EXHIBIT 1.1
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MICROSTRATEGY INCORPORATED
(a Delaware corporation)
4,000,000 Shares of Class A Common Stock
PURCHASE AGREEMENT
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Dated: February __, 1999
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TABLE OF CONTENTS
SECTION 1. Representations and Warranties...................................... 3
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(a) Representations and Warranties by the Company....................... 3
(i) Compliance with Registration Requirements........................... 3
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(ii) Independent Accountants............................................. 4
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(iii) Financial Statements................................................ 4
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(iv) No Material Adverse Change in Business.............................. 4
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(v) Good Standing of the Company........................................ 4
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(vi) Good Standing of Subsidiaries....................................... 5
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(vii) Capitalization...................................................... 5
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(viii) Authorization of Agreement.......................................... 5
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(ix) Authorization and Description of Securities......................... 6
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(x) Absence of Defaults and Conflicts................................... 6
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(xi) Absence of Labor Dispute............................................ 6
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(xii) Absence of Proceedings.............................................. 7
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(xiii) Accuracy of Exhibits................................................ 7
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(xiv) Possession of Intellectual Property................................. 7
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(xv) Absence of Further Requirements..................................... 7
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(xvi) Possession of Licenses and Permits.................................. 8
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(xvii) Title to Property................................................... 8
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(xviii) Compliance with Cuba Act............................................ 8
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(xix) Investment Company Act.............................................. 8
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(xx) Environmental Laws.................................................. 9
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(xxi) Registration Rights................................................. 9
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(xxii) Securities Exchange Act of 1934..................................... 9
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(b) Representations and Warranties by and Covenants of the Selling
Stockholders.................................................................... 9
(i) Authorization of Agreements......................................... 10
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(ii) Good and Marketable Title........................................... 10
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(iii) Due Execution of Power of Attorney and Custody Agreement............ 10
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(iv) Absence of Manipulation............................................. 11
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(v) Absence of Further Requirements..................................... 11
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(vi) Restriction on Sale of Securities................................... 11
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(vii) Certificates Suitable for Transfer.................................. 11
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(viii) No Association with NASD............................................ 12
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(c) Representations and Warranties by the Principal Selling Stockholders........ 12
(d) Representations and Warranties by certain Selling Stockholders.............. 12
(e) Officer's Certificates...................................................... 12
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SECTION 2. Sale and Delivery to Underwriters; Closing.......................... 12
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(a) Initial Securities.................................................. 13
(b) Option Securities................................................... 13
(c) Payment............................................................. 13
(d) Denominations; Registration......................................... 14
SECTION 3. Covenants of the Company............................................ 14
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(a) Compliance with Securities Regulations and Commission Requests...... 14
(b) Filing of Amendments................................................ 15
(c) Delivery of Registration Statements................................. 15
(d) Delivery of Prospectuses............................................ 15
(e) Continued Compliance with Securities Laws........................... 15
(f) Blue Sky Qualifications............................................. 16
(g) Rule 158............................................................ 16
(h) Use of Proceeds..................................................... 16
(i) Listing............................................................. 16
(j) Restriction on Sale of Securities................................... 17
(k) Reporting Requirements.............................................. 17
(l) Compliance with Rule 463............................................ 17
SECTION 4. Payment of Expenses................................................. 17
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(a) Expenses............................................................ 17
(b) Termination of Agreement............................................ 18
(c) Allocation of Expenses.............................................. 18
SECTION 5. Conditions of Underwriters' Obligations............................. 18
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(a) Effectiveness of Registration Statement............................. 18
(b) Opinion of Counsel for Company...................................... 18
(c) Opinion of Counsel for the Selling Stockholders..................... 19
(d) Opinion of Counsel for Underwriters................................. 19
(e) Officers' Certificate............................................... 19
(f) Accountant's Comfort Letter......................................... 19
(g) Certificate of Selling Stockholders................................. 19
(h) Bring-down Comfort Letter........................................... 20
(i) Approval of Listing................................................. 20
