PFSWEB, INC. Common Stock PURCHASE AGREEMENT
Exhibit 1.1
PFSWEB, INC.
Common Stock
Common Stock
May __, 2010
▇▇▇▇▇-▇▇▇▇▇▇ CAPITAL GROUP LLC
As Representative of the Several Underwriters
Identified in Schedule I Annexed Hereto
c/o ▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Identified in Schedule I Annexed Hereto
c/o ▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PFSweb, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the
Underwriters named in Schedule I hereto (the “Underwriters”) shares of the
Common Stock ($0.001 par value per share) of the Company (the “Firm Shares”).
The Company also proposes to issue and sell to the several Underwriters up to an additional
shares of Common Stock ($0.001 par value per share) of the Company (the “Additional
Shares”), if and to the extent that you and ▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC (“Manager”), as manager
of the offering, shall have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 2 hereof. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the “Shares.” The
shares of Common Stock ($0.001 par value per share) of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the “Common Stock.”
The Company has prepared and filed, in accordance with the Securities Act of 1933, as amended
(the “Securities Act”), and the rules and regulations thereunder, with the Securities and Exchange
Commission (the “Commission”) a registration statement on Form S-3 (file number 333-164971),
including a prospectus, relating to the Shares, which registration statement and prospectus
incorporate or are deemed to incorporate by reference documents that the Company has filed, or will
file, with the Commission in accordance with the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations thereunder. The registration statement as amended
at the time it becomes effective for purposes of Section 11 of the Securities Act (as such section
applies to the Underwriters), including the documents filed as part thereof and information
contained or incorporated by reference in the prospectus or otherwise deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A or Rule 430B under the
Securities Act, is hereinafter referred to as the “Registration Statement.” If the Company files
an abbreviated registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference
herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration
Statement. The Company has also filed with, or transmitted for filing to, or shall promptly after
the date of this Agreement file with or transmit for filing to, the Commission a prospectus
supplement (in the form first used to confirm sales of the Shares (or in the form first made
available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act), the “Prospectus Supplement”) pursuant to Rule 424 under the Securities
Act. The term “Base Prospectus” means the prospectus dated March 17, 2010, relating to the Shares,
in the form in which it has most recently been filed with the Commission as part of the
Registration Statement on or prior to the date of this Agreement. The term “Prospectus” means the
Base Prospectus as supplemented by the Prospectus Supplement. The term “Preliminary Prospectus”
means any preliminary form of Prospectus.
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule
405 under the Securities Act; “Time of Sale Prospectus” means the Base Prospectus and the
Preliminary Prospectus, together with the free writing prospectuses, if any, each identified in
Schedule II hereto (each, a “Permitted Free Writing Prospectus”), and other information
conveyed to purchasers of the Shares at or prior to the Time of Sale as set forth in Schedule
II hereto; “Time of Sale” means _________ (Central Time) on the date of this Agreement; and
“road show” has the meaning set forth in Rule 433(h)(4) under the Securities Act. As used herein,
the terms “Registration Statement,” “Base Prospectus,” “Preliminary Prospectus,” “Time of Sale
Prospectus” and “Prospectus” shall include the documents, if any, deemed to be incorporated by
reference therein, including, unless the context otherwise requires, the documents, if any, filed
as exhibits to such incorporated documents. The terms “supplement,” “amendment” and “amend” as
used herein with respect to the Registration Statement, the Base Prospectus, the Time of Sale
Prospectus, any Preliminary Prospectus, the Prospectus or any free writing prospectus shall include
all documents subsequently filed by the Company with the Commission pursuant to the Exchange Act
that are deemed to be incorporated by reference therein.
1. Representations and Warranties of the Company. The Company represents and warrants to and
agrees with each of the Underwriters on the date hereof, on the Closing Date and on each Option
Closing Date, if any, that:
(a) The Registration Statement has become effective under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus is in effect, and no proceedings for such purpose are
pending before or threatened by the Commission.
(b) The Base Prospectus and any Preliminary Prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424
under the Securities Act, complied when so filed in all material respects with the Securities Act
and the rules and regulations thereunder (including, without limitation, Rule 430B(a) or 430A(b)).
(c) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Time of Sale Prospectus or the Prospectus complied or will comply
when so filed in all material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder; (ii) each part of the Registration Statement, when such
part became effective, did not contain and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading;
(iii) the Registration Statement, as of the date hereof, does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading; (iv) the Registration Statement complies and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act; the conditions to the use
of Form S-3 in connection with the offering and sale of the Shares as contemplated hereby have been
satisfied; the Registration Statement meets, and the offering and sale of the Shares as
contemplated hereby complies with, the requirements of Rule 415 under the Securities Act (including
without limitation Rule 415(a)(5)); (v) at no time during the period that begins on March 17, 2010
and ends immediately prior to the execution of this Agreement did the Base Prospectus or any
Preliminary Prospectus contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; (vi) the Time of Sale Prospectus does not, and at the Time of Sale, at
the Closing Date (as defined in Section 4) and, if applicable, each Option Closing Date (as defined
in Section 5), the Time of Sale Prospectus, as then amended or supplemented by the Company, if
applicable, will not, contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; (vii) each Permitted Free Writing Prospectus
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does not conflict with the information contained in the Registration Statement, the Time of Sale
Prospectus or the Prospectus; (viii) each road show, when considered together with the Time of
Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and (ix) the Prospectus, as of the date it is filed with the
Commission pursuant to Rule 424, at the Closing Date and at each Option Closing Date, if any, will
comply in all material respects with the Securities Act (including without limitation Section 10(a)
of the Securities Act) and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the representations and
warranties set forth in this Section 1(c) do not apply to statements or omissions in the
Registration Statement, the Time of Sale Prospectus, any Preliminary Prospectus, any Permitted Free
Writing Prospectus, any road show or the Prospectus or any amendments or supplements thereto based
upon information relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Manager expressly for use therein, it being agreed that the only
information furnished by the Underwriters to the Company expressly for use therein are the
statements contained in the underwriter table in, and the paragraphs of the
“Underwriting” section of the Prospectus Supplement.
