EXHIBIT 1.1
GAIAM, INC.
2,200,000 SHARES OF CLASS A COMMON STOCK*
UNDERWRITING AGREEMENT
_______, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
As Representative of the Underwriters
Identified in Schedule I Annexed Hereto
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SECTION 1. INTRODUCTION. Gaiam, Inc., a Colorado corporation (the
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"Company"), proposes to sell a total of 2,200,000 shares (the "Firm Shares") of
Class A common stock, $.0001 par value per share (the "Class A Common Stock" and
together with the Company's Class B common stock, $.0001 par value per share,
the "Common Stock"), to the several underwriters identified in Schedule I
annexed hereto (the "Underwriters"), who are acting severally and not jointly.
In addition, the Company has agreed to grant to the Underwriters an option to
purchase up to 330,000 additional shares of Class A Common Stock (the "Optional
Shares") as provided in Section 5 hereof. The Firm Shares and, to the extent
such option is exercised, the Optional Shares are hereinafter collectively
referred to as the "Shares."
You, as representative of the Underwriters (the "Representative"), have
advised the Company that the Underwriters propose to make a public offering of
the Shares as soon hereafter as in your judgment is advisable and that the
public offering price of the Shares initially will be $____ per Share (the
"Offering Price").
The Company hereby confirms its agreements with the Underwriters as
follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
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represents and warrants to, and agrees with, the several Underwriters, and shall
be deemed to represent and warrant to the several Underwriters on each Closing
Date (as hereinafter defined), that:
(a) The Company and each of the subsidiaries of the Company, which
subsidiaries are listed on Exhibit 21.1 of the Registration Statement (as
hereinafter defined) (individually, a "Subsidiary" and collectively, the
"Subsidiaries"), has been duly incorporated or formed and is validly
existing as an entity in good standing under the laws of its jurisdiction
of incorporation or formation, with full power and authority to own,
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*Plus an option to acquire up to 330,000 additional shares of Class A Common
Stock from the Company solely to cover over-allotments.
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lease and operate its properties and to conduct its business as presently
conducted and described in the Prospectus (as hereinafter defined) and the
Registration Statement; each of the Company and the Subsidiaries is duly
registered and qualified to do business as a foreign corporation or other
entity under the laws of, and is in good standing as such in, each
jurisdiction in which such registration or qualification is required,
except where the failure to so register or qualify would not be reasonably
expected to have or result in a material adverse effect on the financial
condition, business, property or results of operations of the Company and
the Subsidiaries, taken as a whole (a "Material Adverse Effect"); and, to
the Company's knowledge, no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification. Complete and correct
copies of the certificate of incorporation, articles of incorporation, or
other organizational documents, as amended or restated (collectively, the
"Articles of Incorporation"), and by-laws, as amended or restated ("By-
laws"), of the Company and each of the Subsidiaries as in effect on the
date hereof, have been delivered to the Representative, and no changes
thereto will be made on or subsequent to the date hereof and prior to each
Closing Date, except as contemplated by the Registration Statement.
(b) The shares of Common Stock issued and outstanding immediately
prior to the issuance and sale of the Shares hereunder as set forth in the
Prospectus have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus and the Registration Statement. There are no preemptive rights
to subscribe for or purchase any shares of Common Stock (including the
Shares). The Shares have been duly authorized and, when issued, delivered
and paid for pursuant to this Agreement, will be validly issued, fully paid
and nonassessable and will conform to the description thereof contained in
the Prospectus and the Registration Statement. The delivery of the Shares
to be issued and sold hereunder and payment therefor pursuant to the terms
of this Agreement will pass valid title to such Shares to the Underwriters,
free and clear of any lien, claim, encumbrance or defect in title. Except
as described in the Prospectus, there are no material outstanding options,
warrants or other rights of any description, contractual or otherwise,
entitling any person to be issued any class of security by the Company or
any Subsidiary, and there are no holders of Common Stock or other
securities of the Company or any Subsidiary, or of securities that are
convertible or exchangeable into Common Stock or other securities of the
Company or any Subsidiary, that have rights to the registration of such
Common Stock or securities under the Securities Act of 1933, as amended,
and the regulations thereunder (together, the "Act") or the securities laws
or regulations of any of the states (the "Blue Sky Laws").
(c) Except for the Subsidiaries, the Company has no "significant
subsidiaries" (as such term is defined in Rule 1-02(w) of Regulation S-X)
and does not own any equity interest in or control, directly or indirectly,
any other corporation, limited liability company, partnership, joint
venture, association, trust or other business organization, except as set
forth in Schedule III to this Agreement. Except as set forth in the
Registration Statement, the issued and outstanding capital stock of each
Subsidiary owned directly or indirectly by the Company is owned free and
clear of any and all liens, claims, encumbrances or security interests,
other than liens, claims, encumbrances or security interests in favor of
▇▇▇▇▇ Fargo Bank West, N.A. in respect of amounts owed to ▇▇▇▇▇ Fargo Bank
West, N.A. under the Company's credit arrangement with such bank,
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and all such capital stock or other equity interest has been duly
authorized and validly issued, is fully paid and nonassessable and was
issued free and clear of preemptive rights. There are no outstanding
options, warrants or other rights of any description, contractual or
otherwise, entitling any person to subscribe for or purchase any shares of
capital stock of any Subsidiary.
(d) The Company has the corporate power and authority to enter into
and perform this Agreement, and the execution and delivery by the Company
of this Agreement and the performance by the Company of its obligations
hereunder and the consummation of the transactions described herein, have
been duly authorized with respect to the Company by all necessary corporate
action and will not: (i) violate any provisions of the Articles of
Incorporation or By-laws (or their equivalents) of the Company or any
Subsidiary; (ii) violate any provisions of, or result in the breach,
modification or termination of, or constitute a default under, any
provision of any agreement, lease, franchise, license, indenture, permit,
mortgage, deed of trust, evidence of indebtedness or other instrument to
which the Company or any Subsidiary is a party, other than any violation,
breach, modification, termination or default which would not be reasonably
expected to have or result in a Material Adverse Effect; (iii) violate any
statute, ordinance, rule or regulation applicable to the Company or any
Subsidiary, or order or decree of any court, regulatory or governmental
body, arbitrator, administrative agency or instrumentality of the United
States or the States of California, Colorado or Ohio or having jurisdiction
over the Company or any Subsidiary; or (iv) result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any Subsidiary. No consent, approval, authorization or
other order of any court, regulatory or governmental body, arbitrator,
administrative agency or instrumentality of the United States or the States
of California, Colorado and Ohio is required for the execution and delivery
of this Agreement by the Company, the performance of its obligations
hereunder or the consummation of the transactions contemplated hereby,
except for compliance with the Act, the Securities Exchange Act of 1934, as
amended, and the regulations thereunder (together, the "Exchange Act"), the
Blue Sky Laws applicable to the public offering of the Shares by the
Underwriters and the clearance of such offering and the underwriting
arrangements evidenced hereby with the National Association of Securities
Dealers, Inc. (the "NASD"). This Agreement has been duly authorized,
executed and delivered by and on behalf of the Company and is a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(e) A registration statement on Form S-1 (Reg. No. 333-64388) with
respect to the Shares, including a preliminary form of prospectus, has been
prepared by the Company and complies in all material respects with the
requirements of the Act and Form S-1 promulgated thereunder and has been
filed with the Securities and Exchange Commission (the "Commission"). Such
registration statement, as finally amended and revised at the time such
registration statement was or is declared effective by the Commission
(including the information contained in the form of final prospectus, if
any, filed with the Commission pursuant to Rule 424(b) and Rule 430A under
the Act and deemed to be part of the registration statement if the
registration statement has been declared effective pursuant to Rule
430A(b)) and as thereafter amended by post-effective amendment, if any, is
herein referred to as the "Registration Statement." The related final
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prospectus in the form first filed with the Commission pursuant to Rule
424(b) or, if no such filing is required, as included in the Registration
Statement, or any supplement thereto, is herein referred to as the
"Prospectus." The prospectus, subject to completion in the form included in
the Registration Statement at the time of the initial filing of the
Registration Statement with the Commission, and each such prospectus as
amended from time to time until the date of the Prospectus, is referred to
herein as the "Preliminary Prospectus." Each Preliminary Prospectus filed
as part of the Registration Statement as originally filed or as part of any
amendment thereto complied when so filed in all material respects with the
Act. The Company has prepared and filed such amendments to the Registration
Statement since its initial filing with the Commission, if any, as may have
been required to the date hereof, and will file such additional amendments
thereto as may hereafter be required. There have been delivered to the
Representative two (2) manually signed copies (which need not be originals)
of the Registration Statement and each amendment thereto, if any, together
with one copy of each exhibit filed therewith or incorporated by reference
therein, and such number of conformed copies for each of the Underwriters
of the Registration Statement and each amendment thereto, if any (but
without exhibits), and of each Preliminary Prospectus and of the Prospectus
as the Representative has requested.