(j) No Objection........................................................ 20
(k) Lock-up Agreements.................................................. 20
(l) Conditions to Purchase of Option Securities......................... 20
(i) Officers' Certificate............................................... 20
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(ii) Opinion of Counsel for Company...................................... 20
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(iii) Opinion of Counsel for ▇▇▇▇▇▇▇▇▇ LLC................................ 20
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(iv) Opinion of Counsel for Underwriters................................. 21
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(v) Bring-down Comfort Letter........................................... 21
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(m) Additional Documents............................................... 21
(n) Termination of Agreement........................................... 21
SECTION 6. Indemnification.................................................... 21
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(a) Indemnification of Underwriters by Company and Principal Selling
Stockholders................................................................... 21
(b) Indemnification of Underwriters by certain Selling Stockholders.... 23
(c) Indemnification of Company, Directors and Officers, and Selling
Stockholders................................................................... 24
(d) Actions against Parties; Notification.............................. 24
(e) Settlement without Consent if Failure to Reimburse................. 25
(f) Other Agreements with Respect to Indemnification................... 25
SECTION 7. Contribution....................................................... 25
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SECTION 8. Representations, Warranties and Agreements to Survive Delivery..... 27
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SECTION 9. Termination of Agreement........................................... 27
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(a) Termination; General............................................... 27
(b) Liabilities........................................................ 27
SECTION 10. Default by One or More of the Underwriters......................... 27
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SECTION 11.
Default by the Company or one or more of the Selling Stockholders. 28
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SECTION 12. Notices............................................................ 29
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SECTION 13. Parties............................................................ 29
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SECTION 14. Governing Law And Time............................................ 29
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SECTION 15. Effect of Headings ................................................ 30
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SCHEDULE A............................................................................... 32
SCHEDULE B............................................................................... 33
SCHEDULE C............................................................................... 34
SCHEDULE D............................................................................... 35
iii
Draft of February 8, 1999
MICROSTRATEGY INCORPORATED
(a Delaware corporation)
4,000,000 Shares of Class A Common Stock
(Par Value $.001 Per Share)
PURCHASE AGREEMENT
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February __, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
MicroStrategy Incorporated, a Delaware corporation (the "Company") and the
stockholders of the Company named in Schedule D hereto (the "Selling
Stockholders") confirm their agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters"),
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
and Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. are acting as representatives (in
such capacity, the "Representatives"), with respect to (i) the sale by the
Company and the Selling Stockholders, acting severally and not jointly, and the
purchase by the Underwriters, acting severally and not jointly, of the
respective shares of Class A Common Stock, par value $.001 per share, of the
Company ("Class A Common Stock") set forth in Schedule A, and (ii) the grant by
▇▇▇▇▇▇▇▇▇ LLC to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of 600,000
additional shares of Class A Common Stock to cover over-allotments, if any. The
aforesaid 4,000,000 shares of
Class A Common Stock (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the 600,000 shares of Class A Common Stock
subject to the option described in Section 2(b) hereof (the "Option Securities")
are hereinafter called, collectively, the "Securities."
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-70919) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
The information included in such prospectus or in such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information."
Each prospectus used before such registration statement became effective,
and any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the "Prospectus." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary prospectus dated
January 28, 1999 together with the Term Sheet and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
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SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter as follows:
(i) Compliance with Registration Requirements. Each of the
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Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations, and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434 from the prospectus included in the Registration Statement at the
time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933) Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering were identical to the
3
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
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financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
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Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved; except, in the case of interim financial statements, for
the absence of complete footnote disclosure and customary year end
adjustments. The selected financial data and the summary financial
information included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Registration Statement. The
pro forma financial information included in the Registration Statement and
the Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein.
(iv) No Material Adverse Change in Business. Since the respective
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dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects, of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) Good Standing of the Company. The Company has been duly organized
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and is validly existing as a corporation in good standing under the laws of
the State of Delaware, and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into
4
and perform its obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of the Company
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(each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are the subsidiaries listed on Exhibit 21.1 to
the Registration Statement.