(d) Prior to the execution of this Agreement, the Company has not, directly or indirectly,
offered or sold any Shares by means of any “prospectus” (within the meaning of the Securities Act)
or used any “prospectus” (within the meaning of the Securities Act) in connection with the offer or
sale of the Shares, in each case other than the Permitted Free Writing Prospectuses; the Company
has not, directly or indirectly, prepared, used or referred to any free writing prospectuses,
without the prior written consent of the Manager, other than the Permitted Free Writing
Prospectuses and road shows furnished or presented to the Manager before first use. Each Permitted
Free Writing Prospectus has been prepared, used or referred to in compliance with Rules 164 and 433
under the Securities Act; assuming that such Permitted Free Writing Prospectus is so sent or given
after the Registration Statement was filed with the Commission (and after such Permitted Free
Writing Prospectus was, if required pursuant to Rule 433(d) under the Securities Act, filed with
the Commission), the sending or giving, by any Underwriter, of any Permitted Free Writing
Prospectus will satisfy the provisions of Rule 164 and Rule 433 (without reliance on subsections
(b), (c) and (d) of Rule 164); the conditions set forth in one or more of subclauses (i) through
(iv), inclusive, of Rule 433(b)(1) under the Securities Act are satisfied, and the registration
statement relating to the offering of the Shares contemplated hereby, as initially filed with the
Commission, includes a prospectus that, other than by reason of Rule 433 or Rule 431 under the
Securities Act, satisfies the requirements of Section 10 of the Securities Act; neither the Company
nor the Underwriters are disqualified, by reason of subsection (f) or (g) of Rule 164 under the
Securities Act, from using, in connection with the offer and sale of the Shares, free writing
prospectuses pursuant to Rules 164 and 433 under the Securities Act; each Permitted Free Writing
Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or behalf of or used or referred to by the Company complies
or will comply in all material respects with the requirements of the Securities Act; no Permitted
Free Writing Prospectus conflicts with the information contained in the Registration Statement, any
Preliminary Prospectus, Time of Sale Prospectus or Prospectus; and, to the Company’s knowledge, no
free writing prospectus prepared by or on behalf of or used by any Underwriter contains any “issuer
information” within the meaning of Rule 433(h)(2) under the Securities Act.
(e) The Company was, at the time the Registration Statement was initially filed and when it
became effective, eligible to use Form S-3 to register the offering of the Shares contemplated
hereby. The Company was not an “ineligible issuer” (as defined in Rule 405 under the Securities
Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the
Securities Act with respect to the offering of the Shares contemplated by the Registration
Statement.
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(f) Shares of Common Stock are listed for quotation on the NASDAQ Capital Market (“NASDAQ”),
and the Company has not received any notice from the NASDAQ regarding the delisting of such shares
from the NASDAQ. The Shares are duly listed for quotation, and admitted and authorized for
trading, subject to official notice of issuance, on the NASDAQ. To the Company’s knowledge, there
are no affiliations or associations between (i) any member of FINRA and (ii) the Company or any of
the Company’s officers, directors or 5% or greater security holders or any beneficial owner of the
Company’s unregistered equity securities that were acquired at any time on or after the 180th day
immediately preceding the date the Registration Statement was initially filed with the Commission,
except as disclosed in the Registration Statement (excluding the exhibits thereto), the Time of
Sale Prospectus and the Prospectus.
(g) The Company has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the Time of Sale
Prospectus and the Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so qualified or be in good
standing would not (i) have a material adverse effect on the assets, business, condition (financial
or otherwise), results of operation or prospects of Company and its subsidiaries, taken as a whole,
(ii) prevent or materially interfere with consummation of the transactions contemplated hereby, or
(iii) result in the delisting of shares of Common Stock from the NASDAQ (the occurrence of any such
effect, prevention, interference or result described in the foregoing clauses (i), (ii) or (iii)
being herein referred to as a “material adverse effect”).
(h) Each subsidiary of the Company has been duly organized, is validly existing as a
corporation or limited liability company in good standing under the laws of the jurisdiction of its
organization, has the corporate power and authority to own its property and to conduct its business
as described in the Time of Sale Prospectus and the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse effect; all of the
issued shares of capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly by the Company,
free and clear of all liens, encumbrances, equities or claims.
(i) This Agreement has been duly authorized, executed and delivered by the Company.
(j) The authorized and outstanding capitalization of the Company is as set forth in the Time
of Sale Prospectus and will be as set forth in the Prospectus, subject, in each case, to the
issuance of shares of Common Stock upon exercise of stock options and warrants disclosed as
outstanding in the Time of Sale Prospectus and the Prospectus, as the case may be, and the grant of
stock options under existing equity incentive plans described in the Time of Sale Prospectus and
the Prospectus. The authorized capital stock of the Company conforms and will conform as to legal
matters to the description thereof contained in the Time of Sale Prospectus and the Prospectus.
