party or any person who controls such Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act is a party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of such
indemnified party and each such controlling person from all liability arising
out of such claim, action, suit or proceeding.
10. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its
other obligations under Section 9 of this Agreement, the Company hereby agrees
to reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 9 of this Agreement, notwithstanding the absence of a
judicial
22
determination as to the propriety and enforceability of the obligations under
this Section 10 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent that any such payment is
ultimately held to be improper, the Underwriters shall promptly refund it; and
(ii) the Underwriters shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
11. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The
respective representations, warranties, agreements, covenants, indemnities and
statements of, and on behalf of, the Company and its officers and the
Underwriters, respectively, set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of the Underwriters, and will survive delivery of and payment for the
Shares. Any successors to the Underwriters shall be entitled to the indemnity,
contribution and reimbursement agreements contained in this Agreement.
12. TERMINATION.
(a) In addition to the termination described in
Section 7 hereof, this Agreement (except for the provisions of Section 9 hereof)
may be terminated by you by notice to the Company at any time prior to the
Closing Date if: (i) the Company shall have sustained a loss by strike, fire,
flood, accident or other calamity of such a character as to interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss was insured; (ii) trading in the Common Stock shall
have been suspended or trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or limitations on such trading shall have been imposed or
limitations on prices shall have been established on any such exchange or market
system; (iii) an outbreak or escalation of major hostilities or international
conflict involving the United States or the declaration of war or a national
emergency by the United States on or after the date hereof, act of terrorism or
other national or international calamity or crisis or material adverse change in
economic or political conditions shall have occurred if the effect of such
outbreak, escalation, declaration, terrorist act, calamity, crisis or change in
economic or political conditions in the financial markets of the United States
would, in your reasonable judgment, make the offering or delivery of the Shares
impracticable; (v) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of, or commencement of
any proceeding or investigation by, any court, legislative body, agency or other
governmental authority shall have occurred that in the Underwriters' reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company; (vi) a banking moratorium shall have
been declared by New York or United States authorities; or (vii) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs shall have occurred that in your reasonable judgment
has a material adverse effect on the securities markets in the United States.
(b) If this Agreement is terminated pursuant to
this Section 12, there shall be no liability of the Company to the Underwriters
and no liability of the Underwriters to the Company; provided, however, that in
the event of any such termination, the Company agrees to indemnify and hold
harmless the Underwriters from all expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses
23
referred to in paragraph (g) of Section 6. Notwithstanding any termination of
this agreement, the provisions of Section 9 hereof shall survive and remain in
full force and effect.
13. NOTICES. All communications hereunder shall be in
writing and if sent to the Underwriters shall be mailed or delivered or emailed
and confirmed by letter or telecopied and confirmed by letter to X.X. Xxxxxxxxx
+ Co., LLC at 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxx
Xxxxxxxx, Esq. with copies to Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxx, Esq., or, if sent to the
Company, shall be mailed or delivered or emailed and confirmed to the Company at
000 Xxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000 with copies to Venture Law Group, 0000
Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxxx Xxxxxx, Esq.
14. SUCCESSORS. This agreement shall be to the benefit of
and be binding upon the Company and the Underwriters and, with respect to the
provisions of Section 9 hereof, the several parties (in addition to the Company
and the Underwriters) indemnified under the provisions of said Section 9, and
their respective personal representatives, successors and assigns. Nothing in
this agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this agreement,
or any provisions herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the Shares
from the Underwriters.
15. COUNTERPARTS. This agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
16. GOVERNING LAW. This agreement shall be governed by
and construed in accordance with the laws of the State of California. Any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal courts of the
United States of America located in the City and County of San Francisco or the
courts of the State of California in each case located in the City and County of
San Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court, as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
[INTENTIONALLY LEFT BLANK]
24
If the foregoing correctly sets forth our understanding,
please indicate the Underwriters' acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
REDENVELOPE, INC.
By: _______________________________________________
Name: Xxxxxx Xxx
Title: President and Chief Executive Officer
Accepted as of the date first above written:
X.X. XXXXXXXXX + CO., LLC
PACIFIC CREST SECURITIES INC.
AS REPRESENTATIVES OF THE UNDERWRITERS
By: X.X. Xxxxxxxxx + Co., LLC
By: _______________________________________
Name: _________________________________
Title: ________________________________
25
SCHEDULE 1
UNDERWRITERS
NUMBER OF SHARES
TO BE PURCHASED
UNDERWRITERS FROM THE COMPANY
------------ ----------------
X.X. Xxxxxxxxx + Co., LLC ........................
Pacific Crest Securities Inc.
26
EXHIBIT A
Form of Opinion of Venture Law Group on Behalf of the Company
(a) The Company is duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation with full power and authority (corporate
and other) to own or lease its properties and to conduct its business
as described in the Registration Statement and the Prospectus and is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of
property or the conduct of its business requires such qualification
(except for those jurisdictions [set forth in the opinion] in which the
failure so to qualify would not have a material adverse effect on the
Company taken as a whole).
(b) The authorized capital stock of the Company consists
of ___________ shares of Preferred Stock, $_______ par value, of which
there are no outstanding shares, and ___________ shares of Common
Stock, $________ par value, of which there are outstanding ________
shares (including the Underwritten Stock and any shares of Option Stock
issued on the date hereof). The securities of the Company conform in
all material respects to the description thereof contained in the
Prospectus. Proper corporate proceedings have been validly taken to
authorize the Company's authorized capital stock and all outstanding
shares of such capital stock (including the Underwritten Stock and the
shares of Option Stock issued, if any) have been duly authorized and
validly issued by the Company, are fully paid and nonassessable and
have been issued in compliance with all Federal and state securities
laws. Any Option Stock purchased after the Closing Date, when issued
and delivered to and paid for by the Underwriters as provided in the
Underwriting Agreement, will have been duly and validly issued and be
fully paid and nonassessable. No preemptive rights, rights of first
refusal or other rights exist with respect to the Shares, or the issue
and sale thereof, pursuant to the Company's certificate of
incorporation or bylaws, and, to the knowledge of such counsel, there
are no contractual preemptive rights that have not been waived, right
of first refusal or rights of co-sale that exist with respect to the
Shares.
