_________________ Shares
XXXXXXX.XXX INC.
Common Stock
$.01 Par Value Per Share
UNDERWRITING AGREEMENT
,1999
Xxxx Xxxxxxxx Incorporated
U.S. Bancorp Xxxxx Xxxxxxx Inc.
SoundView Technology Group, Inc.
Wit Capital Corporation
As Representatives of the several Underwriters
x/x Xxxx Xxxxxxxx Xxxxxxx
Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
XxxxXxx.xxx Inc., a Washington corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell, to the
several Underwriters named in Schedule A hereto (the "Underwriters"), for which
you are acting as representatives (the "Representatives"), ________________
shares (the "Firm Shares") of Common Stock, $.01 par value per share, of the
Company (the "Common Stock"). The Company also proposes, subject to the terms
and conditions stated herein, to sell to the Underwriters, at the Underwriters'
election,________________ additional shares of Common Stock (the "Option
Shares"). The Firm Shares and the Option Shares are herein collectively called
the "Shares."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-80981)
and a related preliminary prospectus for the registration of the Shares under
the Securities Act of 1933, as amended (the "Act"). The registration statement,
as amended at the time it was declared effective, including the information (if
any) deemed to be part thereof pursuant to Rule 430A under the Act is herein
referred to as the "Registration Statement." The form of prospectus first filed
by the Company with the Commission pursuant to Rules 424(b) and 430A under the
Act is referred to herein as the "Prospectus." Each preliminary prospectus
included in the Registration
Statement prior to the time it became effective or filed with the Commission
pursuant to Rule 424(a) under the Act is referred to herein as a "Preliminary
Prospectus." Copies of the Registration Statement, including all exhibits
and schedules thereto, any amendments thereto and all Preliminary
Prospectuses have been delivered to you.
The Company hereby confirms its agreements with respect to the purchase of
the Shares by the Underwriters as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) The Registration Statement has been declared effective
under the Act, and no post-effective amendment to the Registration Statement has
been filed as of the date of this Agreement. No stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or threatened by the Commission.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, nor, to the best of
the Company's knowledge have proceedings for such purpose been instituted or
threatened, and each Preliminary Prospectus, at the time of its issue date,
conformed in all material respects to the requirements of the Act and the rules
and regulations of the Commission promulgated thereunder (collectively, the
"Regulations"), and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, the Company makes no representation or
warranty as to information contained in or omitted from any Preliminary
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives expressly for use in the preparation thereof.
(iii) The Registration Statement conforms, and the Prospectus
and any amendments or supplements thereto will conform, in all material respects
to the requirements of the Act and Regulations. Neither the Registration
Statement nor any amendment thereto, and neither the Prospectus nor any
supplement thereto, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state 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; provided,
however, that the Company makes no representation or warranty as to information
contained in or omitted from any Preliminary Prospectus from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of any Underwriter through the Representatives expressly for use in
the preparation thereof.
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(iv) The Company has been duly organized, is validly
existing as a corporation under the laws of its state of incorporation, has
the corporate power and authority to own, lease, license and use its
properties and conduct its business as described in the Prospectus, and is
duly qualified to transact business and is in good standing in all
jurisdictions in which the conduct of its business or its ownership, leasing,
licensing or using of property requires such qualification and the failure so
to qualify would have a material adverse effect on the business, properties,
key personnel, prospects, condition, financial or otherwise, or results of
operations of the Company and its subsidiaries, taken as a whole (a "Material
Adverse Effect").
(v) The Company has no subsidiaries other than as listed on
Exhibit 21 to the Registration Statement (herein referred to as its
"subsidiaries"). Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own, lease, license and use its properties and conduct its business as
described in the Prospectus, and is duly qualified to transact business in
all jurisdictions in which the conduct of its business or its ownership,
lease, license or use of property requires such qualification and the failure
so to qualify would have a Material Adverse Effect. Other than the Company's
subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association
or other entity. All outstanding shares of capital stock of each of the
subsidiaries of the Company have been duly authorized and validly issued, are
fully paid and non-assessable, and are owned, directly or indirectly, by the
Company free and clear of all liens, encumbrances and security interests. No
options, warrants or other rights to purchase, agreements or other
obligations to issue, or other rights to convert any obligations into, shares
of capital stock or ownership interests in any of the subsidiaries of the
Company are outstanding.
(vi) The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. All offers and sales by the Company of outstanding shares of
capital stock and other securities of the Company, prior to the date hereof,
were made in compliance with the Act and all applicable state securities or
blue sky laws and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right. The Shares to be
issued and sold by the Company to the Underwriters pursuant to this Agreement
have been duly authorized and, when issued and paid for as contemplated
herein, will be validly issued, fully paid and nonassessable. Each of the
Underwriters will receive good and marketable title to the Shares purchased
by it, free and clear of any and all liens, encumbrances, pledges, security
interests, charges, claims, equitable interests, restrictions and defects.
Except as otherwise stated in the Prospectus, there are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of capital stock of the Company pursuant to
the Company's charter, bylaws or any agreement or other instrument to which
the Company is a party or by which the Company is bound. Neither the filing
of the Registration Statement nor the offering or the sale of the Shares as
contemplated by this Agreement gives rise to any rights for, or relating to,
the registration of any shares of capital stock or other securities of the
Company, accept such
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rights which have been validly waived or satisfied. Except as described in
the Prospectus, there are no outstanding options, warrants, agreements or
contracts to purchase or preemptive or other rights to purchase, subscribe
for or acquire from the Company any shares of its capital stock or any
securities or obligations convertible into or exercisable for shares of the
Company's capital stock. The Company has the authorized and outstanding
capital stock as set forth under the heading "Capitalization" in the
Prospectus as of the date set forth therein. The outstanding capital stock of
the Company, including the Shares, conforms, and the Shares to be issued by
the Company to the Underwriters will conform, to the description thereof
contained in the Prospectus.