(vii) Capitalization. The authorized, issued and outstanding capital
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stock of the Company at September 30, 1998 is as set forth in the
Prospectus in the column entitled "Actual" under the caption
"Capitalization." Except for issuances of Class A Common Stock subsequent
to September 30, 1998 pursuant to the conversion of shares of Class B
Common Stock, par value $.001 per share (the "Class B Common Stock") into
shares of Class A Common Stock, pursuant to purchases under the employee
stock purchase plan described in the Prospectus and pursuant to the
exercise of employee and director options to purchase shares of Class A
Common Stock under the stock option plans described in the Prospectus, no
shares of the Company's capital stock have been issued since September 30,
1998. The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and non-
assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement has been duly
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authorized, executed and delivered by the Company.
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(ix) Authorization and Description of Securities. The Securities have
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been duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Company pursuant to
this Agreement against payment of the consideration set forth herein, will
be validly issued, fully paid and non-assessable; the Class A Common Stock
conforms to all statements relating thereto contained in the Prospectus and
such description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any of
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its subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
in the Registration Statement (including each of the transactions described
in the Prospectus under the caption "Certain Transactions," the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the Company
or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations.
As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(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 or any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the employees of
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the Company or any subsidiary exists or, to the knowledge of the Company,
is imminent,
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which, in any case under this clause (xi) could reasonably be expected
to result in a Material Adverse Effect.
(xii) Absence of Proceedings. Except as set forth in the Prospectus
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there is no action, suit, proceeding, inquiry or investigation before or
brought by any court or governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any subsidiary, that is required to be disclosed
in the Registration Statement or which could reasonably be expected to
result in a Material Adverse Effect, or which could reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by, if determined adversely to the Company of its obligations
hereunder; the aggregate of all pending legal or governmental proceedings
to which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject, that are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents that
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are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto that have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. Except as described in the
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Prospectus or as would not have a Material Adverse Effect, the Company and
its subsidiaries own or possess or reasonably believes it can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. Except as described in the
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Prospectus, no filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the
Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement (including each of the
transactions described in the Prospectus under the caption "Certain
7
Transactions"), except such as have been already obtained or, as may be
required under the 1933 Act or the 1933 Act Regulations or state securities
laws.
(xvi) Possession of Licenses and Permits. Except as described in the
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Prospectus, the Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them; the Company and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and in
full force and effect, except when the invalidity of such Governmental
Licenses, or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xvii) Title to Property. The Company and its subsidiaries have good and
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marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or
any of its subsidiaries holds properties described in the Prospectus, are
in full force and effect, and neither the Company nor any subsidiary has
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease, except as
such would not reasonably be expected to have a Material Adverse Effect.
(xviii) Compliance with Cuba Act. The Company has complied with, and is
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and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(xix) Investment Company Act. The Company is not, and upon the issuance
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and sale of the Securities as herein contemplated and the application of
the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an
8
entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the Registration
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Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries, and (D)
there are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxi) Registration Rights. Other than ▇▇▇▇▇▇ ▇▇▇▇▇ there are no persons
-------------------
with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act.
(xxii) Securities Exchange Act of 1934. The Company has filed all
-------------------------------
reports it has been required to file under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations of the
Commission thereunder; such reports when filed conformed in all material
respects to the requirements of the Exchange Act; and none of such reports
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) Representations and Warranties by and Covenants of the Selling
Stockholders. Each of the Selling Stockholders severally, but not jointly,
represents and warrants to each Underwriter as of the date hereof and as of the
Closing Time and agrees with each Underwriter, as follows:
9
(i) Authorization of Agreements. The Selling Stockholder has the full
---------------------------
right to enter into this Agreement, a Power of Attorney (the "Power of
Attorney") and a Custody Agreement (the "Custody Agreement") and to sell,
transfer and deliver the Securities to be sold by the Selling Stockholder
hereunder. The execution and delivery of this Agreement, the Power of
Attorney and the Custody Agreement and the sale and delivery of the
Securities to be sold by the Selling Stockholder and the consummation by
the Selling Stockholder of the transactions contemplated herein and
compliance by the Selling Stockholder with its obligations hereunder do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any tax, lien, charge, or
encumbrance upon the Securities to be sold by the Selling Stockholder or
any property or assets of the Selling Stockholder pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
license, lease or other agreement or instrument to which the Selling
Stockholder is a party or by which the Selling Stockholder may be bound, or
to which any of the property or assets of the Selling Stockholder is
subject, nor will such action result in any violation of the provisions of
any applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Selling Stockholder or
any of his properties.