(f) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary
Prospectus, nor, to the knowledge of the Company, have any proceedings for
that purpose been initiated or threatened, and each Preliminary Prospectus
filed with the Commission as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto complied
in all material respects when so filed with the requirements of the Act
and, as of its date, did not include 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. As of the
effective date of the Registration Statement, and at all times subsequent
thereto up to each Closing Date, the Registration Statement and the
Prospectus contained or will contain all statements that are required to be
stated therein in accordance with the Act and conformed or will conform in
all material respects with the requirements of the Act, and neither the
Registration Statement nor the Prospectus included or will include any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein, not misleading. Neither the Company, nor, to the
Company's knowledge, any person that controls, is controlled by (including
the Subsidiaries) or is under common control with the Company, has
distributed or will distribute prior to each Closing Date any offering
material in connection with the offering and sale of the Shares other than
the Prospectus, the Registration Statement or other materials permitted by
the Act and provided to the Representative. There has not occurred any
material adverse change, or any development involving a prospective
material adverse change, in the financial condition, or in the earnings,
business, prospects or operations of the Company, from that set forth in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
(g) Each of Ernst & Young LLP, Deloitte & Touche LLP and ▇▇▇▇ ▇▇▇▇▇
LLP, each of which has expressed its opinion with respect to certain of the
audited consolidated financial statements filed with the Commission or
incorporated by reference
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and included as a part of each Preliminary Prospectus, the Prospectus or
the Registration Statement, is an independent accountant as required by the
Act.
(h) The consolidated financial statements and the related notes
thereto included in each Preliminary Prospectus, the Prospectus and the
Registration Statement present fairly the financial position, results of
operations and cash flows of the Company as of their respective dates or
for the respective periods covered thereby, all in conformity with
generally accepted accounting principles consistently applied throughout
the periods involved. The financial statement schedules, if any, included
in the Registration Statement present fairly the information required to be
stated therein on a basis consistent with the consolidated financial
statements of the Company contained therein. The Company had an outstanding
capitalization as set forth in the Registration Statement and under
"Capitalization" in the Prospectus as of the date indicated therein, and
there has been no material change thereto since such date except as
disclosed in the Prospectus. The financial and statistical information and
data relating to the Company in each Preliminary Prospectus, the Prospectus
and the Registration Statement are accurately and fairly presented and
prepared on a basis consistent with the audited consolidated financial
statements and books and records of the Company. The consolidated financial
statements and schedules and the related notes thereto included in each
Preliminary Prospectus, the Prospectus or the Registration Statement are
the only such financial statements and schedules required under the Act to
be set forth therein.
(i) Neither the Company nor any Subsidiary is, nor with the giving of
notice or passage of time or both, would be, in violation or in breach of:
(i) its respective Articles of Incorporation or By-laws (or
their equivalents);
(ii) any statute, ordinance, order, rule or regulation
applicable to the Company or such Subsidiary;
(iii) any order or decree of any court, regulatory body,
arbitrator, administrative agency or other instrumentality of the
United States or other country or jurisdiction having jurisdiction
over the Company or such Subsidiary; or
(iv) any provision of any agreement, lease, franchise, license,
indenture, permit, mortgage, deed of trust, evidence of indebtedness
or other instrument to which the Company or such Subsidiary is a party
or by which any property owned or leased by the Company or such
Subsidiary is bound or affected,
except, in each case, for any such violation or breach that would not be
reasonably expected to have or result in a Material Adverse Effect.
(j) Neither the Company nor any Subsidiary has received notice of any
violation of any applicable statute, ordinance, order, rule or regulation
applicable to the Company or any Subsidiary. The Company and each
Subsidiary have obtained and hold,
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and are in compliance with, all permits, certificates, licenses, approvals,
registrations, franchises, consents and authorizations of governmental or
regulatory authorities required under all laws, rules and regulations in
connection with their businesses (hereinafter "permit" or "permits") except
where the failure to obtain and hold any such permit would not be
reasonably expected to have or result in a Material Adverse Effect, and all
of such permits are in full force and effect; and the Company and each
Subsidiary have fulfilled and performed all of their respective obligations
with respect to each such permit, and no event has occurred which would
result in, or after notice or lapse of time would result in, revocation or
termination of any such permit or result in any other impairment of the
rights of the holder of such permit which would be reasonably expected to
have or result in a Material Adverse Effect. Neither the Company nor any
Subsidiary is or has been (by virtue of any action, omission to act,
contract to which it is a party or other occurrence) in violation of any
applicable foreign, federal, state, municipal or local statutes, laws,
ordinances, rules, regulations or orders (including those relating to
environmental protection, occupational safety and health and equal
employment practices) heretofore or currently in effect, the violation of
which would be reasonably expected to have a Material Adverse Effect.
(k) There are no legal or governmental proceedings or investigations
pending or, to the Company's knowledge, threatened, to which the Company or
any Subsidiary is or may be a party or to which any property owned or
leased by the Company or any Subsidiary is or may be subject, including,
without limitation, any such proceedings that are related to environmental
or employment matters, which are required to be described in the
Registration Statement or the Prospectus which are not so described, or
which question the validity of this Agreement or any action taken or to be
taken pursuant hereto. Except as described in the Registration Statement or
the Prospectus, neither the Company nor any Subsidiary: (i) is in violation
of any statute, ordinance, rule or regulation, or any decision, order or
decree of any court, regulatory body, arbitrator, administrative agency or
other instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company or such Subsidiary relating to the
use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environmental or human exposure to
"Hazardous" Materials (as hereinafter defined) (collectively,
"environmental laws"); (ii) owns, operates or occupies any real property
contaminated, to the Company's knowledge, with any Hazardous Material that
is subject to any environmental laws; (iii) is, to the Company's knowledge,
liable for any off-site disposal or contamination pursuant to any
environmental laws; or (iv) is subject to any claim relating to any
environmental laws; which violation, contamination, liability or claim
identified in (i) through (iv) above would be reasonably expected to have
or result in a Material Adverse Effect. For purposes of this Agreement,
"Hazardous Materials(s)" shall mean (i) any substance, the presence in a
quantity of which requires investigation or remediation under any
environmental laws; (ii) any toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
substance present in a quantity such that it is regulated by any
environmental laws; (iii) any substance in a quantity the presence of which
poses a hazard to the health or safety of persons on or about the real
property owned, operated or occupied by the Company or any of its
Subsidiaries; and (iv) urea-formaldehyde, PCBs, asbestos or asbestos-
containing materials and radon.
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(l) There is no transaction, relationship, obligation, agreement or
other document required to be described in the Registration Statement or
the Prospectus or to be filed or deemed to be filed as an exhibit to the
Registration Statement by the Act, which has not been described or filed as
required. All contracts or agreements filed as an exhibit to the
Registration Statement to which the Company or any Subsidiary is a party
have been duly authorized, executed and delivered by the Company or such
Subsidiary, are in full force and effect, constitute valid and binding
agreements of the Company or such Subsidiary, and are enforceable by and
against the Company or such Subsidiary, in accordance with the respective
terms thereof, subject to bankruptcy, insolvency, and moratorium laws,
fraudulent transfer and other laws affecting creditors' rights generally
and other principles of equity. None of such contracts or instruments has
been assigned by the Company (other than to a Subsidiary); and the Company
knows of no default or breach by any party to any such contract or
instrument or of any present situation or condition or fact which would
prevent compliance by the parties with the terms of such contracts or
instruments as amended to date. Except for amendments or modifications of
such contracts or instruments in the ordinary course of business, the
Company has no intention of exercising any right which would cause any
other party to the contract to cancel any of their obligations under any of
such contracts or instruments, and, except as described in the Registration
Statement, the Company has no knowledge that any other party to any of such
contracts or instruments is in material breach or violation of any such
contract or agreement or has any intention not to render full performance
thereunder.
(m) The Company or a Subsidiary has good and valid title to all
property and assets reflected as owned by the Company or such Subsidiary in
the Company's consolidated financial statements included in the
Registration Statement (or the Prospectus), free and clear of all liens,
claims, mortgages, security interests or other encumbrance of any kind or
nature whatsoever except those, if any, reflected in such financial
statements (or elsewhere in the Registration Statement or the Prospectus).
