EXHIBIT 1.1
4,100,000 Shares of Common Stock
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
UNDERWRITING AGREEMENT
----------------------
December [ ], 1999
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
WIT CAPITAL CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 4,100,000 shares (the "Firm Shares")
of its common stock, par value $.01 per share (the "Common Stock"), and, for the
sole purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, up to an additional 615,000 shares
(the "Additional Shares") of Common Stock. The Firm Shares and any Additional
Shares purchased by the Underwriters are referred to herein as the "Shares." The
Shares are more fully described in the Registration Statement referred to below.
1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-85139), for the
registration of the Shares under the Securities Act of 1933, as amended (the
"Act"). Such registration statement, including the prospectus, financial
statements and schedules, exhibits and all other documents filed as a part
thereof, as amended at the time of effectiveness of the registration statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of the Rules
and Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the Regulations is herein called the "462(b) Registration
Statement," and after such filing, the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The prospectus, in the form
first filed with the Commission pursuant to Rule 424(b) of the Regulations or
filed as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) or Rule 434 filing is required, is herein called the "Prospectus."
The term "preliminary prospectus" as used herein means a preliminary prospectus
as described in Rule 430 of the Regulations. Neither the Commission nor the Blue
Sky or securities authority of any jurisdiction has issued a stop order
suspending the effectiveness of the Registration Statement, preventing or
suspending the use of any preliminary prospectus, the Prospectus, the
Registration Statement or any amendment or supplement thereto, refusing to
permit the effectiveness of the Registration Statement or suspending the
registration or qualification of the Shares, nor, to the Company's knowledge,
has any of such authorities instituted or threatened to institute any
proceedings with respect to a stop order.
(b) At the respective time of the effectiveness of the
Registration Statement or any 462(b) Registration Statement or the effectiveness
of any post-effective amendment to the Registration Statement, when the
Prospectus is first filed with the Commission pursu-
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ant to Rule 424(b) or Rule 434 of the Regulations, when any supplement to or
amendment of the Prospectus is filed with the Commission and at the Closing Date
and the Additional Closing Date, if any (as hereinafter respectively defined),
the Registration Statement and the Prospectus and any amendments thereof and
supplements thereto (including any prospectus wrapper) complied or will comply
in all material respects with the applicable provisions of the Act and the
Regulations and do not or will not contain an untrue statement of a material
fact and do not or will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein (i) in the
case of the Registration Statement, not misleading and (ii) in the case of the
Prospectus, in light of the circumstances under which they were made, not
misleading, and the Prospectus, any preliminary prospectus and any supplement
thereto or prospectus wrapper prepared in connection therewith, at their
respective times of issuance and at the Closing Date, complied and will comply
in all material respects with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus and such preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with the
offer and sale of the Directed Shares (as hereinafter defined). When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amend ment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through you as herein stated ex-
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pressly for use in connection with the preparation thereof. If Rule 434 is used,
the Company will comply with the requirements of Rule 434.
(c) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified the financial
statements and supporting schedules included in the Registration Statement, are
independent public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, there has been no material
adverse change or any development involving a prospective material adverse
change in the business, prospects, properties, operations, condition (financial
or other) or results of operations of the Company, including but not limited to
relationships with customers and suppliers of the Company, whether or not
arising from transactions in the ordinary course of business, and since the date
of the latest balance sheet presented in the Registration Statement and the
Prospectus, the Company has not incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company, except for
liabilities or obligations which are reflected in the Registration Statement and
the Prospectus.
(e) This Agreement and the transactions contemplated herein have
been duly and validly authorized by the Company, and this Agreement has been
duly and validly executed and delivered by the Company.
(f) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) or Repayment Event (as hereinafter defined) under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to, any agreement, instrument,
franchise, license or permit to which the Company is a party or by which the
Company or its properties or assets may be bound or (ii) violate or con-
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flict with (A) any provision of the certificate of incorporation or by-laws of
the Company or (B) any judgment, decree, order, statute, rule or regulation of
any court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its properties or assets. No consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental or regulatory agency or
body having juris diction over the Company or any of its properties or assets is
required for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, including the issuance,
sale and delivery of the Shares to be issued, sold and delivered by the Company
hereunder, except the registration under the Act of the Shares and such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence of in
debtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company.
(g) All of the outstanding shares of capital stock of the Company
are duly and validly authorized and issued, fully paid and nonassessable, and
none of such shares was issued in violation of or is now subject to any
preemptive or similar rights. The Shares have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement and, when is sued,
delivered and sold in accordance with this Agreement, will be duly and validly
issued and outstanding, fully paid and nonassessable and will not have been
issued in violation of or be subject to any preemptive or similar rights. The
Company had, at September 30, 1999, an authorized and outstanding capitalization
as set forth in the Registration Statement and the Prospectus. The authorized
capital stock of the Company, including the Firm Shares and the Additional
Shares, conforms to the description thereof contained in the Registration
Statement and the Prospectus. Except as disclosed in the Registration Statement
and the Prospectus,
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there are no outstanding options, warrants or other rights calling for the
issuance of, and no commitments, obligations, plans or arrangements to issue,
any shares of capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company. The outstanding stock options
relating to the Common Stock have been duly authorized and validly issued and
conform to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(h) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified
or in good standing which will not in the aggregate have a material adverse
effect on the Company. The Company has all requisite power and authority, and
all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits (collectively, "Governmental Licenses") of
and from all public, regulatory or governmental agencies and bodies, to own,
lease and operate its properties and conduct its business as now being conducted
and as described in the Registration Statement and the Prospectus, each such
Governmental License is valid and in full force and effect, and no such
Governmental License contains a materially burdensome restriction not adequately
disclosed in the Registration State ment and the Prospectus, and the Company has
not received any notice of proceedings relating to the revocation of any such
Governmental Licenses. The Company does not own any capital stock or any other
interests in any other corporation or entity.