(vii) The financial statements, together with the related
notes and schedules as set forth in the Registration Statement and
Prospectus, present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its
subsidiaries on the basis stated in the Registration Statement at the
indicated dates and for the indicated periods. Such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of results for such periods have been made,
except as otherwise stated therein, and are in accordance with the books and
records of the Company. The summary and selected financial and statistical
data included in the Registration Statement present fairly the information
shown therein on the basis stated in the Registration Statement and have been
compiled on a basis consistent with the financial statements presented
therein. The books, records and accounts of the Company and its subsidiaries
accurately and fairly reflect in all material respects, in reasonable detail,
the transactions in and dispositions of the assets of, and the results of
operations of, the Company and its subsidiaries.
(viii) The Company has provided you with all financial
statements that are available to the officers of the Company since the date
of the most recent financial statements included in the Prospectus.
(ix) There is no action, suit, claim, proceeding or
investigation pending or, to the knowledge of the Company, threatened or
contemplated against the Company or any of its subsidiaries or any of their
respective officers, directors, properties, assets or rights before any court
or administrative or regulatory agency which, if determined adversely to the
Company or any of its subsidiaries, would, individually or in the aggregate,
result in a Material Adverse Effect except as set forth in the Registration
Statement.
(x) The Company has good and marketable title to all
properties and assets reflected in the financial statements hereinabove
described as owned by the Company (or as described in the Prospectus as owned
by the Company), in each case free and clear of all liens, encumbrances,
pledges, security interests, charges, claims, equitable interests,
restrictions and defects, except such as are described in the Prospectus or
do not materially affect the value of such properties and assets and do not
materially interfere with the use made and proposed to be made of such
properties and assets by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries
are held by them under valid
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and enforceable leases with such exceptions set forth in the Prospectus or as
are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries.
(xi) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, as they may be amended or
supplemented, (A) there has not been any material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in or affecting the condition, financial or otherwise, of the Company
and its subsidiaries, taken as a whole, or the business affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole, whether or not occurring in
the ordinary course of business, (B) there has not been any transaction not
in the ordinary course of business entered into by the Company or any of its
subsidiaries which is material to the Company and its subsidiaries, taken as
a whole, other than transactions described or contemplated in the
Registration Statement, (C) the Company and its subsidiaries have not
incurred any material liabilities or obligations, direct or indirect or
contingent or non-contingent, which are not in the ordinary course of
business or which could result in a material reduction in the future earnings
of the Company and its subsidiaries, (D) the Company and its subsidiaries
have not sustained any material loss or interference with their respective
businesses or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance, (E) there has not been any
change in the capital stock of the Company (other than upon the exercise of
options and warrants described in the Registration Statement), or any
material increase in the short-term or long-term debt (including capitalized
lease obligations) of the Company and its subsidiaries, taken as a whole, (F)
there has not been any declaration or payment of any dividends or any
distributions of any kind with respect to the capital stock of the Company,
other than any dividends or distributions described or contemplated in the
Registration Statement, or (G) there has not been any issuance of warrants,
options, convertible securities or other rights to purchase or acquire
capital stock of the Company (other than options granted under the Company's
employee stock option plans referred to in the Prospectus).
(xii) Neither the Company nor any of its subsidiaries is in
violation of, or in default under, its charter or bylaws, or any statute, or
any law, rule, regulation, order, judgment, injunction, decree or
authorization of any court or governmental or administrative agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties, or any indenture, mortgage, deed of trust, loan agreement,
lease, franchise, license or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any property or assets of the
Company or any of its subsidiaries is subject, which violation or default
would have a Material Adverse Effect.
(xiii) The issuance and sale of the Shares by the Company and
the compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated herein will not violate
any provision of the charter or bylaws of the Company or any of its
subsidiaries or any statute or any order, judgment, decree, rule,
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regulation or authorization of any court or governmental or administrative
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, and will not conflict with, result
in a breach or violation of, or constitute, either by itself or upon notice
or passage of time or both, a default under any indenture, mortgage, deed of
trust, loan agreement, lease, franchise, license or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any
property or assets of the Company or any of its subsidiaries is subject. No
approval, consent, order, authorization, designation, declaration or filing
by or with any court or governmental agency or body is required for the
execution and delivery by the Company of this Agreement and the consummation
of the transactions herein contemplated, except as may be required under the
Act or any state securities or blue sky laws or under the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD"). No further approval or authorization of any securityholder, the
Company's Board of Directors or any duly appointed committee thereof or
others is required for the issuance and sale or transfer of the Shares,
except as may be required by the NASD or under state securities or blue sky
laws.
(xiv) The Company and each of its subsidiaries holds and is
operating in compliance with all licenses, approvals, certificates and
permits from governmental and regulatory authorities, foreign and domestic,
which are necessary or material to the conduct of its business as described
in the Prospectus (except where the failure to so hold or operate in
compliance with such a license, approval, certificate or permit would not
have a Material Adverse Effect) and there are no proceedings pending or, to
the knowledge of the Company, threatened, which may cause any such license,
approval, certificate or permit to be withdrawn, cancelled, suspended or not
renewed.