(k) The shares of Common Stock outstanding prior to the issuance of the Shares to be sold by
the Company have been duly authorized, are validly issued, fully paid and non-assessable, have been
issued in compliance with applicable securities laws and were not issued in violation of any
preemptive or similar rights. All prior offers and sales of securities by the Company were made in
compliance in all material respects with the Securities Act and all other applicable laws and
regulations.
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(l) The Shares to be sold by the Company have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar
rights.
(m) Neither the execution and delivery by the Company of, nor the performance by the Company
of its obligations under, this Agreement will conflict with, contravene, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any assets of the Company or
any of its subsidiaries pursuant to, or constitute a default under (i) any statute, law, rule,
regulation, judgment, order or decree of any governmental body, regulatory or administrative agency
or court having jurisdiction over the Company or any subsidiary; (ii) the certificate of
incorporation or bylaws of the Company or any of its subsidiaries; or (iii) any contract,
agreement, obligation, covenant or instrument to which the Company or any of its subsidiaries (or
any of their respective assets) is subject or bound.
(n) No approval, authorization, consent or order of or filing with any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or agency, or of or with
any self-regulatory organization or other non-governmental regulatory authority (including, without
limitation, the NASDAQ), or approval of the Company’s stockholders, is required in connection with
the issuance and sale of the Shares or the consummation of the transactions contemplated hereby,
other than (i) registration of the Shares under the Securities Act, which has been effected (or,
with respect to any Rule 462 Registration Statement, will be effected in accordance Rule 462(b)
under the Securities Act), (ii) any necessary qualification under the securities or blue sky laws
of the various jurisdictions in which the Shares are being offered by the Underwriters or (iii)
under the FINRA Conduct Rules.
(o) There are no actions, suits, claims, investigations or proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company or any of its subsidiaries or
any of their respective directors or officers is or would be a party or of which any of their
respective properties is or would be subject at law or in equity, before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority or agency, or before
or by any self-regulatory organization or other non-governmental regulatory authority (including,
without limitation, the NASDAQ) (i) other than any such action, suit, claim, investigation or
proceeding accurately described in the Time of Sale Prospectus and the Prospectus which, if
resolved adversely to the Company or any of its subsidiaries, would not, individually or in the
aggregate, have a material adverse effect or (ii) that are required to be described in the Time of
Sale Prospectus or the Prospectus and are not so described. There are no statutes, regulations,
contracts or other documents that are required to be described in the Registration Statement, the
Time of Sale Prospectus or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(p) The Company is not, and after giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus will not be, required to
register as an “investment company” as such term is defined in the Investment Company Act of 1940,
as amended.
(q) The financial statements included or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, together with the related notes and
schedules, present fairly the consolidated financial position of the Company and its subsidiaries
as of the dates indicated and the consolidated results of operations, cash flows and changes in
stockholders’ equity of the Company for the periods specified and have been prepared in compliance
with the requirements of the Securities Act and Exchange Act and in conformity with U.S. generally
accepted accounting principles applied on a consistent basis during the periods involved; all pro
forma financial statements or data included or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, if any, comply with the requirements of
the Securities Act and the Exchange Act, and the assumptions used in the preparation of such pro
forma financial statements and data are reasonable, the
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pro forma adjustments used therein are
appropriate to give effect to the transactions or circumstances described therein and the pro forma
adjustments have been properly applied to the historical amounts in the compilation of those
statements and data; the other financial and statistical data contained or incorporated by
reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus are
accurately and fairly presented and prepared on a basis consistent with the financial statements
and books and records of the Company; there are no financial statements (historical or pro forma)
that are required to be included or incorporated by reference in the Registration Statement, the
Time of Sale Prospectus or the Prospectus that are not included or incorporated by reference as
required; the Company and its subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not described in the Time of
Sale Prospectus and the Prospectus; and all disclosures contained or incorporated by reference in
the Time of Sale Prospectus and the Prospectus regarding “non-GAAP financial measures” (as such
term is defined by the rules and regulations of the Commission) comply with Regulation G under the
Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, which has expressed its opinion with respect to the consolidated financial
statements and schedules of the Company, is an independent registered public accounting firm as
required by the Securities Act.
(r) All statistical or market-related data included or incorporated by reference in the Time
of Sale Prospectus, the Prospectus and the Permitted Free Writing Prospectuses are based on or
derived from sources that the Company reasonably believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data from such sources to the extent
required. Each “forward-looking statement” (within the meaning of Section 27A of the Securities
Act or Section 21E of the Exchange Act) contained or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus, the Prospectus and the Permitted Free Writing Prospectuses
has been made or reaffirmed with a reasonable basis and in good faith.
(s) The Company and its subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits, licenses or approvals
would not have a material adverse effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential liabilities to third
parties) which would have a material adverse effect.
(t) There are no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the Registration Statement.
(u) Subsequent to the respective dates as of which information is given in each of the
Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) there has not occurred
any material adverse change, or any development involving a prospective material adverse change, in
the assets, business, condition (financial or otherwise), management, operations or earnings of the
Company and its subsidiaries, taken as a whole; (ii) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or contingent, nor entered into any material
transaction; (iii) the Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend
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or distribution of any kind on its capital stock
other than ordinary and customary dividends; and (iv) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its subsidiaries, except in
each case as described in each of the Registration Statement, the Time of Sale Prospectus and the
Prospectus, respectively.
(v) The Company and its subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them which is material to
the business of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Time of Sale Prospectus and the
Prospectus or such as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company
and its subsidiaries, in each case except as described in the Time of Sale Prospectus and the
Prospectus.