(i) The Company is not (i) in violation of its charter or by-laws,
as the case may be, or in breach of any of the terms or provisions of or in
default (or would be in default with notice or lapse of time or both) in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material contract, indenture, mortgage, deed of trust,
loan or credit agreement,
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lease, joint venture or other agreement or instrument to which the Company is a
party or by which any of its properties may be bound, which breach, violation,
default or defaults would have individually or in the aggregate a material
adverse effect on the Company or (ii) in violation of any law, order, rule,
regulation, writ, injunction, judgment or decree of any court or governmental
agency or body, the violation of which would have individually or in the
aggregate a material adverse effect on the Company.
(j) Except as described in the Prospectus, there is no litigation
or governmental proceeding to which the Company is a party or to which any
property of the Company is subject or which is pending or, to the knowledge of
the Company, contemplated against the Company which might result in any material
adverse change or any development involving a material adverse change in the
business, prospects, properties, operations, condition (financial or other) or
results of operations of the Company or which is required to be disclosed in the
Registration Statement and the Prospectus.
(k) Neither the Company nor, to the Company's knowledge after due
inquiry, any of its directors or officers has taken or will take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(l) The financial statements included in the Registration
Statement and the Prospectus, including the notes thereto and supporting
schedules, present fairly the consolidated financial position of the Company as
of the dates indicated and the results of its operations for the periods
specified; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein; and the selected financial data and the summary
financial information included in the Registration Statement and the Prospectus
present fairly the information shown
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therein and have been compiled on a basis consistent with that of the financial
statements included in the Registration Statement and the Prospectus.
(m) The Company has filed all federal, state, local and foreign
tax returns that have been required to be filed and has paid all taxes shown
thereon and all assessments received by it to the extent that such taxes have
become due and are not being contested in good faith. Except as disclosed in the
Registration Statement and the Prospectus, there is no tax deficiency that has
been or might reasonably be expected to be asserted or threatened against the
Company which would have a material adverse effect on the Company.
(n) The Company has good and marketable title to all personal
property owned by it, in each case free and clear of all liens, encumbrances and
defects except such as are described or referred to in the Prospectus or such as
do not materially affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company. Any real
property and buildings held under lease by the Company are held under valid,
existing and enforceable leases with such exceptions as are not material and do
not interfere with the use made or proposed to be made of such property and
buildings by the Company.
(o) Except as described in the Registration Statement and the
Prospectus, the Company owns or possesses valid and enforceable licenses or
other rights to use all inventions, patents, patent applications, trademarks,
service marks, trade names, copyrights, technology, software, databases,
Internet domain names, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), proprietary techniques (including processes and substances) and
other intellectual property rights necessary to conduct the business now
conducted or presently contemplated to be conducted by the Company as described
in the Registration Statement and the Prospectus (collectively, "Intellectual
Property"), free and clear of all liens, claims and encumbrances, except where
the failure to own or possess such rights would not reasonably be expected to
have a material adverse effect on the Company. The Company has taken all
reasonable steps to protect, maintain and
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safeguard the Intellectual Property for which improper or unauthorized
disclosure would impair its value or validity and has executed appropriate
nondisclosure and confidentiality agreements and made appropriate filings and
registrations in connection with the foregoing; other than as described in the
Registration Statement and the Prospectus: (i) to the Company's knowledge, there
are no third parties who have any rights in the Intellectual Property that could
preclude the Company from conducting its business as currently conducted or as
presently contemplated to be conducted as described in the Registration
Statement and the Prospectus; (ii) there are no pending or, to the Company's
knowledge, threatened action, suits, proceedings, investigations or claims by
others challenging the rights of the Company or (if the Intellectual Property is
licensed) the licensor thereof if any Intellectual Property owned or licensed to
the Company; (iii) neither the Company nor (if the Intellectual Property is
licensed), to the Company's knowledge, the licensor thereof has infringed, or,
except for the complaint entitled ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ d/b/a Mother Natures Vitamins
v. ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ filed in the United States District Court, District of
Minnesota on October 8, 1999, has received any notice of infringement of or
conflict with, any rights of others with respect to the Intellectual Property;
and (iv) there is, to the knowledge of the Company, no dispute between it and
any licensor with respect to any Intellectual Property. True and correct copies
of all material licenses and other material agreements between the Company and
any third party relating to the Intellectual Property, and all amendments
thereof and supplements thereto, have been provided to the Underwriters.
(p) No relationship, direct or indirect, exists between or among
the Company or any of its affiliates, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company, on the other
hand, that is required by the Act to be described in the Registration Statement
and the Prospectus that is not so described.
(q) The Shares have been approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
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(r) Except as described in the Prospectus or as have been waived
in writing, no holder of securities of the Company has any rights to the
registration of securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Shares
contemplated hereby.
(s) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" or an entity "controlled" by an "investment company" under the
Investment Company Act of 1940, as amended.