(xv) The Company has the corporate power and authority to
enter into this Agreement and to authorize, issue and sell the Shares
hereunder as contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(xvi) Xxxxxx Xxxxxxxx LLP and Ernst & Young LLP, which have
expressed their opinions on the audited financial statements included in the
Registration Statement and Prospectus, are independent public accountants as
required by the Act and Regulations.
(xvii) The Company has not taken and will not take, directly
or indirectly, any action designed to, or which has constituted, or which
might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Common Stock.
(xviii) The Company's Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and has been approved for listing upon notice of issuance on
The Nasdaq National Market under the symbol "SPNW."
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(xix) The Company has obtained and delivered to the
Representatives written agreements (the "Lock-Up Agreements"), in form and
substance satisfactory to the Representatives, of each of its officers and
directors AND [OTHER SHAREHOLDERS _______________] that they shall not (A)
offer, pledge, sell, offer to sell, contract to sell, sell any option or
contract to purchase, purchase any option to sell, grant any option right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the shares of Common Stock or any securities convertible
into, or exercisable or exchangeable for, Common Stock, or (B) enter into any
swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (A) or (B)
above is to be settled by delivery of the shares of Common Stock or such
other securities, in cash or otherwise), in each case, beneficially owned
(within the meaning of Rule 13d-3 under the Exchange Act) or otherwise
controlled by such officer or director on the date hereof or hereafter
acquired, for a period beginning from the date of execution of this Agreement
and continuing to and including the date 180 days after the date of the
Prospectus (the "Lock-Up Period"); PROVIDED, HOWEVER, that, if such
shareholder is an individual, such shareholder may, without the prior written
consent of Xxxx Xxxxxxxx Xxxxxxx on behalf of the Underwriters, transfer
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, Common Stock either during his or her lifetime or, on
death, by will or intestacy to members of his or her immediate family or to
trusts exclusively for the benefit of members of his or her immediate family
or in connection with BONA FIDE gifts, PROVIDED that, prior to any such
transfer, such transferee executes an agreement, satisfactory to Xxxx
Xxxxxxxx Xxxxxxx, pursuant to which such transferee agrees to receive and
hold such shares subject to the provisions of the Lock-Up Agreement and that
there shall be no further transfer except in accordance with the provisions
of the Lock-Up Agreement. For purposes of this paragraph, "immediate family"
shall mean the spouse, lineal descendant, father, mother, brother or sister
of such shareholder. The restrictions on transfers described in the Lock-Up
Agreements shall not apply to transactions in shares of Common Stock acquired
in open-market transactions after completion of the Offering.
(xx) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering and
sale of the Shares other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Act to be distributed by the Company.
(xxi) The Company is in compliance with all provisions of
Florida Statutes Section 517.075 (Chapter 92-198, laws of Florida). The
Company does not do any business, directly or indirectly, with the government
of Cuba or with any person or entity located in Cuba.
(xxii) The Company and its subsidiaries have timely filed all
federal, state, local and foreign tax returns or reports required to be
filed, and have paid in full all taxes indicated by said returns or reports
and all assessments received by it or any of them to the extent that such
taxes have become due and payable, except where the Company and its
subsidiaries are
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contesting in good faith such taxes and assessments and there is no tax
deficiency that has been or, to the Company's knowledge, might be asserted
against the Company or any of its subsidiaries which might have a Material
Adverse Effect and all material tax liabilities, whether or not disputed, are
adequately provided for on the books of the Company and its subsidiaries.
Except as set forth in the Registration Statement and the Prospectus, neither
the Company nor any subsidiary has executed or filed with any taxing
authority, foreign or domestic, any agreement extending the period for
assessment or collection of any income taxes or is a party to any pending
action or proceeding by any foreign or domestic governmental agency for
assessment or collection of taxes, and no claims for assessment or collection
of taxes have been asserted against the Company or any of its subsidiaries.
(xxiii) The Company and each of its subsidiaries owns or
possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service xxxx registrations, copyrights, licenses, inventions, trade secrets,
know-how, technology, Internet domain names (including without limitation
[DESCRIBE FOUR PENDING PATENT APPLICATIONS], the trademarks "ShopNow",
"TechWave", and "Internet Mall", and the domain names xxxxxxx.xxx,
xxxxxxxxx.xxx, xxxxxxxxxxxxx.xxx, xxxxxxxxxxx.xxx and [LOGOS, DOMAIN NAMES,
ETC?] and other similar rights described in the Prospectus as being owned by
them or any of them or necessary to the conduct their respective businesses.
The Company has no knowledge of any facts which would preclude it from having
rights to its patent applications described in the Prospectus. The business
of the Company and its subsidiaries as now conducted and proposed to be
conducted does not and will not infringe or conflict with in any material
respect any patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service xxxx registrations, copyrights,
licenses, inventions, trade secrets, know-how, technology, Internet domain
names or other similar rights of others, and neither the Company nor any of
its subsidiaries has any knowledge of or has received any notice or claim of
conflict with the asserted rights of others with respect any of the foregoing.
(xxiv) The Company is not, and upon completion of the sale of
Shares contemplated hereby will not be, required to register as an
"investment company" under the Investment Company Act of 1940, as amended.