All property (real and personal) held or used by the Company or a
Subsidiary under leases, licenses, franchises or other agreements is held
by the Company or such Subsidiary under valid, subsisting, binding and
enforceable leases, franchises, licenses or other agreements, and the
Company or such Subsidiary, as the case may be, is in full compliance with
each such lease, license, franchise or other agreements and the Company has
no knowledge that any other party thereto is not in full compliance with
each such lease, license, franchise or other agreements, except in either
case where the failure to be in compliance would not be reasonably expected
to have or result in a Material Adverse Effect. The Company has no
knowledge that any other party thereto is not in material compliance with
each such lease, license, franchise or other agreement.
(n) Neither the Company nor, to the Company's knowledge, any person
that controls, is controlled by (including the Subsidiaries) or is under
common control with the Company has taken or will take, directly or
indirectly, any action designed to cause or result in, or which
constituted, or which could cause or result in, stabilization or
manipulation, under the Exchange Act or otherwise, of the price of any
security of the Company to facilitate the sale or resale of the Common
Stock.
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(o) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in
the Registration Statement or the Prospectus and prior to each Closing
Date:
(i) neither the Company nor any Subsidiary has or will have
incurred any liability or obligation, direct or contingent, or entered
into any transaction, in each case, that is material to the Company,
except in the ordinary course of business;
(ii) the Company has not and will not have paid or declared any
dividend or other distribution with respect to its capital stock and
neither the Company nor any Subsidiary is or will be delinquent in the
payment of principal or interest on any outstanding debt obligation;
and
(iii) there has not been and will not have been any change in
the capital stock, any material change in the indebtedness of the
Company or any Subsidiary, or any change or development involving or
which would be reasonably expected to have or result in a Material
Adverse Effect, whether or not arising from transactions in the
ordinary course of business.
(p) Neither the Company nor any person that controls, is controlled
by (including the Subsidiaries) or is under common control with the Company
has, directly or indirectly:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose fully any contribution in
violation of law; or
(ii) made any payment to any federal, state or foreign
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
or applicable foreign jurisdictions.
(q) The Company or a Subsidiary owns or possesses adequate rights to
use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations, copyrights and
licenses presently used in or necessary for the conduct of its business or
ownership of its properties, and neither the Company nor any Subsidiary has
violated or infringed upon the rights of others, or received any notice of
conflict with the asserted rights of others, in respect thereof, which
violation or infringement would be reasonably expected to have or result in
a Material Adverse Effect.
(r) Neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for; and, except as described in the
Prospectus, neither the Company nor any 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
insurers of similar standing as may be necessary to continue its business
at a cost that would not have or result in a Material Adverse Effect.
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(s) No labor dispute with the employees of the Company or any
Subsidiary, which dispute would reasonably be expected to have or result in
a Material Adverse Effect, exists or, to the knowledge of the Company, is
imminent, and neither the Company nor any Subsidiary, except as disclosed
in the Registration Statement, is a party to any collective bargaining
agreement and, to the knowledge of the Company, no union organizational
attempts are pending. There has been no change in the relationship of the
Company or any Subsidiary with any of its suppliers, manufacturers,
contractors or customers resulting in or that would reasonably be expected
to have or result in a Material Adverse Effect.
(t) Neither the Company nor any Subsidiary is an "investment
company", an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (without regard to the second
sentence of Section 3(c)(1) of such Act, insofar as such sentence applies
to the status of investment vehicles of ▇▇▇▇▇ ▇▇▇▇▇▇ as "affiliated
persons" with respect to the Company).
(u) All federal, state and local tax returns required to be filed by
or on behalf of the Company or any Subsidiary have been filed (or are the
subject of valid extension) with the appropriate federal, state and local
authorities, and all such tax returns, as filed, are accurate in all
material respects; all federal, state and local taxes (including estimated
tax payments) required to be shown on all such tax returns or claimed to be
due from or with respect to the business of the Company or such Subsidiary
have been paid or reflected as a liability on the financial statements of
the Company or such Subsidiary for all appropriate periods; all
deficiencies asserted as a result of any federal, state or local tax audits
have been paid or finally settled, and no issue has been raised in any such
audit which, by application of the same or similar principles, would be
reasonably expected to result in a proposed material deficiency for any
other period not so audited; no state of facts exist (or has existed with
respect to any period for which a taxing authority may lawfully assess the
Company for any penalty, interest assessment or other charges) which would
reasonably be expected to constitute grounds for the assessment of any tax
liability with respect to the periods which have not heretofore been
audited by appropriate federal, state or local authorities; there are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any federal, state or local tax return of any
period; and neither the Company nor any Subsidiary has ever been a member
of an affiliated group of corporations filing consolidated federal income
tax returns, other than a group of which the Company is and has been the
common parent.
(v) Neither the Company nor any Subsidiary is a participating
employer or plan sponsor with respect to any employee pension benefit plan
as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), including, without limitation, any multi-
employer pension plan. The Company is in material compliance with all
applicable laws and regulations, including ERISA and the Code.
(w) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that:
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(i) transactions are executed in accordance with management's
general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of consolidated 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 authorizations; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(x) None of the Company, any Subsidiary, any officer or director of
the Company or any Subsidiary, or, to the Company's knowledge, any person
who owns, of record or beneficially, any class of securities issued by the
Company is: (i) an officer, director or partner of any brokerage firm,
broker or dealer that is a member of the NASD ("NASD Member"); or (ii)
directly or indirectly, a "person associated with" an NASD member or an
"affiliate", of an NASD member, as such terms are used in the NASD Rules of
the Association.
(y) The Shares are duly listed, and admitted and authorized for
trading, upon official notice of issuance, on the Nasdaq National Market
("Nasdaq").
(z) All offers and sales of the securities of the Company and each
Subsidiary prior to the date hereof were made in compliance with the Act,
the Blue Sky Laws and all other applicable state and federal laws or
regulations.
(aa) The Company has obtained for the benefit of the Underwriters an
agreement (a "Lock-Up Agreement"), enforceable by the Representative,
executed and delivered by each of the persons listed on Schedule II hereof,
who owns of record or has options to acquire the number of shares of Common
Stock set forth on Schedule II opposite such shareholder's name, that for a
period of 180 days after the First Closing Date, such persons will not
(except as set forth in Schedule II), without the prior written consent of
the Representative, directly or indirectly: (i) offer to sell, sell,
pledge, contract to sell or otherwise dispose of (or enter into any
transaction that is designed to, or could be expected to, result in the
disposition by any person of) any shares of Common Stock or rights to
acquire shares of Common Stock owned by such persons or (ii) enter into any
swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock.
(bb) The Company has complied with all provisions of Section 517.075
of the Florida Statutes, relating to doing business with the government of
Cuba or with any person or affiliate located in Cuba.
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(cc) The Company represents that no finder's fee has been or will be
paid in connection herewith. It is understood that, should a claim be made
for any finder's fee in connection with the sale of the Shares and based
upon any agreement by the Company, the Company will indemnify the
Underwriters with respect to any such claim.
(dd) All documents and other information relating to the Company's
affairs shall be made available upon request to the Representative and
counsel to the Underwriters at the Company's office, and copies of any such
documents shall be furnished upon request to the Representative or counsel
to the Underwriters. Included within the documents made available are the
Company's articles of incorporation, as amended, and related charter
documents, bylaws and amendments thereto, minutes of all meetings and other
actions taken by the Company's incorporators, directors and shareholders,
all financial statements, correct copies of any material contracts,
licenses, leases or agreements to which the Company is a party or by which
it or its property is bound, including contracts for the sale of products
or services in the normal course of business, excluding purchase orders
made in the normal course of business, and including any employee
(including officers and/or directors) incentive plans and any other type of
fringe benefit plan, of whatever nature, and copies of all patents, patent
applications, trademarks and trademark applications in which the Company
may have an interest.
(ee) A certificate signed by any officer of the Company and delivered
to the Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby. A certificate delivered by the Company to its
counsel for purposes of enabling such counsel to render the opinion
referred to in Section 8(d) will also be furnished to the Representative
and counsel for the Underwriters and shall be deemed to be additional
representations and warranties to the Underwriters by the Company as to the
matters covered thereby.
SECTION 3. REPRESENTATION OF UNDERWRITERS. The Representative will act as
------------------------------
the Representative for the several Underwriters in connection with the public
offering of the Shares, and any action under or in respect of this Agreement
taken by the Representative will be binding upon all of the Underwriters.