(c) The Company does not own, to the knowledge of such
counsel, any interest in or control, directly or indirectly, any other
corporation, association or other entity.
(d) There are no rights of any holders of the Company's
securities, not effectively satisfied or waived, to require
registration under the Securities Act of any of the Company's
securities or other securities of the Company in connection with the
filing of the Registration Statement or with the offer or sale of the
Shares.
(e) There are no rights of any holders of the Company's
securities to require the Company to register any securities under the
Securities Act that are not described in the Registration Statement and
the Prospectus.
1
(f) The Company has full legal right, power and authority
to enter into the Underwriting Agreement and to consummate the
transactions provided for therein. The Underwriting Agreement has been
duly authorized, executed and delivered by the Company and constitutes
the legal, valid and binding agreement of the Company, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws now or hereafter
in effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of remedies
and except as rights to indemnity and contribution may be limited by
Federal or state securities laws or the public policy underlying such
laws.
(g) None of the Company's execution or delivery of the
Underwriting Agreement, its performance thereof, its consummation of
the transactions contemplated therein or its application of the net
proceeds of the offering in the manner set forth under the caption "Use
of Proceeds," conflicts or will conflict with or results or will result
in any breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon, any property or assets of the
Company pursuant to the terms of the certificate of incorporation or
bylaws of the Company; the terms of any indenture, mortgage, deed of
trust, voting trust agreement, stockholder's agreement, note agreement
or other agreement or instrument known to such counsel to which the
Company is a party or by which it is or may be bound or to which its
properties may be subject; any statute, rule or regulation of any
regulatory body or administrative agency or other governmental agency
or body, domestic or foreign, having jurisdiction over the Company or
any of their activities or properties; or any judgment, decree or
order, known to such counsel, of any government, arbitrator, court,
regulatory body or administrative agency or other governmental agency
or body, domestic or foreign, having such jurisdiction.
(h) No consent, approval, authorization or order of any
court, regulatory body or administrative agency or other governmental
agency or body, domestic or foreign, has been or is required for the
consummation of the transactions contemplated in the Underwriting
Agreement, except such as have been obtained under the Securities Act
or may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters.
(i) To the knowledge of such counsel, the conduct of the
business of the Company is not in violation of any federal, state or
local statute, administrative regulation or other law, which violation
is likely to have a material adverse effect on the Company and the
Company has obtained all licenses, permits, franchises, certificates
and other authorizations from state, Federal and other regulatory
authorities as are necessary or required for the ownership, leasing and
operation of its properties and the conduct of its business as
presently conducted and as contemplated in the Prospectus.
(j) The Registration Statement is effective under the
Securities Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued,
2
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of such counsel, are threatened or contemplated by
the Commission.
(k) The Registration Statement and the Prospectus (except
for the financial statements, schedules and other financial data
included therein, as to which such counsel need not express any
opinion), comply as to form in all material respects with the
requirements of the Securities Act and Rules.
(l) The descriptions contained and summarized in the
Registration Statement and the Prospectus of franchises, contracts,
leases, documents, or any threatened legal or governmental actions,
suits or proceedings, are accurate and fairly represent in all material
respects the information required to be shown by the Securities Act and
Rules. There are no franchises, contracts, leases, documents, or any
threatened legal or governmental actions, suits or proceedings, which
are required by the Securities Act and Rules to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as required.
(m) The statements (1) in the Prospectus under the
captions "Certain Relationships and Related Transactions;" "Description
of Our Capital Stock;" and "Shares Eligible for Future Sale" and (2) in
the Registration Statement in Items 14 and 15; in each case insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information
required under the Securities Act and Rules with respect to such legal
matters, documents and proceedings and fairly summarize the matters
referred to therein to the extent required by the Securities Act and
Rules at the time the Registration Statement became effective, and did
not contain any untrue statement of material fact or omit to state a
material fact to be stated therein or necessary to make the statements
therein not misleading.
(n) The Company is not and will not be, after giving
effect to the issuance and sale of the Shares, an "investment company"
or a "company" controlled by an "investment company" within the meaning
of such term under the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission promulgated thereunder.
(o) To such counsel's knowledge, there is no legal or
governmental proceedings pending or threatened to which the Company is
a party or to which any of the properties of the Company is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described, and there is no statute or
regulation, or to such counsel's knowledge any contract or other
document that is required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required.
(p) Good and marketable title to the Shares sold under
the Underwriting Agreement, free and clear of all liens, encumbrances,
equities, security interests and claims created by the Company, has
been transferred to the Underwriters, assuming for the purpose of this
opinion that the Underwriters purchased the same in good faith without
notice of any liens, encumbrances, equities, security interests or
adverse claims.
3
(q) The Shares have been duly authorized for inclusion in
The Nasdaq National Market upon official notice of issuance.
In addition, such counsel shall state that in the course of
the preparation of the Registration Statement and the Prospectus, such counsel
has participated in conferences with officers and representatives of the Company
and with the Company's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it is declared effective and as of the Closing Date (or
if related to the later sale of the Option Stock, such later date) or the
Prospectus as of the date thereof and as of the Closing Date (or if related to
the later sale of the Option Stock, such later date) contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need not express any opinion
with respect to the financial statements, schedules and other financial data
included in the Registration Statement or the Prospectus).
4