(xxv) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to records is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxvi) Other than as contemplated by this Agreement, neither
the Company nor any of its subsidiaries has incurred any liability for any
finder's or broker's fee or
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agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(xxvii) The Company and its subsidiaries maintain insurance
with insurers of recognized financial responsibility of the types and in the
amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and
personal property owned or leased by the Company or its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect; neither
the Company nor any such subsidiary has been refused any insurance coverage
sought or applied for; and neither the Company nor any such subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not have a Material Adverse Effect.
(xxviii) To the Company's knowledge, no labor disturbance by
the employees of the Company or any of its subsidiaries exists or is
imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers,
subassemblers, subcontractors or international distributors that might be
expected to result in a material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise. No collective
bargaining agreement exists with any of the Company's employees and, to the
Company's knowledge, no such agreement is imminent.
(xxix) The Company has not distributed and will not distribute
prior to the later of (A) the Closing Date, or any date on which Option
Shares are to be purchased, as the case may be, and (B) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted
by the Act.
(xxx) Neither the Company nor any of its subsidiaries (nor
any person representing the Company or any of its subsidiaries) has at any
time during the last five (5) years (A) made any payment in violation of the
Foreign Corrupt Practices Act, or (B) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
(xxxi) Except as set forth in the Registration Statement and
Prospectus, (i) the Company and each of its subsidiaries is in compliance
with all rules, laws and regulations relating to the use, treatment, storage
and disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business, except for such
instances of non-compliance as would not individually or in the aggregate
have a Material Adverse Effect, (ii) neither the Company nor any of its
subsidiaries has received notice from any
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governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the
Registration Statement and the Prospectus and is not so disclosed, (iii) to
the knowledge of the Company, neither the Company nor any of its subsidiaries
will be required to make future material capital expenditures to comply with
Environmental Laws and (iv) to the knowledge of the Company, no property
which is owned, leased or occupied by the Company or any of its subsidiaries
has been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Section 9601, ET SEQ.), or otherwise designated as a contaminated
site under applicable state or local law.
(xxxii) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel to the Underwriters shall be
deemed to be a representation and warranty of the Company to each Underwriter
as to the matters covered thereby.
2. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and covenants contained herein, and subject to
the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a price of $_______ per share, the number of
Firm Shares (to be adjusted by you to eliminate fractional shares) determined
by multiplying the aggregate number of Firm Shares by a fraction, the
numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in
Schedule A hereto and the denominator of which is the aggregate number of
Firm Shares to be purchased by all the Underwriters.
In addition, on the basis of the representations, warranties and
covenants contained herein and subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters an option to
purchase at the Underwriters' election up to the aggregate number of Option
Shares, at the same price per share as set forth for the Firm Shares in the
paragraph above, for the sole purpose of covering over allotments in the sale
of the Firm Shares. The option granted hereby may be exercised in whole or
in part, but only once, and at any time upon written notice given within 30
days after the date of this Agreement, by you, as Representatives of the
several Underwriters, to the Company setting forth the number of Option
Shares as to which the several Underwriters are exercising the option and the
time and date at which certificates are to be delivered. Any such election
to purchase Option Shares shall be made in proportion to the maximum number
of Option Shares to be sold by the Company. If any Option Shares are
purchased, each Underwriter agrees, severally and not jointly, to purchase
that portion of the number of Option Shares as to which such election shall
have been exercised (subject to
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adjustment to eliminate fractional shares) determined by multiplying such
number of Option Shares by a fraction the numerator of which is the maximum
number of Option Shares which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule A hereto and the
denominator of which is the maximum number of Option Shares which all of the
Underwriters are entitled to purchase hereunder. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than two or later than ten full
business days after the exercise of such option, and shall not in any event
be prior to the Closing Date. If the date of exercise of the option is three
or more full days before the Closing Date, the notice of exercise shall set
the Closing Date as the Option Closing Date.
Certificates in definitive form for the Shares to be purchased by each
Underwriter hereunder, and in such denominations and registered in such names
as Xxxx Xxxxxxxx Xxxxxxx may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
you for the account of such Underwriter at such time and place as shall
hereafter be designated by the Representatives, against payment by such
Underwriter or on its behalf of the purchase price therefor by certified or
official bank checks, payable to the order of the Company in next day funds.
The time and date of such delivery and payment shall be, with respect to the
Firm Shares, 8:30 a.m., local time, at the offices of Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx, xx the third (or if the
Shares are priced, as contemplated by Rule 15c6-1(c) under the Exchange Act,
after 4:30 p.m. Eastern time, the fourth) full business day following the
date hereof, or at such other time and date as you and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act, such time and date being
herein referred to as the "Closing Date," and, with respect to the Option
Shares, at the time and on the date specified by you in the written notice
given by you of the Underwriters' election to purchase the Option Shares, or
such other time and date as you and the Company may agree upon in writing,
such time and date being referred to herein as the "Option Closing Date."
Such certificates will be made available for checking and packaging at least
twenty-four hours prior to the Closing Date or the Option Closing Date, as
the case may be, at a location as may be designated by you.
3. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to make a public offering of the Firm Shares as soon as
the Representatives deem it advisable to do so. The Firm Shares are to be
initially offered to the public at the initial public offering price and
terms set forth in the Prospectus. The Representatives may from time to time
thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer such Option Shares to the public on the
foregoing terms.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the several Underwriters that:
(a) The Company will prepare and timely file with the Commission
under Rule 424(b) under the Act a Prospectus containing information previously
omitted at the time of
11
effectiveness of the Registration Statement in reliance on Rule 430A under
the Act, and will not file any amendment to the Registration Statement or
supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy and as to which the
Representatives shall have reasonably objected in writing promptly after
reasonable notice thereof or which is not in compliance with the Act or the
Regulations.