(w) Each of the Company and its subsidiaries owns or possesses all inventions, patent
applications, patents, trademarks (both registered and unregistered), trade names, service names,
copyrights, trade secrets and other proprietary information described in the Registration
Statement, the Time of Sale Prospectus and the Prospectus as being owned or licensed by it or which
is necessary for the conduct of, or material to, its businesses as currently conducted or as
proposed to be conducted (including the commercialization of products or services described in the
Registration Statement, the Time of Sale Prospectus and the Prospectus as under development)
(collectively, the “Intellectual Property”), and (i) there are no third parties who have or, to the
Company’s knowledge, will be able to establish rights to any Intellectual Property, except for, and
to the extent of, the ownership rights of the owners of the Intellectual Property which the
Registration Statement, the Time of Sale Prospectus and the Prospectus disclose is licensed to the
Company; (ii) there is no infringement by third parties of any Intellectual Property; (iii) there
is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the Company’s rights in or to any Intellectual Property, and the Company is
unaware of any facts which could form a reasonable basis for any such action, suit, proceeding or
claim; (iv) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding
or claim by others challenging the validity, enforceability or scope of any Intellectual Property,
and the Company is unaware of any facts which could form a reasonable basis for any such action,
suit, proceeding or claim; (v) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others that the Company or any of its subsidiaries infringes
or otherwise violates, or would, upon the commercialization of any product or service described in
the Registration Statement, the Time of Sale Prospectus and the Prospectus as under development,
infringe or violate, any patent, trademark, trade name, service name, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any facts which could form a
reasonable basis for any such action, suit, proceeding or claim; (vi) the Company and its
subsidiaries have complied with the terms of each agreement pursuant to which Intellectual Property
has been licensed to the Company or any of its subsidiaries, and all such agreements are in full
force and effect; (vii) there is no patent or patent application that contains claims that
interfere with the issued or pending claims of any of the Intellectual Property or that challenges
the validity, enforceability or scope of any of the Intellectual Property; and (viii) there is no
prior art that may render any patent application within the Intellectual Property unpatentable that
has not been disclosed to the U.S. Patent and Trademark Office.
(x) No material labor dispute with the employees of the Company or any of its subsidiaries
exists, except as described in the Time of Sale Prospectus and the Prospectus, or, to the knowledge
of the Company, is imminent; and the Company is not aware of any existing, threatened or imminent
labor disturbance by the employees of any of its principal suppliers, manufacturers or
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contractors that could have a material adverse effect. Neither the Company nor any of its subsidiaries is in
violation of any provision of the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations promulgated thereunder, except for such violations as would not have a
material adverse effect.
(y) The Company and each of its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent and customary in
the businesses in which they are engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not have a material adverse effect.
(z) The Company and its subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect.
(aa) Except as otherwise would not have a material adverse effect, no subsidiary of the
Company is subject to any material direct or indirect prohibition on paying any dividends to the
Company, on making any other distribution on such subsidiary’s capital stock, on repaying to the
Company any loans or advances to such subsidiary from the Company or on transferring any of such
subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as
described in the Time of Sale Prospectus and the Prospectus.
(bb) The Company maintains “internal control over financial reporting” (as defined in Rules
13a-15 and 15d-15 under the Exchange Act) in compliance with the requirements of the Exchange Act.
The Company’s internal control over financial reporting has been designed by the Company’s
principal executive officer and principal financial officer, or under their supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles and is effective in performing the functions for which it was established. Except as
described in the Time of Sale Prospectus and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (i) no significant deficiency or material weakness in
the design or operation of the Company’s internal control over financial reporting (whether or not
remediated) which is reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information, and (ii) no change in the Company’s internal
control over financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
(cc) The Company maintains “disclosure controls and procedures” (as such term is defined in
Rules 13a-15 and 15d-15 under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s Chief Executive Officer and Chief Financial Officer by
others within those entities, and such disclosure controls and procedures are effective in
performing the functions for which they were established; the principal executive officers (or
their equivalents) and principal financial officers (or their equivalents) of the Company have made
all certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and any related rules and regulations
promulgated by the Commission (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”), and the statements made in each such
certification are accurate; the Company, its subsidiaries and its directors and officers are each
in compliance in all material respects with the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
8
(dd) Neither the Company nor any of its subsidiaries has sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or agreements referred to or
described in the Time of Sale Prospectus or the Prospectus, or referred to or described in, or
filed as an exhibit to, the Registration Statement, and no such termination or non-renewal has been
threatened by the Company or any of its subsidiaries or, to the Company’s knowledge, any other
party to any such contract or agreement.
(ee) All tax returns required to be filed by the Company or any of its subsidiaries have been
timely filed, and all taxes and other assessments of a similar nature (whether imposed directly or
through withholding) including any interest, additions to tax or penalties applicable thereto due
or claimed to be due from such entities have been timely paid, other than those being contested in
good faith and for which adequate reserves have been provided.
(ff) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is aware
of or has taken any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder; and the Company and its subsidiaries have instituted and maintain policies and
procedures designed to ensure continued compliance therewith, including without limitation 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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(gg) The Company has not sold, issued or distributed any shares of Common Stock during the
six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or
Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
(ii) Neither the Company nor any of its subsidiaries nor any of their respective directors,
officers, affiliates or controlling persons has taken, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Shares.
2. Agreements to Sell and Purchase. The Company hereby agrees to issue and sell ______ Shares
to the several Underwriters at a price of
$________ per share (the “Purchase Price”), and each
Underwriter, upon the basis of the representations and warranties herein contained, but subject to
the conditions herein set forth, agrees, severally and not jointly, to purchase from the Company at
the Purchase Price the number of Firm Shares (subject to such adjustments to eliminate fractional
shares as the Manager may determine) set forth opposite the name of such Underwriter set forth in
Schedule I hereto.