(t) There are no existing or, to the knowledge of the Company,
threatened labor disputes with any employees of the Company that are likely in
the aggregate to have a material adverse effect on the Company.
(u) The Company is conducting its business in compliance with all
applicable federal, state and local laws, rules and regulations of the
jurisdictions in which it is conducting its business, including but not limited
to the Dietary Supplement Health and Education Act of 1994, the Federal Food,
Drug and Cosmetic Act, the Nutrition Labeling and Education Act of 1990 and the
Federal Trade Commission Act and all rules and regulations promulgated
thereunder, except where failure to comply would not give rise to a significant
expectation that an enforcement action by the United States Food and Drug
Administration or the Federal Trade Commission would result in a final judgment
against the Company and such judgment would have a material adverse effect on
the prospects or financial condition of the Company.
(v) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval, except
where such
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noncompliance or failure to comply with the terms and conditions of,
or failure to receive, such permits, licenses or approvals will not in the
aggregate have a material adverse effect on the Company.
(w) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Securities Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the Company for
employees or former employees of the Company has been maintained in compliance
with its respective terms and the requirements of any applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"). No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred with respect to any such plan, excluding transactions
effected pursuant to a statutory or administrative exemption. For each such plan
that is subject to the funding rules of Sec tion 412 of the Code or Section 302
of ERISA, no "accumulated funding deficiency," as defined in Section 412 of the
Code, has been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeded the present value of all benefits accrued under such
plan determined using reasonable actuarial assumptions.
(x) The Company maintains a system of internal accounting
controls that, taken as a whole, is sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, without
limitation, insur-
11
ance coverage for real and personal property owned or leased by it against
theft, damage, destruction, acts of vandalism and all other material risks
customarily insured against, all of which insurance is in full force and effect.
The Company has no reason to believe that it will not be able to renew existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business.
(z) The Company has reviewed its operations and those of any
third parties with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company will be affected by
the Year 2000 Problem. As a result of such review, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a material
adverse effect on the general affairs, management, current or future financial
position, business, prospects, stockholders' equity or results of operations of
the Company or result in any material loss or interference with the Company's
business or operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods occurring
after December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000.
(bb) The statistical and market-related data included in the
Registration Statement and the Prospectus are derived from sources which the
Company reasonably and in good faith believes to be accurate, reasonable and
reliable, and such data agree with the sources from which they were derived.
(cc) There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as required.
2. Purchase, Sale and Delivery of the Shares.
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(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $[ ], the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by you and the Company, at 9:00 A.M.
(Boston time) on the third or fourth Business Day, as permitted under Rule 15c6-
1 under the Securities Exchange Act of 1934, as amended (the "1934 Act"), unless
postponed in accordance with the provisions of Section 9 hereof, following the
date of the effectiveness of the Registration Statement (or, if the Company has
elected to rely upon Rule 430A of the Regulations, the third or fourth business
day (as permitted under Rule 15c6-1 under the ▇▇▇▇ ▇▇▇) after the determination
of the initial public offering price of the Shares), or such other time not
later than ten Business Days after such date as shall be agreed upon by you and
the Company (such time and date of payment and delivery being herein called the
"Closing Date"). As used herein, the term "Business Day" means any day other
than a day on which banks are permitted or required to be closed in Boston,
Massachusetts. Payment shall be made to the Company by wire transfer in same day
funds, against delivery to you at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location
as may be mutually acceptable, for the respective accounts of the Underwriters
of certificates for the Shares to be purchased by them. Certificates for the
Shares shall be registered in such name or names and in such authorized
denominations as you may request in writing at least two full Business Days
prior to the Closing Date. The Company will permit you to examine and package
such certif-
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icates for delivery at least one full Business Day prior to the Closing Date.
(3) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 615,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at any
time, or from time to time, in whole or in part, on or before the 30th day
following the date of the Prospectus, by written notice by you to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
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the Closing Date or earlier than the second full Business Day after the date on
which the option shall have been exercised nor later than the eighth full
Business Day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full Business Days prior to the Additional Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full Business Day prior to the Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall be the
number which bears the same ratio to the aggregate number of Additional Shares
being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to 4,100,000, subject, however, to such adjustments to
eliminate any fractional shares as you in your sole discretion shall make.
Payment of the purchase price for the Additional Shares shall be made to
the Company by wire transfer in same day funds at the offices of ▇▇▇▇▇▇▇,
▇▇
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
or such other location as may be mutually acceptable, upon delivery of the
certificates for the Additional Shares to you for the respective accounts of the
Underwriters.
3. Offering.
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(a) Upon your authorization of the release of the Firm Shares,
the Underwriters propose to offer the Shares for sale to the public upon the
terms set forth in the Prospectus.
(b) The Company and the Underwriters hereby agree that up to
seven and one-half percent (7.5%) of the Firm Shares to be purchased by the
Underwriters (the "Directed Shares") shall be reserved for sale by the
Underwriters to certain eligible employees of, and certain persons designated
by, the Company (the "Directed Shares Purchasers") as part of the distribution
of the Shares by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. and all other applicable laws, rules and regulations,
provided, however, that under no circumstances will Bear ▇▇▇▇▇▇▇ & Co. Inc. or
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any other Underwriter be liable to the Company or to any of the Directed Shares
Purchasers for any action taken or omitted in good faith in connection with
transactions effected with regard to the Directed Shares Purchasers. To the
extent that such Directed Shares are not orally confirmed for purchase by such
persons by the end of the first day after the date of this Agreement, such
Directed Shares will be offered to the public as part of the offering
contemplated hereby.