SECTION 4. INFORMATION FURNISHED BY THE UNDERWRITERS. The information set
-----------------------------------------
forth on the outside front cover page of the Prospectus concerning the terms of
the offering by the Underwriters, the names of the Underwriters and the
information appearing in the first, second (second sentence only), fourth,
ninth, tenth, eleventh, twelfth, thirteenth and fifteenth paragraphs under the
caption "Underwriting" in the Prospectus constitute all of the information
furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and the
Prospectus, as such information is referred to in this Agreement.
11
SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES.
-------------------------------------
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to the Underwriters identified in Schedule I
annexed hereto 2,200,000 Firm Shares, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company the number of Firm
Shares as hereinafter set forth at the price of $____ per share. The
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full Firm Shares which (as nearly as practicable in
full shares as determined by the Representative) bears the same proportion
to the number of Firm Shares to be sold by the Company as the number of
shares set forth opposite the name of such Underwriter in Schedule I
annexed hereto bears to the total number of Firm Shares to be purchased by
all of the Underwriters under this Agreement.
(b) On the First Closing Date (as hereinafter defined), the Company
will deliver, through the facilities of The Depository Trust Company, for
the accounts of the several Underwriters, all the Firm Shares against
payment of the aggregate purchase price therefor by wire transfer of
immediately available funds to the account specified by the Company. As
referred to in this Agreement, the "First Closing Date" shall be on the
third or fourth business day (as permitted under Rule 15c6-1 under the
Exchange Act), following the date of the effectiveness of the Registration
Statement, at 9:00 a.m., Denver, Colorado time.
(c) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein
set forth, the Company hereby agrees to sell to the Underwriters, and the
Underwriters, severally and not jointly, shall have the right at any time
within thirty (30) days after the First Closing Date to purchase up to
330,000 Optional Shares from the Company at the price of $____ per share,
for use solely in covering any over-allotments made by the Underwriters in
the sale and distribution of the Firm Shares. The option granted hereunder
may be exercised in full or in part upon notice by the Representative to
the Company within thirty (30) days after the First Closing Date setting
forth the aggregate number of Optional Shares to be purchased by the
Underwriters and sold by the Company, and the names and denominations in
which the certificates for such Optional Shares are to be registered (or
similar information for purchasers whose ownership of Optional Shares is to
be evidenced by book entry only). Such date of delivery (the "Second
Closing Date") shall be determined by the Representative, provided that the
Second Closing Date, which may be the same as the First Closing Date, shall
not be earlier than the First Closing Date and, if after the First Closing
Date, shall not be earlier than three (3) nor later than ten (10) full
business days after delivery of such notice to exercise. The manner of
payment for and delivery of (including the denominations of and the names
in which certificates are to be registered or book entries are to be made)
the Optional Shares shall be the same as for the Firm Shares.
(d) The Representative has advised the Company that each Underwriter
has authorized the Representative to accept delivery of the Shares and to
make payment therefor. It is understood that the Representative,
individually and not as representative of the Underwriters, may (but shall
not be obligated to) make payment for any Shares to
12
be purchased by any Underwriter whose funds shall not have been received by
the Representative by the First Closing Date or the Second Closing Date, as
the case may be, for the account of such Underwriter, but any such payment
shall not relieve such Underwriter from any obligation under this
Agreement. As referred to in this Agreement, "Closing Date" shall mean
either the First Closing Date or the Second Closing Date.
(e) The parties represent and warrant that as of the date hereof and
as of the Closing Date, the representations and warranties herein contained
and the statements contained in all certificates delivered by such party to
another pursuant to this Agreement shall in all material respects be true
and correct.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees with
------------------------
the several Underwriters that:
(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, the Company will use its
best efforts to cause the Registration Statement to become effective at the
earliest possible time and, upon notification from the Commission that the
Registration Statement has become effective, will so advise the
Representative and counsel to the Underwriters promptly. The Company will
advise the Representative and counsel to the Underwriters promptly of the
issuance by the Commission or any state securities commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for purposes, or of any notification of the
suspension of qualification of the Shares for sale in any jurisdiction, or
any issue regarding suspension of Nasdaq listing or the initiation or
threatening of any proceedings for any of those purposes, and will also
advise the Representative and counsel to the Underwriters promptly of any
request of the Commission for amendment or supplement of the Registration
Statement or of the Prospectus, or for additional information, and the
Company will not file any amendment or supplement to the Registration
Statement (either before or after it becomes effective) or to the
Prospectus (including a prospectus filed pursuant to Rule 424(b)), or file
any document under the Exchange Act in the time period from the execution
of this Agreement through the First Closing Date with respect to the Firm
Shares, or from the time of notice by the Representative exercising the
option to purchase the Optional Shares through the Second Closing Date with
respect to the Optional Shares, without first providing the Underwriters
with a copy prior to such filing (with a reasonable opportunity to review
such amendment or supplement) or if the Representative objects to such
filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact, or would omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to supplement the
Prospectus to comply with the Act, the Company promptly will advise the
Representative and counsel to the Underwriters thereof and will promptly
prepare and file with the Commission, at its expense, an amendment to the
Registration Statement which will correct such statement or omission or an
amendment which will effect such compliance; and, if any Underwriter
13
is required to deliver a prospectus after the effective date of the
Registration Statement, the Company, upon request of the Representative,
will prepare promptly such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act.
The Company consents to the use, in accordance with the provisions of the
Act and with the Blue Sky Laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, of each Preliminary
Prospectus.
(c) Neither the Company nor any Subsidiary will, prior to the Second
Closing Date, if any, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in the
ordinary course of business, or enter into any transaction with an
"affiliate," as defined in Rule 405 under the Act, which is required to be
described in the Prospectus pursuant to Item 404 of Regulation S-K under
the Act, except as described in the Prospectus.
(d) Neither the Company nor any Subsidiary will, prior to the Second
Closing Date, if any, acquire any of the Common Stock nor will the Company
declare or pay any dividend or make any other distribution upon its Common
Stock payable to shareholders of record on a date prior to the Second
Closing Date, except as described in the Prospectus.
(e) The Company will make generally available to its security holders
and the Representative an earnings statement as soon as practicable, but in
no event later than forty-five (45) days after the end of its fiscal
quarter in which the first anniversary of the effective date of the
Registration Statement occurs, covering a period of twelve (12) consecutive
calendar months beginning after the effective date of the Registration
Statement, which will satisfy the provisions of the last paragraph of
Section 11(a) of the Act and Rule 158 promulgated thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company
will furnish to the Representative, at the expense of the Company, copies
of the Registration Statement, the Prospectus, and all amendments and
supplements to any such documents, including any document filed under the
Exchange Act and deemed to be incorporated by reference in the Registration
Statement, in each case as soon as available and in such quantities as the
Representative may reasonably request.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Prospectus.
(h) The Company will cooperate with the Representative and counsel to
the Underwriters in qualifying or registering the Shares for sale under the
Blue Sky Laws of such jurisdictions as the Representative designates, and
will continue such qualifications or registrations in effect so long as
reasonably requested by the Representative to effect the distribution of
the Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified. In each jurisdiction
where any of the Shares shall have been qualified as provided above, the
Company will file such reports and statements as may be required to
continue such qualification for a period of not less than one year from
14
the date of the Prospectus. The Company shall promptly prepare and file
with the Commission, from time to time, such reports as may be required to
be filed by the Act and the Exchange Act, and the Company shall comply in
all respects with the undertakings given by the Company in connection with
the qualification or registration of the Shares for offering and sale under
the Blue Sky Laws.
(i) During the period of three (3) years from the date of the
Prospectus, the Company will furnish to each of the Representative and to
each of the other Underwriters who may so request, as soon as available,
each report, statement or other document of the Company or its Board of
Directors mailed to its shareholders or filed with the Commission, and such
other information concerning the Company as the Representative may
reasonably request.
(j) The Company shall deliver the requisite notice of issuance to
Nasdaq and shall take all necessary or appropriate action within its power
to maintain the authorization for trading of the Class A Common Stock as a
Nasdaq National Market security, or take such action to authorize the Class
A Common Stock for listing on the New York Stock Exchange or the American
Stock Exchange, for a period of at least thirty-six (36) months after the
date of the Prospectus.