Moreover,
the Company hereby agrees to issue and sell up to ______ Additional Shares to the
Underwriters at the Purchase Price, and the Underwriters, upon the basis of the representations and
warranties contained herein, but subject to the terms and conditions herein set forth, shall have
the right (but not the obligation) to purchase, severally and not jointly, up to the Additional
Shares at the Purchase Price. The Manager may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice not later than 30 days after the date
of this Agreement. Any exercise notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on
9
which such shares are to be purchased. Each purchase
date must be at least one business day after the written notice is given and may not be earlier
than the closing date for the Firm Shares or later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 4 hereof solely for the purpose
of covering over-allotments made in connection with the offering of the Firm Shares. On each day,
if any, that Additional Shares are to be purchased (an “Option Closing
Date”), each Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as the Manager may
determine) that bears the same proportion to the total number of Additional Shares to be purchased
on such Option Closing Date as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
3. Terms of Public Offering. The Company is advised by the Manager that the Underwriters
propose to make a public offering of their respective portions of the Shares as soon after this
Agreement have become effective as in the Manager’s judgment is advisable. The Company is further
advised by the Manager that the Shares are to be offered to the public initially at $_____ per share
(the “Public Offering Price”) and to certain dealers selected by the Manager at a price that
represents a concession not in excess of $_____ per share under the Public Offering Price, and that
any Underwriter may allow, and such dealers may reallow a concession, not in excess of $_____ per
share, to any Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares to be sold by the Company shall be made
to the Company in Federal or other funds immediately available in Minneapolis, Minnesota against
delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
Central Time, on , 2010 or at such other time on the same or such other date, not later
than , 2010, as shall be designated in writing by the Manager. The time and date of
such payment are hereinafter referred to as the “Closing Date.”
Payment for any Additional Shares shall be made to the Company in Federal or other funds
immediately available in Minneapolis, Minnesota against delivery of such Additional Shares for the
respective accounts of the several Underwriters at 10:00 a.m., Central Time, on the date specified
in the corresponding notice described in Section 2 or at such other time on the same or on such
other date, in any event not later than , 2010, as shall be designated in writing by the
Manager.
The Firm Shares and Additional Shares shall be registered in such names and in such
denominations as the Manager shall request in writing not later than one full business day prior to
the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and
Additional Shares shall be delivered to the Manager on the Closing Date or an Option Closing Date,
as the case may be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters duly paid, against
payment of the Purchase Price therefor.
5. Conditions to the Underwriters’ Obligations. The several obligations of the Underwriters
are subject to the condition that all representations and warranties on the part of the Company
contained in this Agreement are, on the date hereof, on the Closing Date and on each Option Closing
Date, if any, true and correct, the condition that the Company has performed its obligations
required to be performed prior to the Closing Date and the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date
and each Option Closing Date, if any:
(i) none of the securities of the Company or any of its subsidiaries are rated by any
“nationally recognized statistical rating organization,” as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act; and
10
(ii) there shall not have occurred any change, or any development involving a
prospective change, in the assets, business, condition (financial or otherwise), management,
operations, earnings or prospects of the Company and its subsidiaries, taken as a whole,
from that set forth in the Time of Sale Prospectus that makes it, in the Manager’s judgment,
impracticable or inadvisable to offer or sell the Shares on the terms and in the manner
contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date and each Option Closing Date, if
any, a certificate, dated the Closing Date or such Option Closing Date, as the case may be, and
signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect
that the representations and warranties of the Company contained in this Agreement are true and
correct as of the Closing Date or such Option Closing Date, as the case may be, and that the
Company has complied with all of the agreements and satisfied all of the conditions on its part to
be performed or satisfied hereunder on or before the Closing Date or such Option Closing Date, as
the case may be, and as to such other matters as the Manager may reasonably request. The delivery
of the certificate provided for in this Section 5(b) shall constitute a representation and warranty
of the Company as to the statements made in such certificate.
(c) The Underwriters shall have received on the Closing Date and each Option Closing Date, if
any, an opinion of ▇▇▇▇▇ & Samson PC, outside counsel for the Company, dated the Closing Date or
such Option Closing Date, as the case may be, in form and substance reasonably satisfactory to
counsel for the Underwriters to the effect set forth in Exhibit A hereto. The opinion of
▇▇▇▇▇ & ▇▇▇▇▇▇ PC shall be rendered to the Underwriters at the request of the Company and shall so
state therein.
(d) The Underwriters shall have received on the Closing Date and each Option Closing Date, if
any, an opinion of Faegre & ▇▇▇▇▇▇ LLP, counsel for the Underwriters, dated the Closing Date or
such Option Closing Date, as the case may be, in form and substance satisfactory to the
Underwriters.
(e) The Underwriters shall have received, on each of the date hereof, the Closing Date and
each Option Closing Date, if any, a letter dated the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants, 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, the
Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the Closing Date
shall use a “cut-off date” not earlier than the date hereof.
(f) No stop order suspending the effectiveness of the Registration Statement or preventing or
suspending the use of any Preliminary Prospectus, the Time of Sale Prospectus or the Prospectus
shall have been issued, and no proceedings for such purpose shall have been instituted or
threatened by the Commission; no notice of objection of the Commission to the use of the
Registration Statement shall have been received; and all requests for additional information on the
part of the Commission shall have been complied with to the Manager’s satisfaction.
(g) The Shares shall have been approved for listing on the NASDAQ.