(ii) Good and Marketable Title. The Selling Stockholder has and will
-------------------------
at the Closing Time have good and marketable title to the Securities to be
sold by the Selling Stockholder hereunder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim or encumbrance of any kind,
other than pursuant to this Agreement; and upon delivery of such Securities
and payment of the purchase price thereof as herein contemplated, assuming
each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from the Selling Stockholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iii) Due Execution of Power of Attorney and Custody Agreement. The
--------------------------------------------------------
Selling Stockholder has duly executed and delivered, in the form heretofore
furnished to the Representatives, the Power of Attorney with ▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as attorneys-in-fact (the "Attorneys-in-Fact") and
the Custody Agreement with American Stock Transfer and Trust Company as
custodian (the "Custodian"); the Custodian is authorized to deliver the
Securities to be sold by the Selling Stockholder hereunder and to accept
payment therefor; and the Attorneys-in-Fact are authorized to execute and
deliver this Agreement and the certificate referred to in Section 5(f) or
that may be required pursuant to Section 5(l) on behalf of the Selling
Stockholder, to sell, assign, and transfer to the Underwriters the
Securities to be sold by the Selling Stockholder hereunder, to determine
the purchase price to be paid by the Underwriters to the Selling
Stockholder, as provided in Section 2(a) hereof, to authorize the delivery
10
of the Securities to be sold by the Selling Stockholder hereunder, to
accept payment therefor, and otherwise to act on behalf of the Selling
Stockholder in connection with this Agreement.
(iv) Absence of Manipulation. The Selling Stockholder has not taken,
-----------------------
and will not take, directly or indirectly, any action that is designed to
or that has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(v) Absence of Further Requirements. No filing with, or consent,
-------------------------------
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by the Selling Stockholder of his
obligations hereunder or in the Power of Attorney and Custody Agreement, or
in connection with the sale and delivery by the Selling Stockholder of the
Securities hereunder or the consummation by the Selling Stockholder of the
transactions contemplated by this Agreement, except such as may have
previously been made or obtained or as may be required under the 1933 Act
or the 1933 Act Regulations or state securities laws.
(vi) Restriction on Sale of Securities. During a period of 90 days
---------------------------------
from the date of the Prospectus, the Selling Stockholder will not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, offer, sell, contract to sell,
or otherwise dispose of, except as provided in this paragraph any
securities of the Company that are substantially similar to the shares of
Class A Common Stock, including but not limited to any securities of the
Company that are convertible into or exchangeable for, or that represent
the right to receive Class A Common Stock or any substantially similar
securities. The foregoing sentence shall not apply to the Securities to be
sold hereunder. Notwithstanding the foregoing restrictions on transfer, the
Selling Stockholder shall be permitted to make the following transfers: (i)
transfers made by gift, provided the donee thereof agrees in writing to be
bound by the terms hereof; (ii) transfers to the transferor's affiliates,
as such term is defined in Rule 405 promulgated under the Securities Act of
1933, provided that each transferee agrees in writing to be bound by the
terms hereof; (iii) transfers made with the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇; and (iv) transfers pursuant to the Registration Statement.
(vii) Certificates Suitable for Transfer. Certificates for all of the
----------------------------------
Securities to be sold by the Selling Stockholder pursuant to this
Agreement, in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with irrevocable
conditional instructions to deliver such Securities to the Underwriters
pursuant to this Agreement.
11
(viii) No Association with NASD. Neither the Selling Stockholder nor
------------------------
any of his affiliates directly, or indirectly through one or more
intermediaries, control, or is controlled by, or is under common control with,
or has any other association with (within the meaning of Article I, Section 1(m)
of the By-laws of the National Association of Securities Dealers, Inc.), any
member firm of the National Association of Securities Dealers, Inc.