(b) The Company will advise the Representatives promptly of any
request of the Commission for amendment of the Registration Statement or for any
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for that purpose, and the Company
will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus or suspending such
qualification and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will endeavor to qualify the Shares for sale under
the securities laws of such jurisdictions as the Representatives may reasonably
have designated in writing and will, or will cause counsel to, make such
applications, file such documents, and furnish such information as may be
reasonably requested by the Representatives, provided that the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. 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 the
Representatives may reasonably request for distribution of the Shares.
(d) The Company will furnish the Underwriters with as many copies of
any Preliminary Prospectus as the Representatives may reasonably request and,
during the period when delivery of a prospectus is required under the Act, the
Company will furnish the Underwriters with as many copies of the Prospectus in
final form, or as thereafter amended or supplemented, as the Representatives
may, from time to time, reasonably request. The Company will deliver to the
Representatives, at or before the Closing Date, three signed copies of the
Registration Statement and all amendments thereto, including all exhibits filed
therewith, and will deliver to the Representatives such number of copies of the
Registration Statement, without exhibits, and of all amendments thereto, as the
Representatives may reasonably request.
(e) If, during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, any event shall occur as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, not misleading, or if for
any other reason it shall be necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the
12
Prospectus as so amended or supplemented will not include an untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein in light of the circumstances existing when it is
so delivered, not misleading, or so that the Prospectus will comply with law.
In case any Underwriter is required to deliver a prospectus in connection
with sales of any Shares at any time nine months or more after the effective
date of the Registration Statement, upon the request of the Representatives
but at the expense of such Underwriter, the Company will prepare and deliver
to such Underwriter as many copies as the Representatives may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of the Act.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 thereunder and will advise you in
writing when such statement has been so made available.
(g) During a period of five (5) years after the date hereof, or such
shorter period that the Company remains subject to the periodic reporting
requirements of the Exchange Act, the Company, as soon as practicable after the
end of each respective financial quarter or year, as applicable, will furnish to
its shareholders annual reports (including financial statements audited by
independent certified public accountants) and quarterly summary financial
information, which may be unaudited, and will, upon request, furnish to you and
the other several Underwriters hereunder (i) concurrently with making such
reports available to its shareholders, statements of operations of the Company
for each of the first three quarters in the form made available to the Company's
shareholders; (ii) concurrently with the furnishing thereof to its shareholders,
a balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of shareholders' equity and of cash flow of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants; and
(iii) concurrently with the furnishing of such reports to its shareholders,
copies of all reports (financial or other) mailed to shareholders; and (iv) as
soon as they are available, copies of all reports and financial statements
furnished to or filed with the Commission, any securities exchange or The Nasdaq
National Market by the Company (except for documents for which confidential
treatment is requested).
(h) No offering, sale or other disposition of any Common Stock or
other capital stock of the Company, or warrants, options, convertible
securities or other rights to acquire such Common Stock or other capital
stock (other than (i) pursuant to employee stock option plans, employee stock
purchase plans, outstanding options or on the conversion of convertible
securities outstanding on the date of this Agreement, (ii) in connection with
business acquisitions or (iii) pursuant to offerings exempt from the
registration requirements of the Act, provided that the Company shall not
register the resale of Common Stock or other capital stock of the Company, or
warrants, options, convertible securities or other rights to acquire such
13
Common Stock or other capital stock issued or issuable pursuant to such
exempt transaction during the Lock-Up Period; PROVIDED, that any employee
stock options issued pursuant to employee stock option plans during the
Lock-Up Period shall not vest and become exercisable to any extent prior to
the expiration of the Lock-Up Period; and, PROVIDED FURTHER, that any shares
of Common Stock issued to any current officer or director during the Lock-Up
Period pursuant to the exercise of stock options shall bear a restrictive
legend restricting the transfer of such shares during the Lock-Up Period)
will be made from the date of this Agreement until the end of the Lock-Up
Period, directly or indirectly, by the Company otherwise than hereunder or
with the prior written consent of the Representatives.
(i) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the purposes
set forth under "Use of Proceeds" in the Prospectus. The Company will invest
such proceeds pending their use in such a manner that, upon completion of such
investment, the Company will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(j) The Company will use its best efforts to maintain the designation
of the Common Stock on The Nasdaq National Market.
(k) From the date of this Agreement until the termination of the
Lock-Up Period, the Company will not, without the prior written consent of Xxxx
Xxxxxxxx Xxxxxxx on behalf of the Underwriters, alter or amend in any manner the
vesting schedule of any option, warrant or other security of the Company or its
subsidiaries.
(l) 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.