4. Covenants of the Company. The Company covenants and agrees with
------------------------
the Underwriters that:
(a) If the Registration Statement has not yet been declared
effective, the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is otherwise
required under Rule 424(b) or Rule 434, the Company will file the Prospectus
(properly completed if Rule 430A has been used) pursuant to
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Rule 424(b) or Rule 434 within the prescribed time period and will provide
evidence satisfactory to you of such timely filing. If the Company elects to
rely on Rule 434, the Company will prepare and file a term sheet that complies
with the requirements of Rule 434.
The Company will notify you immediately (and, if requested by
you, will confirm such notice in writing) (i) when the Registration Statement
and any amendments thereto become effective, (ii) of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of the initiation, or the threatening,
of any proceedings therefor, (v) of the receipt of any comments from the
Commission and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement,
make any filing under Rule 462(b) of the Regulations or file any amendment of or
supplement to the Prospectus (including the prospectus required to be filed
pursuant to Rule 424(b) or Rule 434 of the Regulations) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) The Company will comply with the Act and the Regulations so
as to permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If at any time when a prospectus relating to
the Shares is required to be delivered under the Act any event shall have
occurred as a result of which the Prospectus as then amended or
16
supplemented would, in the judgment of the Underwriters or the Company, include
an 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, in
the light of the circumstances under which they were made, not misleading, or if
it shall be necessary at any time to amend or supplement the Prospectus or
Registration Statement to comply with the Act or the Regulations, the Company
will notify you promptly and prepare and file with the Commission an appropriate
amendment or supplement (in form and substance reasonably satisfactory to you)
which will correct such statement or omission and will use its best efforts to
have any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will promptly deliver to you four signed copies
of the Registration Statement, including exhibits and all amendments thereto,
and signed copies of all consents, and the Company will promptly deliver to each
of the Underwriters such number of copies of any preliminary prospectus, the
Prospectus, the Registration Statement and all amendments of and supplements to
such documents, if any, as you may reasonably request, and the Company hereby
consents to the use of such copies for purposes permitted by the Act.
(d) The Company will endeavor in good faith, in cooperation with
you, at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares in such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act) to its security holders and to you as soon
as practicable, but not later than 45 days after the end of its fiscal quarter
in which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period
17
of at least twelve consecutive months beginning after the effective date of the
Registration Statement.
(f) During the period of 180 days from the date of the
Prospectus, the Company will not directly or indirectly, without the prior
written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc., issue, sell, offer or agree to
sell, grant any option for the sale of, pledge, or otherwise dispose of or
encumber, or otherwise create or maintain a "put equivalent position" (within
the meaning of Rule 16a-1(h) under the ▇▇▇▇ ▇▇▇) in, any shares of the Company's
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock), and the Company has obtained or will obtain the
undertaking of each of its officers, directors, option holders and each
stockholder that beneficially owns one or more percent of the outstanding
capital stock of the Company, as listed on Schedule II attached hereto, not to
engage in any of the aforementioned transactions on their own behalf, other than
(i) the Company's sale of Shares hereunder, (ii) the Company's issuance of
shares of Common Stock and options to purchase Common Stock under any stock plan
described in the Prospectus, (iii) the Company's issuance of shares of Common
Stock upon the exercise of any currently outstanding warrant or the automatic
conversion of any class of securities outstanding on the date hereof and
disclosed in the Prospectus and (iv) the Company's issuance of shares of Common
Stock in connection with any acquisition of, or strategic relationship with,
another company if the terms of such issuance provide that such shares shall not
be resold prior to the expiration of the aforementioned 180-day period. The
Company agrees not to waive any undertaking obtained pursuant to this paragraph.
(g) During a period of three years from the effective date of
the Registration Statement, the Company will furnish to you copies of (i) all
reports to its stockholders and (ii) all reports, financial statements and proxy
or information statements filed by the Company with the Commission or any
national securities exchange. The Company, during the period when the Prospectus
is required to be delivered under the Act, will file all documents required to
be filed with the Commission pursuant to the 1934 Act within the time periods
required by the 1934 Act and the rules and regulations of the Commission
thereunder.
18
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus and report such
use of proceeds as may be required pursuant to Rule 463 of the Regulations.
(i) The Company will use its best efforts to cause the Shares to
be quoted on the Nasdaq National Market and to maintain such quotation so long
as any of the Shares are outstanding.
(j) The Company hereby agrees that it will ensure that the
Directed Shares are restricted as required by the National Association of
Securities Dealers, Inc. or the National Association of Securities Dealers, Inc.
rules from sale, transfer, assignment, pledge or hypothecation for a period of
three months following the date of this Agreement. The Underwriters will notify
the Company as to which persons will need to be so restricted. At the request of
the Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such a period of time. Should the
Company release, or seek to release, from such restrictions any of the Directed
Shares, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including without limitation legal expenses) they incur in connection
with such release.