(c) Representations and Warranties by the Principal Selling Stockholders.
Each of the Selling Stockholders identified as a "Principal Selling Stockholder"
on Schedule D represents and warrants to each Underwriter as of the date hereof
and as of the Closing Time, and agrees with each Underwriter, that (i) he has
reviewed and is familiar with the Registration Statement and Prospectus and, to
his knowledge, neither the Prospectus nor any amendments or supplements thereto
includes any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) he is not
prompted to sell the Securities to be sold by him hereunder by any information
concerning the Company or any subsidiary of the Company which is not set forth
in the Prospectus.
(d) Representations and Warranties by certain Selling Stockholders. Each
of the Selling Stockholders who is not a Principal Selling Stockholder
represents and warrants to each Underwriter as of the date hereof and as of the
Closing Time, and agrees with each Underwriter, that (i) he or she has reviewed
and is familiar with the Registration Statement and Prospectus and, to the
extent any statements or omissions made in the Registration Statement, the
Prospectus or any amendment or supplement thereto are made in reliance upon and
in conformity with information furnished in writing to the Company by or on
behalf of such Selling Stockholder expressly for use therein, neither the
Prospectus nor any amendments or supplements thereto includes any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and (ii) he or she is not prompted to sell the
Securities to be sold by him or her hereunder by any information concerning the
Company or any subsidiary of the Company which is not set forth in the
Prospectus.
(e) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
-------------------------------------------
12
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and the Selling Stockholders, severally and not jointly, agree to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Company and the Selling
Stockholders, at the price per share set forth in Schedule B, that proportion of
the number of Initial Securities set forth in Schedule A opposite the name of
the Company or the Selling Stockholders, as the case may be, that the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, ▇▇▇▇▇▇▇▇▇ LLC hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional 600,000 shares of Class A Common
Stock at the price per share set forth in Schedule B, less an amount per share
equal to any dividends or distributions declared by the Company and payable on
the Initial Securities but not payable on the Option Securities. The option
hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering over-
allotments which may be made in connection with the offering and distribution of
the Initial Securities upon notice by the Representatives to ▇▇▇▇▇▇▇▇▇ LLC
setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be
earlier than one full business day, or later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased that the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Ropes &
▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by the Representatives and the Company, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business
13
days after such date as shall be agreed upon by the Representatives and the
Company (such time and date of payment and delivery being herein called the
"Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and ▇▇▇▇▇▇▇▇▇ LLC, on each Date of Delivery as specified in the notice from the
Representatives to ▇▇▇▇▇▇▇▇▇ LLC.
Payment shall be made to the Company and the Selling Stockholders by wire
transfer of immediately available funds to the respective bank accounts
designated by the Company and the Selling Stockholders (with wire transfer
instructions to be provided by the Selling Stockholders prior to the Closing
Time), against delivery to the Representatives for the respective accounts of
the Underwriters of certificates for the Securities to be purchased by them. It
is understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and the Option Securities, if any, which it
has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with the
------------------------
Underwriters as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of
14
any order preventing or suspending the use of any preliminary prospectus, or of
the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceedings for any
of such purposes. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event that it
was not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be; and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply with
the 1933 Act and the 1933 Act Regulations so as to permit the completion of the
distribution of the
15
Securities as contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the Underwriters
or for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
as the Representatives may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the effective
date of the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b) Registration
Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and maintain
the quotation of the Securities on the Nasdaq National Market and will file with
the Nasdaq National Market all documents and notices required by the Nasdaq
National Market of companies that have securities that are traded in the over-
the-counter market and quotations for which are reported by the Nasdaq National
Market.