(k) Except for (i) the issuance and sale by the Company of Common
Stock upon exercise of presently existing outstanding stock options and
warrants, (ii) the issuance of options to purchase shares of Common Stock
pursuant to the Company's 1999 Long Term Incentive Plan, (iii) the issuance
of shares of Common Stock pursuant to the Company's Employee Stock Purchase
Plan, (iv) the issuance of shares of Common Stock in connection with the
acquisition of another company if the terms of the issuance provide that
the shares shall not be resold prior to the expiration of the one hundred
eighty (180) day period described below, and (v) the sale of the Shares to
be sold by the Company pursuant to this Agreement, the Company shall not,
for a period of one hundred eighty (180) days after the First Closing Date
without the prior written consent of the Representative, directly or
indirectly, (A) offer to sell, sell, pledge, contract to sell or otherwise
dispose of (or enter into any transaction that is designed to, or could be
expected to, result in the disposition by any person of) any shares of
Common Stock or rights to acquire shares of Common Stock or (B) enter into
any swap or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership of
such shares of Common Stock.
(l) The Company will maintain a transfer agent and, if required by
law or the rules of The Nasdaq Stock Market or any national securities
exchange on which the Class A Common Stock is listed, a registrar (which,
if permitted by applicable laws and rules, may be the same entity as the
transfer agent) for its Class A Common Stock.
(m) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which, in
the opinion of the Representative, the market price of the Class A Common
Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to the
Prospectus), the Company will, after written notice from the Representative
advising the
15
Company of any of the matters set forth above, promptly consult with the
Representative concerning the advisability and substance of, and, if the
Company and the Representative jointly determine that it is appropriate,
disseminate a press release or other public statement responding to or
commenting on, such rumor, publication or event.
(n) The Company will use its reasonable best efforts to comply or
cause to be complied with the conditions to the obligations of the
Underwriters in Section 8 hereof and will take no action or omit to take
any action that would reasonably be expected to prevent the Underwriter's
compliance or satisfaction with the conditions to the obligations of the
Underwriter in Section 8 hereof.
(o) The Company shall issue at the Closing irrevocable instructions
to the transfer agent to provide the Representative for a period of 180
days after the Closing Date, for its confidential use, reasonable access to
its daily transfer sheets (provided such access does not result in expense
to the Company) and, annually upon request of the Representative to the
transfer agent therefor (but more frequently in the event of an
investigation requiring the same or inquiry therefor by the Commission or
other government body or agency or by the NASD), with lists of shareholders
of the Company, all for a period of three (3) years after the Closing Date.
As a condition to providing any information under this Section 6(o), the
Company may require the Representative to enter into a non-disclosure or
confidentiality agreement providing reasonable restrictions against
disclosure of such information.
(p) The Company shall deliver to the Representative the documents
described in Section 2(dd). In addition, at Closing, the Company shall
deliver to the Representative or counsel to the Underwriters, certificates
of good standing in each state where the Company does business,
certificates as to tax status, incumbency or any other certificate or
document which the Representative may reasonably require prior to Closing.
(q) Prior to the Closing Date, the Company shall cooperate with the
Representative in such reasonable investigation as the Representative may
make or cause to be made of all the properties, business and operations of
the Company in connection with the sale of the Shares, and the Company
shall make its officers and directors available to the Representative for
interrogation, without cost or expense, in connection therewith, and the
Company shall make available such information in its possession as the
Representative may reasonably request.
(r) The Company shall supply to each of the Representative and
counsel to the Underwriters, at the Company's cost, two (2) sets of bound
transcripts each containing all of the Closing materials within a
reasonable time after the Closing Date.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective, or
if this Agreement becomes effective and is thereafter terminated for any reason,
the Company will pay the costs, fees and expenses incurred in connection with
the proposed public offering of the Shares as hereinafter provided. Such costs,
fees and expenses to be paid by the Company will include, without limitation:
16
(a) All costs, fees and expenses (excluding the expenses incurred by
the Underwriters except as otherwise set forth in subsections (b) and (c)
below) incurred in connection with the performance of the Company's
obligations hereunder, including, without limiting the generality of the
foregoing: the registration fees related to the filing of the Registration
Statement with the Commission; the fees and expenses related to the
quotation of the Shares on Nasdaq or other national securities exchange;
the fees and expenses of the Company's counsel, accountants, transfer agent
and registrar; the costs and expenses incurred in connection with the
preparation, printing, shipping, and delivery of the Registration Statement
and the Prospectus (including all exhibits and financial statements) and
all agreements and supplements provided for herein, this Agreement,
including, without limitation, shipping expenses via overnight delivery
and/or courier service to comply with applicable prospectus delivery
requirements; and the costs and expenses associated with the production of
materials related to, and travel expenses incurred by the management of the
Company in connection with, the various meetings to be held between the
Company's management and prospective investors.
(b) All registration fees and expenses, including filings under the
Blue Sky Laws and the clearing of the public offering and the underwriting
arrangements evidenced hereby with the NASD and with Canadian Federal and
provincial authorities and legal fees and disbursements of counsel to the
Underwriters incurred in connection with qualifying or registering all or
any part of the Shares for offer and sale under the Blue Sky Laws.
(c) In the event that the transactions contemplated hereunder are not
consummated by December 31, 2001, due to the action or inaction of the
Company, or if this Agreement is terminated by the Company at any time
prior to that date for any reason, the Company will promptly pay, upon the
request of the Underwriters, the out-of-pocket expenses incurred in
connection with this Agreement, including costs, fees and expenses of
counsel to the Underwriters.
(d) All fees and expenses related to printing of the certificates for
the Shares, and all transfer taxes, if any, with respect to the sale and
delivery of the Shares to the Underwriters.
(e) The Company shall also pay all expenses incurred in connection
with the placement of a "tombstone" advertisement after the closing in such
publications and containing such information as the Company and the
Representative may agree, after Closing of the offering.
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
-------------------------------------------------
obligations of the several Underwriters under this Agreement shall be subject to
the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of each Closing Date, to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions, unless waived in writing
by the Representative:
17
(a) The Registration Statement shall have been declared effective by
the Commission; all filings required by Rules 424(b) and 430A under the Act
shall have been timely made; no stop order suspending the effectiveness of
the Registration Statement shall have been issued by the Commission or any
state securities commission nor, to the knowledge of the Company, shall any
proceedings for that purpose have been initiated or threatened; and any
request of the Commission or any state securities commission for inclusion
of additional information in the Registration Statement, or otherwise,
shall have been complied with to the reasonable satisfaction of the
Representative.
(b) Since the dates as of which information is given in the
Registration Statement: (i) there shall not have occurred any change or
development involving, or which would be reasonably expected to involve, a
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business; and (ii) the Company shall not have sustained
any material loss or interference from any labor dispute, strike, fire,
flood, windstorm, accident or other calamity (whether or not insured) or
from any court or governmental action, order or decree, the effect of which
on the Company, in any such case described in clause (i) or (ii) above, is,
in the sole discretion of the Representative, so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares on the terms and in the manner contemplated in
the Registration Statement and the Prospectus.
(c) The Representative shall not have been advised that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the opinion of the Representative or counsel to the
Underwriters, is material, or omits to state a fact that, in the opinion of
the Representative or such counsel, is material and is required to be
stated therein or necessary to make the statements therein not misleading.