(k) The Company will use its reasonable best efforts to do and
perform all things required or necessary to be done and performed under this
Agreement by the Company prior to or after the Closing Date or any Additional
Closing Date, as the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
5. Payment of Expenses. Whether or not the transactions
-------------------
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed, and all amendments thereof
(including all exhibits thereto), any
19
preliminary prospectus, the Prospectus and any amendments or supplements thereto
(including, without limitation, fees and expenses of the Company's accountants
and counsel), the underwriting documents (including this Agreement and the
Agreement Among Underwriters and the Selling Agreement) and all other documents
related to the public offering of the Shares (including those supplied to the
Underwriters in quantities as hereinabove stated), (ii) the issuance, transfer
and delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws, including the costs of printing and mailing
a preliminary and final "Blue Sky Survey" and the reasonable fees of counsel for
the Underwriters and such counsel's reasonable disbursements in relation
thereto, (iv) quotation of the Shares on the Nasdaq National Market, (v) filing
fees of the Commission and the National Association of Securities Dealers, Inc.,
(vi) the cost of printing certificates representing the Shares, (vii) the cost
and charges of any transfer agent or registrar and (viii) all costs and expenses
of the Underwriters, including the fees and disbursements of counsel for the
Underwriters, in connection with matters related to the Directed Shares which
are designated by the Company for sale to certain employees of and certain
persons designated by the Company.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP ("Underwriters' Counsel") pursuant to this Section 6 of any
material misstatement or material omission (except with respect to subsection
(e) of this Section 6, which shall include no misstatement or omission), to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
20
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective and all necessary
approvals of The Nasdaq Stock Market, Inc. shall have been received not
later than 5:30 P.M., Boston time, on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by
you; if the Company shall have elected to rely upon Rule 430A or Rule 434
of the Regulations, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof;
and at or prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereof shall have been issued and no proceedings therefor
shall have been initiated or threatened by the Commission.
(b) At the Closing Date, you shall have received the opinion
of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel for the Company, dated the
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. The Company is duly qualified and in good standing as a
foreign corporation under the laws of the Commonwealth of
Massachusetts and the Commonwealth of Pennsylvania. The Company has
all requisite corporate authority to own, lease and operate its
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus.
(ii) The Company has an authorized capitalization as set
forth in the Prospectus; and all of the outstanding shares of capital
stock of the Company are duly and validly authorized and issued, are
fully paid and nonassessable and were not issued in violation of or
subject to any statutory preemptive or similar rights or, to our
knowledge, any contractual preemptive or similar rights; the Shares to
be delivered on the Closing Date have been duly and validly authorized
and, when delivered by the Company against payment therefor in
21
accordance with this Agreement, will be duly and validly issued, fully
paid and nonassessable and will not have been issued in violation of
or subject to any statutory preemptive or similar rights or, to our
knowledge, any contractual preemptive or similar rights; the Common
Stock, the Firm Shares and the Additional Shares conform in all
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(iii) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(iv) To the best knowledge of such counsel, there is no
litigation or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory
or governmental agency or body pending or threatened against, or
involving the properties or businesses of, the Company that is of a
character required to be disclosed in the Registration Statement and
the Prospectus and has not been properly disclosed therein. In
rendering the opinion set forth in this paragraph, such counsel shall
not be required to search the dockets of any courts or governmental
authorities, and such counsel's opinion may be limited to those
matters which potentially involve loss contingencies and which the
Company has referred to such counsel for legal representation or about
which the Company has consulted such counsel and with respect to which
such counsel has given substantive attention.
(v) The Company is listed in the records of the United States
Patent and Trademark Office ("PTO") as the owner of record of each of
the trademark applications listed in Exhibit A attached hereto (herein
---------
called the "Trademark Applications"). To such counsel's knowledge,
there are no asserted claims of any persons relating to the scope or
ownership of any of the Trademark Applications (except for the action
styled ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ d/b/a Mother Natures Vitamins v.
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ filed in the United States District Court, District
of Minnesota on October 8, 1999), there are no
22
liens which have been filed against any of the Trademark Applications,
there are no material defects of form in the preparation or filing of
the Trademark Applications and none of such Trademark Applications has
been finally rejected or abandoned.
(vi) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by the
Company do not and will not (A) conflict with or result in a breach of
any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a
default) or Repayment Event under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, any agreement that is listed on
on Exhibit B attached hereto, which list sets forth all agreements
---------
which the Company has represented to us to be material to its
business, prospects, properties, operations, condition (financial or
other) or results of operations, or (B) violate or conflict with any
provision of the certificate of incorporation or by-laws of the
Company, or any judgment, decree, order, statute, rule or regulation
of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its properties or
assets (but with no opinion being rendered as to state or federal
anti-fraud provisions set forth in securities laws or other anti-fraud
laws). No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any
public, governmental or regulatory agency or body having jurisdiction
over the Company or any of its properties or assets is required for
the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby including the
issuance, sale and delivery of the Shares, except for (1) such as may
be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters (as to
which such counsel need express no opinion) and (2) such as have been
made or obtained under the Act or the 1934 Act.
23
(vii) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration
as an "investment company" or an entity "controlled" by an "investment
company" under the Investment Company Act of 1940, as amended.
(viii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and other financial data included or
incorporated by reference therein, as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations.
(ix) Such counsel has been informed by the Commission that the
Registration Statement is effective under the Act, and to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof
or supplement thereto has been issued and no proceedings therefor have
been initiated or threatened by the Commission and all filings
required by Rule 424(b) of the Regulations have been made.
(x) To such counsel's knowledge and only as of the dates set
forth in the Registration Statement, there are no outstanding options,
warrants or other contractual rights calling for the issuance of any
shares of capital stock of the Company or any security convertible or
exchangeable for capital stock of the Company, except as disclosed in
the Registration Statement and the Prospectus. The outstanding stock
options relating to the Common Stock have been duly authorized and
validly issued and conform to the descriptions thereof contained in
the Registration Statement and the Prospectus.