16
(j) Restriction on Sale of Securities. During a period of 90 days from the
date of the Prospectus, the Company will not without the prior written consent
of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, sell, contract to sell, or
otherwise dispose of any securities of the Company that are substantially
similar to the Class A Common Stock, including but not limited to any securities
of the Company that are convertible into or exchangeable for, or that represent
the right to receive Class A Common Stock, Class B Common Stock, or any
substantially similar securities, or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Class A or Class B
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Class A or Class B Common Stock or
such other securities, in cash or otherwise. The foregoing sentence shall not
apply to the Securities to be sold hereunder, or to delivery or registration of
shares of Class A Common Stock (i) upon issuance of securities under the
Company's existing employee benefit plans, (ii) upon exercise of options
outstanding as of the date of this Agreement, and (iii) in connection with any
acquisition of another company if the terms of such issuance provide that such
Class A Common Stock shall not be resold prior to the expiration of the 90-day
period referenced in the foregoing sentence.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 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.
(l) Compliance with Rule 463. The Company will file with the Commission
such reports on Form 10-Q as may be required pursuant to Rule 463 of the 1933
Act Regulations.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the performance
of its and the Selling Stockholders' obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue
17
Sky Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities, and (x) the fees and
expenses incurred in connection with the inclusion of the Securities in the
Nasdaq National Market.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Sections 5, 9(a)(i) or 11
hereof, the Company shall reimburse the Underwriters for all of their out-of-
pocket expenses, including the reasonable fees and disbursements of counsel for
the Underwriters.
(c) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholders may make for
the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, together with signed or reproduced copies of such letter
for each of the other Underwriters to such effect as counsel to the Underwriters
may reasonably request.
18
(c) Opinion of Counsel for the Selling Stockholders. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of counsel for the Selling Stockholders in form and substance satisfactory
to counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters to such effect as counsel to the
Underwriters may reasonably request.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Ropes & ▇▇▇▇, counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters with respect
to the matters previously designated by the Representatives. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of The Commonwealth of Massachusetts, the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section l(a) hereof are true
and correct with the same force and effect as though expressly made at, and as
of, Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted, or are pending, or are contemplated by the Commission.
(f) Accountant's Comfort Letter. At the time of the execution of this
Agreement and, if different, at the date of the Prospectus the Representatives
shall have received from PricewaterhouseCoopers L.L.P. a letter dated such date,
in form and substance satisfactory to the Representatives, together with signed
or reproduced copies of such letter for each of the other Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(g) Certificate of Selling Stockholders. At Closing Time, the
Representatives shall have received a certificate of the Selling Stockholders,
dated as of the Closing Time, to
19
the effect that (i) the representations and warranties of the Selling
Stockholders contained in Section 1(b) hereof are true and correct in all
material respects with the same force and effect as though expressly made at and
as of the Closing Time and (ii) the Selling Stockholders have complied in all
material respects with all agreements and all conditions on their part to be
performed under this Agreement at or prior to Closing Time.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from PricewaterhouseCoopers L.L.P. a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have been
approved for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement substantially in the form of Exhibit A hereto
signed by the persons listed on Schedule C hereto.
(l) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company and ▇▇▇▇▇▇▇▇▇ LLC contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company or
▇▇▇▇▇▇▇▇▇ LLC hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery,
---------------------
of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(e) hereof
remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of ▇▇▇▇▇▇ &
------------------------------
▇▇▇▇▇▇▇, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for ▇▇▇▇▇▇▇▇▇ LLC. The favorable opinion of
------------------------------------
counsel for ▇▇▇▇▇▇▇▇▇ LLC, in form and substance satisfactory to counsel
for the Underwriters,
20
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(c) hereof.
(iv) Opinion of Counsel for Underwriters. The favorable opinion of
-----------------------------------
Ropes & ▇▇▇▇, counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 5(d)
hereof.