(d) The Representative shall have received an opinion of Bartlit ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, addressed to the
Representative, in its capacity as the Representative of the Underwriters,
and dated the First Closing Date or the Second Closing Date, as the case
may be, to the effect that, subject to customary qualifications and
assumptions:
(i) the Company is validly existing as a corporation and in
good standing under the laws of its jurisdiction of incorporation,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as presently conducted and as
described in the Prospectus and the Registration Statement;
(ii) the authorized capital stock of the Company consists of
150,000,000 shares of Class A Common Stock, par value $0.0001 per
share, 50,000,000 shares of Class B Common Stock, par value $0.0001
per share and 50,000,000 shares of preferred stock, par value $0.0001
per share, and all such stock conforms in all material respects to the
descriptions thereof in the Prospectus and the Registration Statement;
(iii) the issued and outstanding shares of capital stock of the
Company immediately prior to the issuance and sale of the Shares to be
sold by the
18
Company hereunder have been duly authorized and validly issued, are
fully paid and nonassessable, and there are no statutory preemptive
rights to subscribe for or purchase any shares of capital stock of the
Company, and no shares of capital stock of the Company have been
issued in violation of such rights;
(iv) to such counsel's knowledge, except for the Subsidiaries,
the Company has no "significant subsidiaries" (as defined in Rule 1-
02(w) of Regulation S-X under the Act), and the Company does not own
any equity interest in or control, directly or indirectly, any other
corporation, limited liability company, partnership, joint venture,
association, trust or other business organization except as described
in the Prospectus and the Registration Statement and except as set
forth in Schedule III to this Agreement; each Subsidiary (excluding
EcoSport, Inc., Gaiam International, Inc. and Real Goods Trading
Corporation, as to which such counsel need not express any opinion) is
validly existing, in good standing under the laws of the State of
Colorado, with full power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Prospectus and the Registration Statement; the issued
and outstanding shares of the capital stock of each of Business
Express, Inc., Gaiam Catalog, Inc., Gaiam Holdings, Inc., Gaiam
Travel, Inc. and Real Good Trading Corporation have been duly
authorized and validly issued, are fully paid and nonassessable and
there are no preemptive rights to subscribe for or purchase any shares
of capital stock of or other equity interest in any Subsidiary under
the articles of incorporation or bylaws of such Subsidiary, Colorado
law or the agreements listed as exhibits to the Registration
Statement, and no shares of capital stock or other equity interest of
any Subsidiary have been issued in violation of such rights; except as
otherwise described in the Registration Statement the outstanding
capital stock of each subsidiary owned by the Company is owned
directly or indirectly, free and clear of any and all liens, claims,
encumbrances and security interests;
(v) the issuance and sale of the Shares has been duly
authorized by the Company and, when delivered to the Representative or
upon the order of the Representative against payment of the agreed
consideration therefor in accordance with the provisions of this
Agreement, the Shares to be sold by the Company to the Underwriters
hereunder will be duly and validly issued, fully paid and
nonassessable, and free of any preemptive rights to subscribe for or
purchase such Shares;
(vi) the Registration Statement has become effective under the
Act, and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or are threatened
under the Act or any Blue Sky Laws; the Registration Statement, as of
its date, and the Prospectus, as of its date, and any amendment or
supplement thereto (except for the financial statements and other
statistical or financial data included therein, as to which such
counsel need express no opinion), comply as to form in all material
respects with the requirements of the Act, including Form S-1
promulgated under the Act;
19
(vii) the Company has the corporate power and authority to enter
into and perform this Agreement; the performance of the Company's
obligations hereunder and the consummation of the transactions
described herein have been duly authorized by the Company by all
necessary corporate action, and this Agreement has been duly executed
and delivered by and on behalf of the Company, and is a legal, valid
and binding agreement of the Company, enforceable against the Company
in accordance with its terms; no consent, approval, authorization or
other order or decree of any court, regulatory or governmental body,
arbitrator, administrative agency or other instrumentality of the
United States or of the State of Colorado is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement (except for compliance
with the Act, the Exchange Act, applicable Blue Sky Laws and the
clearance of the underwriting arrangements by the NASD);
(viii) the execution, delivery and performance of this Agreement
by the Company will not: (A) violate any provisions of the articles of
incorporation or by-laws of the Company or any Subsidiary; (B) result
in the breach, modification or termination of, or constitute a default
under, any agreement, lease, franchise, license, indenture, permit,
mortgage, deed of trust, other evidence of indebtedness or other
instrument to which the Company or any Subsidiary is a party or by
which the Company or such Subsidiary, or any of their respective owned
or leased property is bound, and which is filed as an exhibit to the
Registration Statement (except that such counsel need not express any
opinion with respect to financial ratios or any aspect of the
financial condition or results of operations of the Company to the
extent the determination of such breach, modification, termination or
default requires quantitative determination); or (C) violate any
statute, ordinance, rule, or regulation of any regulatory or
governmental body, or to such counsel's knowledge, any order or decree
of any court, arbitrator, administrative agency or other
instrumentality of the United States or of the State of Colorado
(assuming compliance with all applicable federal and state securities
laws);
(ix) to such counsel's knowledge, except as described in the
Prospectus, there are no holders of Common Stock or other securities
of the Company, or securities that are convertible or exchangeable
into Common Stock or other securities of the Company, that have rights
to the registration of such securities;
(x) neither the Company nor any Subsidiary is, nor with the
giving of notice or passage of time or both would be, (A) in violation
of its respective articles of incorporation or by-laws, except for
such violations that would not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a
whole or (B) to such counsel's knowledge, in default in any material
respect in the performance of any agreement, lease, franchise,
license, permit, mortgage, deed of trust, evidence of indebtedness or
other instrument, or any other document, in each case that is filed as
an exhibit to or incorporated by
20
reference in the Registration Statement, to which the Company or any
Subsidiary is subject or bound;
(xi) neither the Company nor any Subsidiary is an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended (without regard to
the second sentence of Section 3(c)(1) of such Act insofar as such
sentence applies to the status of investment vehicles of ▇▇▇▇▇ ▇▇▇▇▇▇
as "affiliated persons" with respect to the Company), and, upon its
receipt of any proceeds from the sale of the Shares, the Company will
not become or be deemed to be an "investment company" thereunder;
(xii) the description in the Registration Statement and the
Prospectus of legal matters, statutes, documents, regulations, legal
and governmental proceedings, and contracts and other legal documents
described therein fairly and correctly present, in all material
respects, the information required to be included therein by the Act
and fairly summarize the matters referred to therein; and
(xiii) nothing has come to such counsel's attention to lead them
to believe that all sales by the Company of its capital stock before
the date of the initial filing of the Registration Statement were not
at all relevant times duly registered under or were exempt from the
registration requirements of the Act.
Such opinion may incorporate exclusions and such qualifications reasonably
acceptable to the Representative and may, with respect to paragraphs (iii),
(iv), (ix), (x), (xi) and (xiii), be based on written representations and
certifications of the Company and respective offerees and purchasers of Shares.
Any written representations and certifications on which such opinion may rely
shall be provided to the Representative and shall be reasonably acceptable to
the Representative.
(e) The Representative shall also have received a letter from Bartlit
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, special counsel for the Company, addressed
to the Representative, in its capacity as the Representative of the
Underwriters, and dated the First Closing Date or the Second Closing Date,
as the case may be, to the effect that (i) no facts have come to the
attention of such counsel which lead it to believe that either the
Registration Statement, at the time it became effective, or the Prospectus
or any amendment or supplement thereto, as of its date and as of the First
Closing Date or Second Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as of the First Closing Date or the
Second Closing Date, as the case may be, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances under which they were made (except for the financial
statements and other financial data included therein, as to which such
counsel need express no opinion), and (ii) without limiting the generality
of the foregoing, no facts have come to the attention of counsel which lead
it to believe that there are legal or governmental proceedings pending or
threatened against the Company, including, without limitation, any such
proceedings that are related to
21
environmental, employee benefit or employment discrimination matters,
required to be described in the Registration Statement or the Prospectus
which are not so described or which question the validity of this Agreement
or any action taken or to be taken pursuant to this Agreement, nor is there
any transaction, relationship, agreement, contract or other document of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to or incorporated by reference in
the Registration Statement by the Act, which is not described, filed or
incorporated by reference as required. Such letter may incorporate
exclusions and such qualifications reasonably acceptable to the
Representatives.
(f) The Representative shall have received an opinion of ▇▇▇▇▇▇▇,
Phleger & ▇▇▇▇▇▇▇▇ LLP, counsel to the Underwriters, dated the First
Closing Date or the Second Closing Date, as the case may be, with respect
to the issuance and sale of the Shares by the Company, the Registration
Statement and other related matters as the Representative may require, and
the Company shall have furnished to such counsel such documents and shall
have exhibited to them such papers and records as they request for the
purpose of enabling them to pass upon such matters.