(h) FINRA shall not have raised any objection with respect to the fairness or reasonableness
of the underwriting, or other arrangements of the transactions, contemplated hereby.
The several obligations of the Underwriters to purchase Additional Shares hereunder are
subject to the delivery to the Manager on the applicable Option Closing Date of such documents as
the Manager
11
may reasonably request, including certificates of officers of the Company, legal
opinions and an accountants’ comfort letter, and other matters related to the issuance of such
Additional Shares.
6. Covenants of the Company. The Company covenants with each Underwriter as follows:
(a) To furnish to the Manager, without charge, two signed copies of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to the Manager in Minneapolis,
Minnesota, without charge, prior to 10:00 a.m. Central Time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section 6(f) or 6(g) below, as many
copies of the Time of Sale Prospectus, the Prospectus and any supplements and amendments thereto or
to the Registration Statement as the Manager may request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus
or the Prospectus, to furnish to the Manager a copy of each such proposed amendment or supplement
and not to file any such proposed amendment or supplement to which the Manager objects, and to file
with the Commission within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) To furnish to the Manager a copy of each proposed free writing prospectus to be prepared
by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed
free writing prospectus to which the Manager objects.
(d) Not to take any action that would result in an Underwriter or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not
have been required to file thereunder.
(e) To advise the Manager promptly of any request by the Commission for amendments or
supplements to the Registration Statement, the Base Prospectus, any Preliminary Prospectus, any
Permitted Free Writing Prospectus, any Prospectus Supplement or any Prospectus or for additional
information with respect thereto, or of notice of institution of proceedings for, or the entry of a
stop order, suspending the effectiveness of the Registration Statement or preventing or suspending
the use of any Preliminary Prospectus, the Time of Sale Prospectus or the Prospectus; and if the
Commission should enter such a stop order, to use its best efforts to obtain the lifting or removal
of such order as soon as possible.
(f) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time
when the Prospectus is not yet available to prospective purchasers and any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Time of Sale
Prospectus in order to make the statements therein, in the light of the circumstances, not
misleading, or if any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration Statement then on file, or
if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time
of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the circumstances when delivered
to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or
supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale
Prospectus, as amended or supplemented, will comply with applicable law.
(g) If, during such period after the first date of the public offering of the Shares as in the
opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to
in Rule
12
173(a) under the Securities Act) is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule
173(a) under the Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion
of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses Manager will furnish to
the Company) to which Shares may have been sold by Manager on behalf of the Underwriters and to any
other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities Act) is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with
applicable law.
(h) If, at the time this Agreement is executed and delivered, it is necessary or appropriate
for a post-effective amendment to the Registration Statement, or a Registration Statement under
Rule 462(b) under the Securities Act, to be filed with the Commission and become effective before
the Shares may be sold, the Company will use its best efforts to cause such post-effective
amendment or such Registration Statement to be filed and become effective, and will pay any
applicable fees in accordance with the Securities Act, as soon as possible; and the Company will
advise Manager promptly and, if requested by the Manager, will confirm such advice in writing, (i)
when such post-effective amendment or such Registration Statement has become effective, and (ii) if
Rule 430A under the Securities Act is used, when the Prospectus is filed with the Commission
pursuant to Rule 424(b) under the Securities Act (which the Company agrees to file in a timely
manner in accordance with such Rules).
(i) If, at any time during the period when a prospectus is required by the Securities Act to
be delivered (whether physically or through compliance with Rule 172 under the Securities Act or
any similar rule) in connection with any sale of Shares, the Registration Statement shall cease to
comply with the requirements of the Securities Act with respect to eligibility for the use of the
form on which the Registration Statement was filed with the Commission, to (i) promptly notify the
Manager, (ii) promptly file with the Commission a new registration statement under the Securities
Act, relating to the Shares, or a post-effective amendment to the Registration Statement, which new
registration statement or post-effective amendment shall comply with the requirements of the
Securities Act and shall be in a form satisfactory to the Manager, (iii) use its best efforts to
cause such new registration statement or post-effective amendment to become effective under the
Securities Act as soon as practicable, (iv) promptly notify the Manager of such effectiveness and
(v) take all other action necessary or appropriate to permit the public offering and sale of the
Shares to continue as contemplated in the Prospectus; all references herein to the Registration
Statement shall be deemed to include each such new registration statement or post-effective
amendment, if any.
(j) If the third anniversary of the initial effective date of the Registration Statement
occurs before all the Shares have been sold by the Underwriters, prior to the third anniversary to
file a new shelf registration statement and to take any other action necessary to permit the public
offering of the Shares to continue without interruption; references herein to the Registration
Statement shall include the new registration statement declared effective by the Commission.
(k) To file promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a
prospectus (or, in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is
required in connection with the offering or sale of the Shares.
13
(l) Promptly to furnish such information or to take such action as the Manager may reasonably
request and otherwise to qualify the Shares for offer and sale under the securities or “blue sky”
laws of such jurisdictions as the Manager shall reasonably request, and to comply with such laws so
as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may
be necessary to complete the distribution of the Shares; provided, however, that the Company shall
not be required to qualify as a foreign corporation or to file a consent to service of process in
any jurisdiction (excluding service of process with respect to the offer and sale of the Shares);
and to promptly advise the Manager of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Shares for offer or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(m) To make generally available to the Company’s security holders and to the Manager as soon
as practicable an earning statement covering a period of at least twelve months beginning after the
effective date of the Registration Statement (as defined in Rule 158(c) under the Securities Act),
which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
(n) To use its best efforts to cause the Shares to be listed on the NASDAQ and to maintain the
listing of the Common Stock, including the Shares, on the NASDAQ.