(xi) The statements in the Registration Statement and the
Prospectus under the captions "Description of Securities" and
"Business -- Legal Proceedings" and in Item 15 of Part II of the
Registration Statement, insofar as such statements
24
constitute a summary of the terms of the Shares, legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such terms, legal matters,
documents or proceedings.
(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the certificate of
incorporation and by-laws of the Company and with the requirements of
The Nasdaq Stock Market, Inc.
(xiii) In addition, such opinion shall also contain a statement
that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent
public accountants for the Company and the Underwriters at which the
contents of the Registration Statement and the Prospectus and related
matters were discussed, and, although such counsel has not
independently verified, is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus,
based upon such counsel's participation as described above, no facts
have come to the attention of such counsel which would lead such
counsel to believe that either the Registration Statement at the time
it became effective (including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to
Rule 430A(b) or Rule 434, if applicable), or any post-effective
amendment thereof made prior to the Closing Date as of the date of
such post-effective amendment, contained an untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date (or any post-
effective amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such post-effective amendment or
supplement) and as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state any material
fact required to be stated
25
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief or opinion with
respect to the financial statements and schedules and other financial
data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to
Underwriters' Counsel, familiar with the applicable laws; (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officers of departments of various jurisdictions having custody of documents
regarding the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is in form satisfactory to
such counsel and, in their opinion, you and they are justified in relying
thereon.
(c) At the Closing Date, you shall have received the opinion
of ________________, regulatory counsel for the Company, reasonably
satisfactory to you, dated the Closing Date, addressed to the Underwriters
and in form and substance satisfactory to Underwriters' counsel, to the
effect that the statements in the Registration Statement and the Prospectus
under the captions "Risk Factors - - Extensive federal, state and local
government regulations may restrict the way we sell our products, resulting
in restrictions on the products and content we offer our customers and
significant additional expenses" and "Business - - Regulatory Environment,"
insofar as such statements constitute summaries of the laws and regulations
of the United States Food and Drug Administration or the Federal Trade
Commission, are accurate in all material respects and fairly summarize such
laws and regulations. This opinion shall be
26
rendered to the Underwriters at the request of the Company and shall so state
therein.
(d) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, and the Underwriters shall have received from said Underwriters'
Counsel a favorable opinion, dated as of the Closing Date, with respect to
the issuance and sale of the Shares, the Registration Statement and the
Prospectus and such other related matters as you may reasonably require, and
the Company shall have furnished to Underwriters' Counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(e) At the Closing Date, you shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated the Closing Date, to the effect that (i) the conditions set
forth in subsection (a) of this Section 6 have been satisfied, (ii) as of the
date hereof and as of the Closing Date, the representations and warranties of
the Company set forth in Section 1 hereof are accurate, (iii) as of the
Closing Date, the obligations of the Company to be performed hereunder on or
prior thereto have been duly performed and (iv) subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, the Company has not sustained any material loss or interference
with its businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, and there has not been any
material adverse change, or any development involving a material adverse
change, in the business prospects, properties, operations, condition
(financial or otherwise) or results of operations of the Company, except in
each case as described in or contemplated by the Prospectus.
(f) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent
public accountants for the Company, dated, respectively, as of the date of
this Agreement and as of the Closing Date
27
addressed to the Underwriters and in form and substance satisfactory to you,
stating that: (i) they are independent certified public accountants with
respect to the Company within the meaning of the Act and the Regulations and
stating that the answer to Item 10 of the Registration Statement is correct
insofar as it relates to them; (ii) in their opinion, the financial
statements and schedule of the Company included in the Registration Statement
and the Prospectus and covered by their opinion therein comply as to form in
all material respects with the applicable accounting requirements of the Act
and the applicable published rules and regulations of the Commission
thereunder; (iii) on the basis of procedures consisting of a reading of the
latest available unaudited interim financial statements of the Company, a
reading of the minutes of meetings and consents of the stockholders and board
of directors of the Company and the committees of such board subsequent to
December 31, 1998, inquiries of officers and other employees of the Company
who have responsibility for financial and accounting matters of the Company
with respect to transactions and events subsequent to December 31, 1998, a
review of interim financial information in accordance with the standards
established by the American Institute of Certified Public Accountants in
Statement of Auditing Standards No. 71, Interim Financial Information, with
respect to the nine-month period ended September 30, 1999 and other specified
procedures and inquiries to a date not more than five days prior to the date
of such letter, nothing has come to their attention that would cause them to
believe that: (A) the unaudited financial statements and schedule of the
Company presented in the Registration Statement and the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and, if applicable, the 1934 Act and the applicable
published rules and regulations of the Commission thereunder or that such
unaudited financial statements are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus; (B) with respect to the period
subsequent to September 30, 1999, there were, as of the date of the most
recent available monthly financial statements of the Company, if any, and as
of a specified date not more than five days prior to the date of such letter,
any changes in the capital
28
stock or long-term indebtedness of the Company or any decrease in the net
current assets or stockholders' equity of the Company, in each case as
compared with the amounts shown in the most recent balance sheet presented in
the Registration Statement and the Prospectus, except for changes or
decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter or (C) that
during the period from October 1, 1999 to the date of the most recent
available monthly financial statements of the Company, if any, and to a
specified date not more than five days prior to the date of such letter,
there was any decrease, as compared with the corresponding period in the
prior fiscal year, in total revenues, or total or per share net loss, except
for decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur or which are set forth in such letter; and (iv)
they have compared specific dollar amounts, numbers of shares, percentages of
revenues and loss and other financial information pertaining to the Company
set forth in the Registration Statement and the Prospectus, which have been
specified by you prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages and information may be derived from the general
accounting and financial records of the Company or from schedules furnished
by the Company, and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of specified
readings, inquiries, and other appropriate procedures specified by you set
forth in such letter, and found them to be in agreement.