5. COSTS AND EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, the Company will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of the
obligations of the Company under this Agreement, including, without limiting the
generality of the foregoing, the following: accounting fees of the Company; the
fees and disbursements of counsel for the Company, the cost of preparing,
printing and filing of the Registration Statement, Preliminary Prospectuses and
the Prospectus and any amendments and supplements thereto and the printing,
mailing and delivery to the Underwriters and dealers of copies thereof and of
this Agreement, the Agreement Among Underwriters, any Selected Dealers
Agreement, the Underwriters' Selling Memorandum, the Invitation Letter, the
Power of Attorney, the Blue Sky Memorandum and any supplements or amendments
thereto (excluding, except as provided below, fees and expenses of counsel to
the Underwriters); the filing fees of the Commission; the filing fees and
expenses (including legal fees and disbursements of counsel for the
Underwriters) incident to securing any required review by the NASD of the terms
of the sale of the Shares; listing fees, if any, transfer taxes and the
expenses, including the fees and disbursements of counsel for the Underwriters
incurred in connection with the qualification of the Shares under state
securities or blue sky laws; the fees
14
and expenses incurred in connection with the listing of the Common Stock on
The Nasdaq National Market; the costs of preparing stock certificates; the
costs and fees of any registrar or transfer agent and all other costs and
expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section 5. In addition, the
Company will pay all travel and lodging expenses incurred by management of
the Company in connection with any informational "road show" meetings held in
connection with the offering and will also pay for the preparation of all
materials used in connection with such meetings. The Company shall not,
however, be required to pay for any of the Underwriters' expenses (other than
those related to qualification of the Shares under state securities or blue
sky laws and those incident to securing any required review by the NASD of
the terms of the sale of the Shares but including, without limitation, the
Underwriter expenses specified in Section 4(e) of this Agreement) except
that, if this Agreement shall not be consummated because the conditions in
Section 6 hereof are not satisfied or because this Agreement is terminated by
the Representatives pursuant to clause (i) of Section 10(a) hereof, or by
reason of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or to
comply with any of the terms hereof on their respective parts to be
performed, unless such failure to satisfy said condition or to comply with
said terms shall be due to the default or omission of any Underwriter, then
the Company shall promptly upon request by the Representatives reimburse the
several Underwriters for all appropriately itemized out-of-pocket accountable
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares
or in contemplation of performing their obligations hereunder; but the
Company shall not in any event be liable to any of the several Underwriters
for damages on account of loss of anticipated profits from the sale by them
of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date, are subject to the
condition that all representations and warranties of the Company contained
herein are true and correct, at and as of the Closing Date or the Option Closing
Date, as the case may be, the condition that the Company shall have performed
all of its covenants and obligations hereunder (to the extent performance of
such covenants and obligations are due at such times) and to the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the Regulations and in accordance with Section 4(a) hereof; no stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, or any part thereof shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representatives.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Xxxxxx Sonsoni
Xxxxxxxx & Xxxxxx,
15
Professional Corporation, counsel for the Company, dated the Closing Date or
the Option Closing Date, as the case may be, addressed to the Underwriters,
to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation under the laws of its state of incorporation, with
corporate power and authority to own, lease, license and use its properties and
conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in all jurisdictions in which the
conduct of its business or its ownership, lease, license or use of property
requires such qualification and the failure so to qualify would have a Material
Adverse Effect.
(ii) The Company has authorized and outstanding capital stock
as described in the Prospectus as of the date set forth therein. The
outstanding shares of the Company's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. The form of certificate
for the Shares is in due and proper form and complies with the requirements of
applicable state corporation laws. The Shares have been duly authorized and,
when issued and paid for as contemplated herein, will be validly issued,
delivered, fully paid and nonassessable. No preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders of the Company, or of holders of warrants, options, convertible
securities or other rights to acquire shares of capital stock of the Company,
exist with respect to any of the Shares or the issue and sale thereof (i)
pursuant to the terms of the Company's charter or bylaws or (ii) to the
knowledge of such counsel, pursuant to the terms of any agreement or instrument
to which the Company is a party or by which the Company is bound. To the
knowledge of such counsel, no rights to register outstanding shares of the
Company's capital stock, or shares issuable upon the exercise of outstanding
warrants, options, convertible securities or other rights to acquire shares of
such capital stock, exist which have not been validly exercised or waived with
respect to the Registration Statement. The capital stock of the Company,
including the Shares, conforms in all material respects as to legal matters to
the description thereof contained in the Prospectus.
(iii) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(iv) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the rules and regulations thereunder (except
that such counsel need express no opinion as to the financial statements and the
notes thereto and related schedules and other financial data included therein or
omitted therefrom).
(v) The statements (A) in the Prospectus under the captions
"Management--Limitation on Director's Liability," "Description of Capital
Stock," and "Shares Eligible for Future Sale" and (B) in the Registration
Statement in Items 14 and 15 insofar as such
16
statements constitute a summary of matters of law, are, in all material
respects, accurate summaries and fairly present the information required to
be stated.
(vi) Such counsel does not know of any contracts, agreements,
documents or instruments required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus which are
not so filed or described as required; and insofar as any statements in the
Registration Statement or the Prospectus constitute summaries of any contract,
agreement, document or instrument, such statements are, in all material
respects, accurate summaries and fairly present the information required to be
stated.
(vii) Such counsel knows of no legal or governmental proceeding,
pending or threatened, before any court or administrative body or regulatory
agency, to which the Company or any of its subsidiaries is a party or to which
any of the properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or Prospectus and are
not so described, or statutes or regulations that are required to be described
in the Registration Statement or the Prospectus that are not so described as
required.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a violation of or default under the charter or bylaws
of the Company or any of its subsidiaries, or under any statute, permit,
judgment, decree, order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties (other than state securities or blue
sky laws, as to which such counsel need express no opinion) and do not and will
not conflict with or result in a violation of or default (except for such
conflicts, violations or defaults as would not have a Material Adverse Effect)
under any lease, license, contract, indenture, mortgage, loan agreement or other
agreement or other instrument or obligation known to such counsel to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any property or assets of the Company or
any of its subsidiaries is subject, except such agreements, instruments or
obligations with respect to which valid consents or waivers have been obtained
by the Company.