(o) During the period beginning on the date of this Agreement and continuing to and including
90 days after the date of the Prospectus, and without the prior written consent of the Manager, not
to (i) to issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether such transaction described in clause (i) or
(ii) above is to be settled by delivery of the Common Stock or such other securities, in cash or
otherwise, (3) file any registration statement with the Commission relating to the offering of any
shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common
Stock, or (4) publicly announce an intention to effect any transaction specified in clause (1), (2)
or (3). The restrictions contained in the preceding sentence shall not apply to (i) the Shares to
be sold hereunder, (ii) the grant of options to purchase shares of Common Stock pursuant to the
Company’s equity incentive plans under the terms of such plans in effect on the date hereof,
provided such stock options are granted at fair market value and in amounts and with exercise terms
consistent with the Company’s past practice, or the sale of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plans (or the filing of a registration statement
on Form S-8 to register shares of Common Stock issuable under such plans, or (iii) the issuance by
the Company of shares of Common Stock upon the exercise of an option or warrant or the conversion
of a security outstanding on the date of this Agreement of which the Manager has been advised in
writing. Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day restricted
period the Company issues an earnings release or material news or a material event relating to the
Company occurs; or (2) prior to the expiration of the 90-day restricted period, the Company
announces that it will release earnings results during the 16-day period beginning on the last day
of the 90-day period, the restrictions imposed by this agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event. The Company shall promptly notify the Manager of any
earnings release, news or event that may give rise to an extension of the initial 90-day restricted
period.
(p) To prepare, if the Manager so requests, a final term sheet relating to the offering of the
Shares, containing only information that describes the final terms of the Shares or the offering in
a form consented to by the Manager, and to file such final term sheet within the period required by
Rule
14
433(d)(5)(ii) under the Securities Act following the date the final terms have been
established for the offering of the Shares.
(q) To comply with Rule 433(d) under the Securities Act (without reliance on Rule 164(b) under
the Securities Act) and with Rule 433(g) under the Securities Act.
(r) Not to take, directly or indirectly, any action designed, or which will constitute, or has
constituted, or might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Shares.
(s) Not, at any time at or after the execution of this Agreement, to offer or sell any Shares
by means of any “prospectus” (within the meaning of the Securities Act) or use any “prospectus”
(within the meaning of the Securities Act) in connection with the offer or sale of the Shares,
except in each case other than the Prospectus.
(t) To maintain a transfer agent and, if necessary under the jurisdiction of incorporation of
the Company, a registrar for the Common Stock.
(u) To apply the net proceeds to the Company from the sale of the Shares in the manner set
forth under the caption “Use of Proceeds” in the Prospectus Supplement.
7. Expenses. Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement, including: (i) the
fees, disbursements and expenses of the Company’s counsel and the Company’s accountants in
connection with the registration and delivery of the Shares under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the Registration Statement, any
Preliminary Prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus
prepared by or on behalf of, used by, or referred to by the Company and amendments and supplements
to any of the foregoing, including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or
producing any securities or blue sky memorandum in connection with the offer and sale of the Shares
under the securities laws of the jurisdictions in which the Shares may be offered or sold and all
expenses in connection with the qualification of the Shares for offer and sale under such
securities laws as provided in Section 6(l) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by FINRA, (v) all costs and expenses
incident to listing the Shares on the NASDAQ, (vi) the cost of printing certificates representing
the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on any “road show” undertaken
in connection with the marketing of the offering of the Shares, including, without limitation,
expenses associated with the preparation or dissemination of any road show, expenses associated
with the production of road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, (ix) the document production
charges and expenses associated with printing this Agreement, (x) all expenses in connection with
any offer and sale of the Shares outside of the United States, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection with offers and
sales outside of the United States, (xi) up to $60,000 of the fees, disbursements and expenses of
the Underwriter’s counsel in connection with the offering including in connection with the
preparation and filing of any Preliminary
15
Prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus and
amendments and supplements to any of the foregoing, and (xii) all other costs and expenses incident
to the performance of the obligations of the Company hereunder for which provision is not otherwise
made in this Section.
Except as set forth in the preceding paragraph, the Underwriters will pay all of their costs
and expenses, including stock transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make. Notwithstanding the above, if the
sale of the Shares provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 5 is not satisfied, because of any termination of this
Agreement by the Underwriters pursuant to Section 9 hereof or because of any refusal, inability or
failure on the part of the Company to perform any obligation or covenant hereunder or comply with
any provision hereof other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect
to themselves, severally, through the Manager on demand for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereby.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any
Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such action or claim) caused
by, arising out of or based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, or any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Time of Sale Prospectus, any issuer free
writing prospectus as defined in Rule 433(h) under the Securities Act, any issuer information that
the Company has filed, or is required to file, pursuant to Rule 433(d) of the Securities Act, any
road show not constituting a free writing prospectus, or the Prospectus or any amendment or
supplement thereto, or any 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 there were made, not misleading; provided, however, that the Company shall not be liable
under this Section 8(a) to the extent that such losses, claims, damages or liabilities are caused
by, arise out of or are based upon any such untrue statement or omission or alleged untrue
statement or omission made therein in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Manager
expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, the directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such action or claim) caused
by, arising from or based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof or any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Time of Sale Prospectus, any issuer free
writing prospectus as defined in Rule 433(h) under the Securities Act, any Company information that
the Company has filed, or is required to file, pursuant to Rule 433(d) of the Securities Act, any
road show not constituting a free writing prospectus, or
16
the Prospectus or any amendment or supplement thereto, or any 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 there were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or omission or alleged untrue
statement or omission was made therein in reliance upon and in conformity with information relating
to such Underwriter furnished to the Company in writing by such Underwriter through the Manager
expressly for use therein.