(g) Prior to the Closing Date, the Company shall have
furnished to you such further information, certificates and documents as you
may reasonably request.
(h) At the Closing Date, the Shares shall have been approved
for quotation on the Nasdaq National Market.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reason-
29
ably satisfactory in form and substance to you and to Underwriters' Counsel,
all obligations of the Underwriters hereunder may be canceled by you at, or
at any time prior to, the Closing Date, and the obligations of the
Underwriters to purchase the Additional Shares may be canceled by you at, or
at any time prior to, the Additional Closing Date. Notice of such
cancellation shall be given to the Company in writing, or by telephone,
facsimile, telex or telegraph, confirmed in writing.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the 1934 Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to reasonable attorneys' fees and any and
all reasonable expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the 1934 Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, or any related preliminary prospectus or the Prospectus,
or in any supplement thereto or amendment thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) (A) the violation of any applicable laws or regulations
of foreign jurisdictions where Directed Shares have been offered and (B) any
untrue statement or alleged untrue statement of a material fact included in
the supplement or prospectus wrapper material distributed in connection with
the reservation and sale of the Directed Shares to eligible employees and
certain persons designated by the Company or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, when
considered in conjunction with the Prospectus or preliminary prospectus, not
misleading; provided, however,
-------- -------
30
that the Company will not be liable in any such case to the extent but
only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein
in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Underwriter through you
expressly for use therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have,
including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company who shall have signed the
Registration Statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a)
of the 1934 Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to
reasonable attorneys' fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation),
joint or several, to which they or any of them may become subject
under the Act, the 1934 Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is
based upon any such untrue statement or alleged untrue statement or
omis sion or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein;
provided, however, that in no case shall any Underwriter be liable or
-------- -------
responsible for any amount
31
in excess of the underwriting discount applicable to the Shares purchased by
such Underwriter hereunder. This indemnity will be in addition to any liability
which any Underwriter may otherwise have, including under this Agreement. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page and in the table in the first paragraph and the third, twelfth,
fourteenth and fifteenth paragraphs under the caption "Underwriting" in the
Prospectus constitute the only information furnished in writing by or on behalf
of any Underwriter expressly for use in the Registration Statement or in any
amendment thereof, any related preliminary prospectus or the Prospectus or in
any amendment thereof or supplement thereto, as the case may be.
(c) In connection with the offer and sale of the Directed
Shares, the Company agrees, promptly upon a request in writing, to indemnify and
hold harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by it as a result of (i) the failure of
the Directed Shares Purchasers to pay for and accept delivery of the Directed
Shares which, by the end of the day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase such Directed Shares or
(ii) the refusal of any Directed Shares Purchasers that are also employees of
the Company, acting in concert with each other, to properly confirm their
respective agreements to purchase the Directed Shares that they had agreed to
purchase by the end of the first day after the date of this Agreement, provided
--------
the Company shall have the express right to mitigate any such losses,
liabilities, claims, damages and expenses through the re-allocation of any such
Directed Shares to other Directed Shares Purchasers.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party against
whom indemnification is to be sought in writing of the commencement of such
action (but the failure so to notify an indemnifying party shall not relieve it
from any liability which it may have under this Section 7). In case any such
action is brought against any indemnified party, and it noti-
32
fies an indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be de defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties;
provided that the indemnifying parties shall only be obligated to bear the fees
--------
and expenses of one such counsel for the benefit of the indemnified party or
parties. No indemnifying party shall be liable to an indemnified party for any
losses, claims, damages, liabilities and judgments by reason of settlement of
any action or claim effected without its written consent, which consent shall
not be unreasonably withheld.
8. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in
33
the case of losses, claims, damages, liabilities and expenses suffered by the
Company any contribution received by the Company from persons, other than the
Underwriters, who may also be liable for contribution, including persons who
control the Company within the meaning of Section 15 of the Act or Section 20(a)
of the 1934 Act, officers of the Company who signed the Registration Statement
and directors of the Company) as incurred to which the Company and one or more
of the Underwriters may be subject, in such proportions as are appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law, in such proportions as are appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters, respectively, shall be deemed to be in the same proportion
as (a) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (b) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and of 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 or any
violation of the nature referred to in Section 7(a)(ii). The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount applicable to the Shares purchased
34
by such Underwriter hereunder and (ii) 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. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
1934 Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the 1934 Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 8. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
-------- -------
withheld.
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, as the case may be,
35
the Firm Shares or Additional Shares to which the default relates shall be
purchased by the non-defaulting Underwriters in the same respective proportions
which the numbers of Firm Shares set forth opposite their respective names in
Schedule I hereto bear to the aggregate number of Firm Shares set forth opposite
the names of the non-defaulting Underwriters.