(g) The Representative shall have received on each Closing Date, a
certificate of ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer, and ▇▇▇▇ ▇▇▇▇▇▇,
President of the Company, to the effect that:
(i) The representations and warranties of the Company set
forth in Section 2 hereof are true and correct as of the date of this
Agreement and as of the date of such certificate, and the Company has
complied in all material respects with all the agreements and
satisfied all the conditions to be performed or satisfied in all
material respects by it at or prior to the date of such certificate;
(ii) To the best knowledge of the respective signatories, after
due inquiry, the Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to
the knowledge of the respective signatories, no proceedings for that
purpose have been initiated or are pending or contemplated under the
Act or under the Blue Sky Laws of any jurisdiction;
(iii) Each of the respective signatories has examined the
Registration Statement and the Prospectus, and any amendment or
supplement thereto, and such documents contain all statements required
to be stated therein, and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and, since the date on which the Registration Statement was initially
filed, no event has occurred that was required to be set forth in an
amended or supplemented prospectus or in an amendment to the
Registration Statement that has not been so set forth; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there shall not have occurred any
change or
22
development involving, or which could be expected to involve, a
Material Adverse Effect, whether or not arising from transactions in
the ordinary course of business, except as disclosed in the Prospectus
and the Registration Statement as heretofore amended or as disclosed
in an amendment or supplement thereto filed with the Commission and
delivered to the Representative after the execution of this Agreement;
since such date and except as so disclosed or in the ordinary course
of business, the Company has not incurred any liability or obligation,
direct or indirect, or entered into any transaction which is material
to the Company other than in the ordinary course of business; since
such date and except as so disclosed, there has not been any change in
the outstanding capital stock of the Company, or any change that is
material to the Company in the short-term debt or long-term debt of
the Company; since such date and except as so disclosed or as
contemplated in this Agreement, the Company has not acquired any of
the Common Stock or other capital stock of the Company nor has the
Company declared or paid any dividend, or made any other distribution,
upon its outstanding Common Stock payable to shareholders of record on
a date prior to such Closing Date; since such date and except as so
disclosed, the Company has not incurred any material contingent
obligations, and no material litigation is pending or threatened
against the Company; and, since such date and except as so disclosed,
the Company has not sustained any material loss or interference from
any strike, fire, flood, windstorm, accident or other calamity
(whether or not insured) or from any court or governmental action,
order or decree.
The delivery of the certificate provided for in this subsection (g)
shall be and constitute a representation and warranty of the Company as to
the facts required in the immediately foregoing clauses (i), (ii), (iii)
and (iv) to be set forth in said certificate.
(h) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Representative a letter addressed to
the Representative, in its capacity as the representative of the
Underwriters, from Ernst & Young LLP, the Company's independent
accountants, the first letter to be dated the date of this Agreement, the
second letter to be dated the First Closing Date and the third letter (if
applicable) to be dated the Second Closing Date, which shall be in form and
substance satisfactory to the Representative and shall contain information
as of a date within five (5) days of the date of such letter. There shall
not have been any change set forth in any of the letters referred to in
this subsection (g) which makes it impracticable or inadvisable, in the
sole discretion of the Representative, to proceed with the public offering
or purchase of the Shares as contemplated hereby.
(i) The Shares shall have been qualified or registered for sale under
the Blue Sky Laws of such jurisdictions as shall have been specified by the
Representative, the underwriting terms and arrangements for the offering
shall have been cleared by the NASD, and the Shares shall have been duly
listed and admitted and authorized for trading, subject to official notice
of issuance, on the Nasdaq National Market.
(j) Such further certificates and documents as the Representative may
reasonably request (including certificates of officers of the Company). All
such opinions, certificates, letters and documents shall be in compliance
with the provisions hereof only
23
if they are satisfactory to the Representative and to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to the Underwriters. The Company shall furnish the
Representative with such manually signed or conformed copies of such
opinions, certificates, letters and documents as the Representative may
reasonably request.
(k) All the Shares being offered by the Company shall be tendered for
delivery in accordance with the terms and provisions of this Agreement.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at either Closing Date is not so satisfied, this Agreement at the
election of the Representative will terminate upon notification to the Company,
without liability on the part of any Underwriter, including the Representative
or the Company, except for the provisions of Section 6(n) hereof, the expenses
to be paid or reimbursed by the Company pursuant to Section 7 hereof and except
to the extent provided in Section 10 hereof.
SECTION 9. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
------------------------------------------------
will use its best efforts to prevent the issuance of any stop order suspending
the effectiveness of the Registration Statement, and, if such stop order is
issued, to obtain as soon as possible the lifting and permanent suspension or
termination thereof.
SECTION 10. INDEMNIFICATION.
---------------
(a) The Company, subject to the last paragraph of this Section 10,
agrees to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act or the
Exchange Act, from and against any losses, claims, damages, expenses,
liabilities or actions in respect thereof ("Claims"), joint or several, to
which such Underwriter or each such controlling person may become subject
under the Act, the Exchange Act, Blue Sky Laws or other United States or
Canadian federal, state, provincial or local laws or regulations, at common
law or otherwise (including payments made in settlement of any litigation),
insofar as such Claims arise out of or are based upon (i) any breach of any
representation, warranty or covenant made by the Company in this Agreement,
or (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus
---
or the Prospectus or any amendment or supplement thereto, or (iii) in any
application filed with Nasdaq or under any Blue Sky Law or other document
executed by the Company for that purpose or based upon written information
furnished by the Company and filed in any state or other jurisdiction to
qualify any or all of the Shares under the securities laws thereof (any
such document, application or information being hereinafter called a "Blue
Sky Application") or (iv) arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Company, subject to the last paragraph of this Section 10, agrees to
reimburse each Underwriter and each such controlling person for any legal
fees or other expenses incurred by such Underwriter or any such controlling
person in connection with investigating, defending or settling any such
Claim; provided, however, that the Company will not be liable in any such
case to the extent that any such Claim arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus or supplement thereto
24
or in any Blue Sky Application in reliance upon and in conformity with the
written information furnished to the Company by the Underwriters pursuant
to Section 4 of this Agreement. The indemnification obligations of the
Company as provided above with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting
any Claim purchased the Shares which are the subject thereof if, at or
prior to the written confirmation of the sale of such Shares, a copy of the
Prospectus (or the Prospectus as supplemented) was not sent or delivered to
such person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus
(or in the Prospectus as supplemented) in any case where such sending is
required by the Act unless the failure is the result of noncompliance by
the Company with paragraph 6(b) hereof. The indemnification obligations of
the Company as provided above are in addition to and in no way limit any
liabilities the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its officers
who signs the Registration Statement, and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act against any
Claim to which the Company, or any such director, officer, or controlling
person may become subject under the Act, the Exchange Act, Blue Sky Laws or
other federal or state statutory laws or regulations, at common law or
otherwise (including payments made in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter and the
Representative), insofar as such Claim arises out of or is based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus or the Prospectus, or
any amendment or supplement thereto, or in any Blue Sky Application, or
arises out of or is based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, any
Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or in any Blue Sky Application, in reliance solely upon and in
conformity with the information set forth in the Registration Statement on
the front cover of the Prospectus and in the first, second (second sentence
only), fourth, ninth, tenth, eleventh, twelfth, thirteenth or fifteenth
paragraphs under the caption "Underwriting," which is the only written
information furnished by the Representative to the Company pursuant to
Section 4 of this Agreement. Each Underwriter will severally reimburse any
legal fees or other expenses incurred by the Company, or any such director,
officer or controlling person in connection with investigating or defending
any such Claim, and from any and all Claims solely resulting from failure
of an Underwriter to deliver a Prospectus, if the person asserting such
Claim purchased Shares from such Underwriter and a copy of the Prospectus
(as then amended if the Company shall have furnished any amendments
thereto) was not sent or given by or on behalf of such Underwriter to such
person, at or prior to the written confirmation of the sale of the Shares
to such person, and if the Prospectus (as so amended) would have cured the
defect giving rise to such Claim. The indemnification obligations of each
Underwriter as provided above are in addition to any liabilities any such
Underwriter may otherwise have. Notwithstanding the provisions of this
section, no Underwriter shall be required to indemnify or reimburse the
Company, or any officer, director or controlling person in an
25
aggregate amount in excess of the amount by which the underwriting discount
applicable to the Shares purchased by such Underwriter exceeds the amount
of damages which such Underwriter has been otherwise required to pay.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action in respect of a Claim, such
indemnified party will, if a Claim in respect thereof is to be made against
an indemnifying party under this section, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve an indemnifying party from any
liability it may have to any indemnified party under this section or
otherwise, except to the extent that the failure to so notify the
indemnifying party causes such party prejudice. In case any such action is
brought against any indemnified party, and such indemnified party notifies
an indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate in and, to the extent that he, she or it
may wish, jointly with all other indemnifying parties, similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and any indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to the indemnified party and/or other indemnified
parties which are different from or additional to those available to any
indemnifying party, the indemnified party or parties shall have the right
to select one separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will not
be liable to such indemnified party under this section for any legal fees
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with
the proviso to the last sentence of subsection (e) of this section (it
being understood, however, that the indemnifying party shall not be
liable for the legal fees and expenses of more than one separate
counsel, approved by the Representative, if one or more of the
Underwriters or their controlling persons are the indemnified
parties);
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the
action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(e) If the indemnification provided for in this section is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) hereof in
26
respect of any Claim referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall, subject to the
limitations hereinafter set forth, contribute to the amount paid or payable
by such indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Underwriters 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 Company and the Underwriters
in connection with the statements or omissions which resulted in such
Claim, as well as any other relevant equitable considerations.