(c) In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
such person (the “indemnified party”) shall promptly notify the person against whom such indemnity
may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (i) the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or
who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act, and
(ii) the fees and expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either such Section, and that all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons and affiliates of any Underwriters, such firm shall be
designated in writing by the Manager. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm shall be designated in
writing by the Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) To the extent the indemnification provided for in 8(a) or 8(b) is unavailable to an
indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such
17
losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand and the indemnified
party or parties on the other hand from the offering of the 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 the indemnifying party or parties on the one hand and of the indemnified party or
parties on the other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company or by the
Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters’ respective obligations to
contribute pursuant to this Section 8 are several in proportion to the respective number of Shares
they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any indemnified party at
law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8 shall remain
operative and in full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter
or any affiliate of any Underwriter, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the Shares.
9. Termination. The Underwriters may terminate this Agreement by notice given by the Manager
to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date
(a) trading generally shall have been suspended or materially limited or minimum prices shall have
been established on, or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, or the NASDAQ Global Market, (b) trading of any securities of the Company shall
have been suspended or materially limited on any exchange or in any over-the-counter market, (c) a
material disruption in securities settlement, payment or clearance services in the United States
shall have occurred, (d) any moratorium or material limitation on commercial banking activities
shall have been declared by
18
Federal, Minnesota or New York state authorities, (e) there shall have occurred any outbreak
or escalation of hostilities, act of terrorism involving the United States or declaration by the
United States of a national emergency or war, or (f) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere, if the effect of any
such event specified in clause (e) or (f), makes it, in the Manager’s judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the
manner contemplated in the Time of Sale Prospectus or the Prospectus (exclusive of any supplement
thereto).
10. Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate
number of the Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite their respective
names in Schedule I bears to the aggregate number of Firm Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions as the Manager may
specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such number of Shares without the written consent
of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased on such date,
and arrangements satisfactory to the Manager and the Company for the purchase of such Firm Shares
are not made within 36 hours after such default, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter or the Company. In any such case either the Manager
or the Company shall have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration Statement, in the Time
of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected.
If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such
Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or
(ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. Representations and Indemnities to Survive. The respective agreements, representations,
warranties, indemnities and other statements of the Company and the Underwriters set forth or made
pursuant to this Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Shares. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Entire Agreement. (a) This Agreement, together with any contemporaneous written
agreements and any prior written agreements (to the extent not superseded by this Agreement) that
relate to the offering of the Shares, represents the entire agreement between the Company, on the
one hand, and
19
the Underwriters, on the other, with respect to the preparation of any Preliminary Prospectus,
the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale
of the Shares.
(b) The Company acknowledges that in connection with the offering of the Shares: (i) the
Underwriters have acted at arm’s length, are not agents of, and owe no fiduciary duties to, the
Company or any other person; (ii) the Underwriters owe the Company only those duties and
obligations set forth in this Agreement and prior written agreements (to the extent not superseded
by this Agreement), if any; (iii) the Underwriters may have interests that differ from those of the
Company; and (iv) the Purchase Price and the Public Offering Price of the Shares set forth in this
Agreement were established and agreed to by the Company following arm’s length discussions with the
Underwriters, and the Company understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement. The Company waives to the full extent permitted by
applicable law any claims it may have against the Underwriters arising from an alleged breach of
fiduciary duty in connection with the offering of the Shares.
13. Counterparts. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart by facsimile or electronic transmission shall be equally as effective as
delivery of an original counterpart of this Agreement. The failure by a party to deliver an
original executed counterpart to this Agreement shall not affect the validity, enforceability and
binding effect of this Agreement.
14. Applicable Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
16. Notices. All communications hereunder shall be in writing and effective only upon receipt
and if to the Underwriters shall be delivered, mailed or sent to the Manager at ▇▇▇▇▇-▇▇▇▇▇▇
Capital Group LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (▇▇▇)
▇▇▇-▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, with copies to the Legal Department and Faegre & ▇▇▇▇▇▇ LLP,
2200 ▇▇▇▇▇ Fargo Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Fax (▇▇▇)
▇▇▇-▇▇▇▇ Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Company shall be delivered, mailed or sent to
PFSweb, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Fax (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer with a copy to ▇▇▇▇▇ & Samson, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
20
| Very truly yours, PFSweb, Inc. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Accepted as of the date hereof
▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC
Acting severally on behalf of themselves and
the several Underwriters named in
Schedule I hereto
the several Underwriters named in
Schedule I hereto
| By: | ||||
| Name: | ||||
| Title: | ||||
21
SCHEDULE I
| Number of Firm Shares | Number of Additional Shares | |||
| Underwriter | To Be Purchased | To Be Purchased | ||
▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC
|
||||
Stonegate Securities, Inc. |
||||
SCHEDULE II
Time of Sale Prospectus
1.
|
Base Prospectus dated , 2010 | |
2.
|
Free Writing Prospectus dated , 2010 | |
3.
|
Free Writing Prospectus dated , 2010 | |
4.
|
Electronic road show | |
5.
|
Orally communicated pricing information: | |
| Number of Shares to be Sold: | ||
| Offering size: $ | ||
| Estimated net proceeds to the Company (after underwriting discounts and commissions and offering expenses): $ | ||
| Price per share: $ | ||
| Underwriting discount and commissions per share: $ | ||
| Trade date: , 2010 | ||
| Closing date: , 2010 |