(2) In the event that such default relates to more than 10% of
the total number of Firm Shares or Additional Shares, as the case may be, you
may in your discretion arrange for yourself or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within 5
calendar days after such a default you do not arrange for the purchase of the
Firm Shares or Additional Shares, as the case may be, to which such default
relates as provided in this Section 9, this Agreement or, in the case of a
default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares shall
thereupon terminate, without liability on the part of the Company (except in
each case as provided in Section 5, Section 7(a) and Section 8 hereof) or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(3) In the event that the Firm Shares or Additional Shares to
which such default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
you or the Company shall have the right to postpone the Closing Date or
Additional Closing Date, as the case may be, for a period not exceeding five
Business Days in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion
of Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any
36
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares, as the case may be.
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5
hereof, the indemnity agreements contained in Section 7 hereof and the
contribution agreements contained in Section 8 hereof, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Underwriter or any controlling person thereof or by or on behalf
of the Company, any of its officers and directors or any controlling person
thereof and shall survive delivery of and payment for the Shares to and by the
Underwriters. The representations contained in Section 1 and the agreements
contained in Sections 5, 7, 8 and 11(d) hereof shall survive the termination of
this Agreement, including termination pursuant to Section 9 or Section 11
hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the later of (i)
such time as you and the Company shall have received notification of the
effectiveness of the Registration Statement and (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price per
Share has not been agreed upon prior to 5:00 P.M., New York time, on the fifth
full Business Day after the Registration Statement shall have become effective,
this Agreement shall thereupon terminate without liability to the Company or the
Underwriters except as herein expressly provided. Until this Agreement becomes
effective as aforesaid, it may be terminated by the Company by notifying you or
by you notifying the Company. Notwithstanding the foregoing, the provisions of
this Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in
full force and effect.
(b) You shall have the right to terminate this Agreement at any
time prior to the Closing Date or the obligations of the Underwriters to
purchase
37
the Additional Shares at any time prior to the Additional Closing Date, as the
case may be, if (i) any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, the market for the Company's securities or securities in general; (ii)
if trading on the New York Stock Exchange or quotations over the Nasdaq National
Market shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required, on the New York Stock Exchange or for the Nasdaq National Market by
the New York Stock Exchange or The Nasdaq Stock Market, Inc. or by order of the
Commission or any other governmental authority having jurisdiction; or (iii) if
a banking moratorium has been declared by a state or federal authority or if any
new restriction materially adversely affecting the distribution of the Firm
Shares or the Additional Shares, as the case may be, shall have become
effective; or (iv) (A) if the United States becomes engaged in hostilities or
there is an escalation of hostilities involving the United States or there is a
declaration of a national emergency or war by the United States or (B) if there
shall have been such change in political, financial or economic conditions, if
the effect of any such event in (A) or (B) as in your judgment makes it
impracticable or inadvisable to proceed with the offering, sale and delivery of
the Firm Shares or the Additional Shares, as the case may be, on the terms
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall
be by telephone, facsimile, telex or telegraph, confirmed in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied (other than the condition that the Underwriters receive a legal
opinion from Underwriters' counsel, if such condition is not satisfied because
Underwriters' counsel unreasonably withholds delivery of such opinion) or
because of any refusal, inability or failure on the
38
part of the Company to perform any agreement herein or comply with any provision
hereof in any material respect, the Company will, subject to demand by you,
reimburse the Underwriters for all reasonable out-of-pocket expenses (including
the reasonable fees and expenses of their counsel), incurred by the Underwriters
in connection herewith.
12. Notice. All communications hereunder, except as may be otherwise
------
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, sent by facsimile, telex or telegraph
and confirmed in writing by letter, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co.
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇,
Associate Director, fax no. (▇▇▇) ▇▇▇-▇▇▇▇; if sent to the Company, shall be
mailed, delivered, or sent by facsimile, telex or telegraph and confirmed in a
letter to the Company, One Concord Farms, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive
Officer, fax no. (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Esquire, fax no. (▇▇▇) ▇▇▇-▇▇▇▇.
13. Parties. This Agreement shall inure solely to the benefit of,
-------
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision contained herein.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be an
39
original and all of which together shall constitute one and the same instrument.
40
If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: _________________________
Name:
Title:
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
WIT CAPITAL CORPORATION
By: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: _________________________
Name:
Title:
On behalf of themselves and the other Underwriters named in Schedule I hereto.
41
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------------- ----------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc...
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC ....
Wit Capital Corporation...
Total .... ===============
42
SCHEDULE II
BancBoston Ventures, Inc.
Bessec Venture IV, L.P.
Bessemer Venture Investors, L.P.
Bessemer Venture Partners IV, L.P.
Blue Chip Capital Fund II, L.P.
▇▇▇▇ ▇▇▇▇
Chestnut Hill Nature, LLC
CMG@Ventures II, LLC
Comdisco, Inc.
Commonwealth Capital Ventures II, L.P.
CCV II Associates, L.P.
ConvestcoAtEura, LLC
▇▇▇▇ ▇▇▇▇▇▇▇
Rodale, Inc.
▇▇▇▇ ▇. Love
Pilinvest ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇ Venture Partners IV, L.P.
NCP-MNC, L.P.
North Castle Co-Investment Fund, L.P.
North Castle Partners II, L.P.
Shad Run Investments, L.P.
Zero Stage Capital VI, L.P.
All Directors and Executive Officers of the Company
All optionholders of the Company
43