(ix) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of, or in default under, its charter or
bylaws, or any statute, or any law, rule, regulation, order, judgment,
injunction, decree or authorization of any court or governmental or
administrative agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, or any indenture, mortgage, deed of
trust, loan agreement, lease, franchise, license or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any property
or assets of the Company or any of its subsidiaries is subject, which violation
or default would have a Material Adverse Effect.
(x) The Company has the corporate power and authority to enter
into this Agreement and to authorize, issue, sell and deliver the Shares to be
sold by the Company as
17
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration, qualification or filing by or with any judicial,
regulatory, administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement and the
consummation of the transactions herein contemplated (other than as may be
required by state securities or blue sky laws, as to which such counsel need
express no opinion) except such as have been obtained or made.
(xii) The Company is not, and immediately upon completion of
the sale of Shares contemplated hereby will not be, required to register as
an "investment company" under the Investment Company Act of 1940, as amended.
(xiii) Although such counsel assumes no responsibility for the
factual accuracy or completeness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in the
opinion in subsections (ii) and (v) of this Section 6(b) and on the basis of
the procedures undertaken by such counsel (and relying as to materiality to
the extent such counsel deems appropriate upon opinions of officers and other
representatives of the Company), no facts have come to the attention of such
counsel that cause it to believe that the Registration Statement and any
amendments and supplements thereto, at the time they became effective and as
of the Closing Date or the Option Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus or any further amendment or supplement thereto, at the time it was
transmitted to the Commission for filing pursuant to Rule 424(b) and as of
the Closing Date and the Option Closing Date, included an untrue statement of
a material fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that such counsel need not express any
opinion with respect to the financial statements and supporting schedules and
other financial data included in the Registration Statement and the
Prospectus.
(c) The Representatives shall have received from Faegre & Xxxxxx
LLP, counsel for the Underwriters, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, with respect to the incorporation of
the Company, the validity of the Shares, the Registration Statement, the
Prospectus, and other related matters as the Representatives may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters.
(d) The Representatives shall have received on each of the date
hereof, the Closing Date and the Option Closing Date, as the case may be, a
signed letter, dated as of the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance reasonably
satisfactory to the Representatives, from Xxxxxx Xxxxxxxx LLP and Ernst &
Young LLP, to the effect that they are independent public accountants with
respect to the
18
Company and its subsidiaries within the meaning of the Act and the related
rules and regulations and containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(e) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Option Closing Date, as the case may be, there
shall not have been any change or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in your judgment, is material and adverse to the Company and
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at the Closing Date or the Option Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.
(f) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the chief executive officer and the chief financial officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant to
Rule 424(b) within the applicable period prescribed for such filing by the
Regulations and in accordance with Section 4(a) of this Agreement; no stop order
suspending the effectiveness of the Registration Statement has been issued, and
no proceedings for such purpose have been initiated or are, to such officer's
knowledge, threatened by the Commission.
(ii) The representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct at and as of the
Closing Date or the Option Closing Date, as the case may be, and the Company has
performed all of its obligations under this Agreement to be performed at or
prior to the Closing Date or the Option Closing Date, as the case may be.
(g) The Company shall have furnished to the Representatives such
further certificates and documents as the Representatives may reasonably have
requested.
(h) The Lock-Up Agreements shall have been delivered to the
Representatives prior to the date hereof and are, as of the Closing Date or the
Option Closing Date, as the case may be, in full force and effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Representatives and to Faegre & Xxxxxx
LLP, counsel for the Underwriters.
19
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date or the Option Closing Date, as
the case may be. In such event, the Company and the Underwriters shall not
be under any obligation to each other (except to the extent provided in
Sections 5 and 7 hereof).
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each officer and director thereof, and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or
investigating any such action or claim) to which such Underwriter or such
persons may became subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus or the Prospectus, including any
amendments or supplements thereto, or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading in light of the circumstances
under which they were made, or (iii) any act or failure to act or any alleged
act or failure to act by any Underwriter in connection with, or relating in
any manner to, the Common Stock or the offering contemplated hereby, and
which is included as part of or referred to in any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arising out of or
based upon matters covered by clause (i) or (ii) above, and will reimburse
each Underwriter and each such officer, director and controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
officer, director or controlling person in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement, or omission or alleged
omission, made in the Registration Statement, any Preliminary Prospectus or
the Prospectus, including any amendments or supplements thereto, in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter through the Representatives specifically for use therein;
provided further, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission, made in a Preliminary Prospectus, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of the Underwriters to the person asserting such loss, claim,
damage or liability, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of Shares to such person, and
if the Prospectus (as amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability, unless the failure to
so deliver the Prospectus (as amended or supplemented) is the result of
noncompliance by the Company with the first sentence of paragraph 4(d) of
this Agreement.
20
(b) Each Underwriter agrees severally and not jointly to indemnify
and hold harmless the Company, each of its directors, each of its officers
who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances under which they were made, and will
reimburse any 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 action or claim as such expenses are
incurred; provided, however, that each Underwriter will be liable in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 7, such
person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) or contribution provided
for in Section 7(d) shall be available with respect to a proceeding to any
party who shall fail to give notice of such proceeding as provided in this
Section 7(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party otherwise than on account of the provisions
of Section 7(a) or (b). In case any such proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay promptly as incurred the
reasonable fees and expenses of the counsel retained by the indemnified party
in the event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions
of the
21
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it or other
indemnified parties which are different from or additional to those available
to the indemnifying party. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one
separate firm at any time for all such indemnified parties. Such firm shall
be designated in writing by the Representatives and shall be reasonably
satisfactory to the Company in the case of parties indemnified pursuant to
Section 7(a) and shall be designated in writing by the Company and shall be
reasonably satisfactory to the Representatives in the case of parties
indemnified pursuant to Section 7(b). The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
Section 7(a), or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying 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 or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this
Section 7(d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereto) referred to above in this Section 7(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
22
provisions of this Section 7(d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter, and no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this
Section 7(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have, and the
obligations of the Underwriters under this Section 7 shall be in addition to any
liability which the Underwriters may otherwise have.
8. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter shall fail to purchase and pay for the
portion of the Shares which such Underwriter has agreed to purchase and pay for
on such date (otherwise than by reason of any default on the part of the
Company), you, as Representatives of the Underwriters, shall use your best
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may be
agreed upon, and upon the terms set forth herein, of the Firm Shares or Option
Shares, as the case may be, which the defaulting Underwriter or Underwriters
failed to purchase. If the aggregate number of Shares that the defaulting
Underwriter or Underwriters agreed to purchase shall not be purchased in
accordance with the preceding sentence, the Company shall have the right, within
36 hours next succeeding the 36-hour period above referred to, to make
arrangements with other underwriters or purchasers satisfactory to you for
purchase of such remaining Shares on the terms herein set forth. If during such
two 36-hour periods you, as Representatives, and the Company shall not have
procured such other Underwriters, or any others, to purchase the Firm Shares or
Option Shares, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of Shares with
respect to which such default shall occur does not exceed 10% of the Firm Shares
or Option Shares, as the case may be, covered hereby, the other Underwriters
shall be obligated, severally, in proportion to the respective numbers of Firm
Shares or Option Shares, as the case may be, which they are obligated to
purchase hereunder, to purchase the Firm Shares or Option Shares, as the case
may be, which such defaulting Underwriter or Underwriters failed to purchase, or
(b) if the aggregate number of shares of Firm Shares or Option Shares, as the
case may be, with respect to which such default shall occur exceeds 10% of the
Firm Shares or Option Shares, as the case may be, covered hereby, the Company or
you as the Representatives of the Underwriters will have the right, by written
notice given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company except for expenses to be borne by the Company
and the Underwriters as provided in Section 5 hereof and the indemnity and
contribution agreements in Section 7 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 8 (and assuming that
this Agreement is not terminated pursuant to the immediately preceding
sentences), the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as Representatives,
may determine in order that
23
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action
taken under this Section 8 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
9. NOTICES. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters, to Xxxx Xxxxxxxx Xxxxxxx, Xxxx
Xxxxxxxx Plaza, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention:
Xxxx Xxxxxx, with copies to Faegre & Xxxxxx LLP, 2200 Norwest Center, 00 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Xxxxxx X.
Xxxxxxx, Esq.; if to the Company to XxxxXxx.xxx Inc., 000 Xxxxx Xxxxxx Xxxxx,
Xxxxx 000 Xxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxx, with
copies to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 0000
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxxxxx X.
Xxxxxxxxx, Esq.
10. TERMINATION. This Agreement may be terminated by you by notice to the
Company as follows:
(a) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change in or
affecting the condition, financial or otherwise, of the Company and its
subsidiaries taken as a whole or the business affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of war
or national emergency after the date hereof or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your judgment, make the
offering or delivery of the Shares impracticable or inadvisable,
(iii) suspension of trading in securities on the New York Stock Exchange or the
American Stock Exchange or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on either such Exchange, or a halt
or suspension of trading in securities generally which are quoted on The Nasdaq
National Market System, or (iv) declaration of a banking moratorium by either
federal or New York State authorities; or
(b) as provided in Sections 6 and 8 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company, as
to any obligation of the Underwriters to purchase the Option Shares, upon the
occurrence at any time prior to the Option Closing Date of any of the events
described in subparagraph (a) above or as provided in Sections 6 and 8 of this
Agreement.
11. WRITTEN INFORMATION. For all purposes under this Agreement
(including, without limitation, Section 1, Section 2 and Section 7 hereof), the
Company understands and agrees with each of the Underwriters that the following
constitutes the only written information furnished to
24
the Company by or through the Representatives specifically for use in
preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto: (i) the per share "Public
offering price" and per share "Underwriting discounts and commissions" set
forth on the cover page of the Prospectus, and (ii) the information set forth
under the caption "Underwriting" in the Preliminary Prospectus and the
Prospectus.
12. SUCCESSORS. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Company and their
respective successors and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Shares merely because of such purchase.
13. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Minnesota.
25
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
XxxxXxx.xxx Inc.
By:______________________________
Name:____________________________
Its:_____________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
Xxxx Xxxxxxxx Incorporated
U.S. Bancorp Xxxxx Xxxxxxx Inc.
SoundView Technology Group, Inc.
Wit Capital Corporation
As Representatives of the several Underwriters
By Xxxx Xxxxxxxx Incorporated
By:______________________________
Name:____________________________
Its:_____________________________
26
SCHEDULE A
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM MAXIMUM NUMBER
UNDERWRITER SHARES TO BE OF OPTION SHARES
PURCHASED
Xxxx Xxxxxxxx Xxxxxxx ...................
U.S. Bancorp Xxxxx Xxxxxxx Inc. .........
SoundView Technology Group, Inc. ........
Wit Capital Corporation .................
...................
...................
...................
...................
...................
...................
Total ................................