The relative benefits received by each of the Company and the
Underwriters shall be deemed to be in such proportion so that the
Underwriters are responsible for that portion represented by the percentage
that the amount of the underwriting discounts and commissions per share
appearing on the cover page of the Prospectus bears to the public offering
price per share appearing thereon, and the Company is responsible for the
remaining portion. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The amount paid or payable by a party as a result of the
Claims referred to above shall be deemed to include, subject to the
limitations set forth in subsections (c) and (d) of this section, any legal
or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
(f) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this section were determined by
pro rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method or allocation which
does not take into account the equitable considerations referred to in
subsection (e) of this section. Notwithstanding the other provisions of
this section, no Underwriter shall be required to contribute any amount in
excess of the amount by which the underwriting discount applicable to the
Shares purchased by such Underwriter exceeds the amount of damages which
such Underwriter has been otherwise required to pay. 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 to
contribute pursuant to this section are several in proportion to their
respective underwriting commitments and not joint.
SECTION 11. DEFAULT OF UNDERWRITERS. It shall be a condition to the
-----------------------
obligations of each Underwriter to purchase the Shares in the manner as
described herein, that, except as hereinafter provided in this section, each of
the Underwriters shall purchase and pay for all the Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Representative of all
such Shares in accordance with the terms hereof. If any Underwriter or
27
Underwriters default in their obligations to purchase Shares hereunder on either
the First Closing Date or the Second Closing Date and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of Shares which
the Underwriters are obligated to purchase on such Closing Date, the
Representative may make arrangements for the purchase of such Shares by other
persons, including any of the Underwriters, but if no such arrangements are made
by such Closing Date the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Shares which such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of Shares with respect to which such default or defaults occur
is greater than ten percent (10%) of the total number of Shares which the
Underwriters are obligated to purchase on such Closing Date, and arrangements
satisfactory to the Representative for the purchase of such Shares by other
persons are not made within thirty-six (36) hours after such default, this
Agreement will terminate without liability on the part of any nondefaulting
Underwriter and the Company except to the extent provided in section 10 hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representative shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, for not more than seven (7) business
days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
SECTION 12. EFFECTIVE DATE. This Agreement shall become effective the date
--------------
and time that this Agreement is executed and delivered by the parties hereto.
SECTION 13. TERMINATION
-----------
(a) This Agreement may be terminated by the Representative by notice
to the Company in the event the Company shall have failed or been unable to
comply with any of the terms, conditions, representations, warranties,
covenants or other provisions of this Agreement on the part of the Company
to be performed, complied with or fulfilled within the respective times
herein provided for, unless compliance therewith or performance or
satisfaction thereof shall have been expressly waived by the Representative
in writing.
(b) This Agreement may be terminated by the Representative by notice
to the Company at any time if payment for and delivery of the Shares is
rendered impracticable or inadvisable because of: (i) material adverse
changes in the Company's business, business prospects, management,
earnings, properties or financial condition; (ii) any action, suit or
proceedings, threatened or pending, at law or equity against the Company,
or by any federal, state or other commissions, board or agency wherein any
unfavorable result or decision could materially adversely affect the
business, business prospects, properties, financial condition, income or
earnings of the Company; (iii) additional material governmental
restrictions not in force and effect on the date hereof shall have been
imposed upon the trading in securities generally, or minimum or maximum
prices shall have been generally established on a registered securities
exchange, or trading in
28
securities generally on any such exchange shall have been suspended, or a
general moratorium shall have been established by federal or state
authorities; (iv) substantial and material changes in the condition of the
market beyond normal fluctuations are such that it would be undesirable,
impracticable or inadvisable to proceed with this Agreement or with the
offering; (v) any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of the Representative, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the
Shares; (vi) The Nasdaq Stock Market notifies the Company that the Shares
will not be listed for trading on The Nasdaq National Market as required
under this Agreement; or (vii) any suspension of trading in the Class A
Common Stock of the Company in the over-the-counter market or the
interruption or termination of quotations of the Shares on the NASDAQ
System.
(c) Any termination of this Agreement under Section 13(a) or (b)
shall be without liability of any nature whatsoever (including, but not
limited to, loss of anticipated profits or consequential damages) on the
part of either party hereto, except that the Company shall remain obligated
to pay the costs and expenses provided to be paid or reimbursed by the
Company pursuant to Section 7 hereof; and the Company and the
Representative shall be obligated to pay, respectively, all losses, claims,
demands, liabilities and expenses under Section 10.
(d) It is understood that the Company and the Representative will
each advise the other party immediately and confirm in writing the receipt
of any threat of or the initiation of any steps or procedures which would
impair or prevent the right to offer any of the Company's Shares or the
issuance of any "suspension orders" or other prohibitions preventing or
impairing the proposed offering by the Commission or other regulatory
authority.
SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company, of its officers or directors and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, officers, directors
or any controlling person, as the case may be, and will survive delivery of and
payment for the Shares sold hereunder.
SECTION 15. NOTICES. All notices, demands or requests required or
-------
authorized hereunder shall only be deemed given sufficiently if in writing and
hand delivered by messenger or courier service or sent by registered mail or
certified mail, return receipt requested and postage prepaid, in the case of the
Representative:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Sutro Capital Markets
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Managing Director
29
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
and, in the case of the Company:
Gaiam, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, President
with a copy to:
Bartlit ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Any such notice shall be deemed effectively given on the earlier of the
date of actual receipt or the second business day after delivered, telecopied,
or deposit of the notice with the United States Postal Service.
SECTION 16. SUCCESSORS. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors, personal
representative and assigns, and to the benefit of the officers and directors and
controlling persons referred to in Section 12 hereof and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares as such from any of the Underwriters merely by
reason of such purchase.
SECTION 17. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause
------------------------
or provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
SECTION 18. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
----------------------------
governed by and construed in accordance with the internal laws of the State of
New York without reference to conflict of law principles thereunder. This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument, and shall be effective when at least one
counterpart hereof shall have been executed by or on behalf of each party
hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
30
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters,
including the Representative, all in accordance with its terms.
Very truly yours,
GAIAM, INC.
By:
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
Acting as Representative of the several
Underwriters (including themselves)
identified in Schedule I annexed hereto.
By:
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
Date: , 2001
-------
31
GAIAM, INC.
Schedule I
--------------------------------------------------------------------------------
Name of Underwriter Number of Firm Shares to be Purchased
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
--------------------------------------------------------------------------------
Total
--------------------------------------------------------------------------------
GAIAM, INC.
Schedule II
Name of Shareholder Number of Shares Owned
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇* 8,150,200
-----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇** 142,200
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▇▇▇▇▇ ▇▇▇▇▇▇ 119,520
-----------------------------------------------------------------------------------------
Barnet ▇▇▇▇▇▇▇▇ 13,304
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▇▇▇▇ ▇▇▇▇▇▇ 85,300
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 7,304
-----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇ 7,168
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* An aggregate of 1,600,000 shares of Common Stock have been pledged by ▇▇.
▇▇▇▇▇▇ to ▇▇▇▇▇ Fargo Bank West, N.A. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated, and the
Representative has consented to the continued pledge of such shares pursuant to
the Lock-Up Agreement between the Representative and ▇▇. ▇▇▇▇▇▇. In addition,
the Representative has agreed that ▇▇. ▇▇▇▇▇▇ may enter into one or more
transactions for the purpose of granting to ▇▇▇▇ ▇▇▇▇▇▇ an option to purchase up
to 800,000 shares of Common Stock held by ▇▇. ▇▇▇▇▇▇, provided that any shares
of Common Stock acquired by ▇▇. ▇▇▇▇▇▇ upon the exercise of such option shall be
subject to the terms of the Lock-Up Letter Agreement signed by ▇▇. ▇▇▇▇▇▇.
**An aggregate of 32,000 shares of Common Stock have been pledged by ▇▇. ▇▇▇▇▇▇
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated and the Representative has consented to the
continued pledge of such shares pursuant to the Lock-Up Agreement between the
Representative and ▇▇. ▇▇▇▇▇▇.
GAIAM, INC.
Schedule III
Additional Gaiam Subsidiaries
Distribution Services Group, Inc.
Earthlings, Inc.
Fish Crane, Inc.
Gaiam Product Sourcing, Inc.
InnerBalance Health, Inc.