(v) Bring-down Comfort Letter. A letter from PricewaterhouseCoopers
-------------------------
L.L.P., in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(m) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(n) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters by Company and Principal Selling
Stockholders. The Company and the Principal Selling Stockholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:
21
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of the
Company and the Principal Selling Stockholders; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further, that
-------- -------
the Company will not be liable to an Underwriter with respect to any preliminary
prospectus to the extent that the Company shall sustain the burden of proving
that any such loss, liability, claim, damage or expense resulted from the fact
that such Underwriter in contravention of a requirement of this Agreement or
applicable law, sold Securities to a person to whom such Underwriter failed to
send or give, at or prior to Closing Time, a copy of the Prospectus as then
amended or supplemented if the Company has previously furnished copies thereof
(sufficiently in advance of Closing Time to allow for distribution by Closing
Time) to the Underwriter and the loss, liability, claim, damage or expense of
such Underwriter resulted from an untrue statement or
22
omission or alleged untrue statement or omission of a material fact contained in
or omitted from the preliminary prospectus which was corrected in the Prospectus
as, if applicable, amended or supplemented prior to Closing Time, and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person; and provided, further, that the liability
-------- -------
of each Principal Selling Stockholder pursuant to this Section 6(a) shall not
exceed the product of the number of Securities sold by such Principal Selling
Stockholder and the public offering price per share of the Securities as set
forth in the Prospectus.
(b) Indemnification of Underwriters by certain Selling Stockholders. The
Selling Stockholders who are not Principal Selling Stockholders severally agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case only
with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such
Selling Stockholder expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of the
Company and the Selling Stockholders; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any
23
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further, that
-------- -------
the liability of each Selling Stockholder who is not a Principal Selling
Stockholder pursuant to this Section 6(b) shall not exceed the product of the
number of Securities sold by such Selling Stockholder and the public offering
price per share of the Securities as set forth in the Prospectus.
(c) Indemnification of Company, Directors and Officers, and Selling
Stockholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, the Selling Stockholders, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇
▇▇▇▇▇ expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Sections 6(a) or 6(b)
above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and, in the case of parties indemnified pursuant to Section 6(c) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection
24
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Sections 6(a)(ii) and 6(b)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into, and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
(f) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Stockholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section
------------
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders, as applicable, on the one hand and the Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) 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 Selling Stockholders, as applicable, on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions,
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders,
as applicable, on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same
25
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the Selling Stockholders, as applicable, and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet, bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholders, as
applicable, on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Selling Stockholders, as applicable, or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public, exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations
26
to contribute pursuant to this Section 7 are several in proportion to the number
of Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
--------
Agreement or in certificates of officers of the Company or any of its
subsidiaries, or in certificates of the Selling Stockholders submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of the Securities to
the Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this Agreement,
by notice to the Company and the Selling Stockholders, at any time at or prior
to Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not
27
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number
of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of ▇▇▇▇▇▇▇▇▇ LLC to sell the Option Securities to
be purchased and sold on such Date of Delivery shall terminate without liability
on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery, that is after the Closing
Time, that does not result in a termination of the obligation of the
Underwriters to purchase and ▇▇▇▇▇▇▇▇▇ LLC to sell the relevant Option
Securities, as the case may be, either the Representatives or the Company shall
have the right to postpone the Closing Time or the relevant Date of Delivery, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Default by the Company or one or more of the Selling
----------------------------------------------------
Stockholders.
------------
(a) If a Selling Stockholder shall fail at Closing Time or at a Date of
Delivery to sell and deliver the number of Securities which such Selling
Stockholder or Selling Stockholders are obligated to sell hereunder, and the
remaining Selling Stockholders do not exercise the right hereby granted to
increase, pro rata or otherwise, the number of Securities to be sold by them
hereunder to the total number to be sold by all Selling Stockholders as set
forth in Schedule A hereto, then the Underwriters may, at the option of the
Representatives, by notice from the Representatives to the Company and the non-
defaulting Selling Stockholders, either (a) terminate this Agreement without any
liability on the fault of any non-defaulting party except that the provisions of
Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or (b) elect to
purchase the Securities which the non-defaulting Selling Stockholders and the
Company have agreed to sell hereunder. No action taken pursuant to this Section
11 shall relieve any Selling Stockholder so defaulting from liability, if any,
in respect of such default.
28
In the event of a default by any Selling Stockholder as referred to in this
Section 11, each of the Representatives, the Company and the non-defaulting
Selling Stockholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven business days in order to effect any
required change in the Registration Statement or Prospectus or in any other
documents or arrangements.
(b) If the Company shall fail at Closing Time or at any Date of Delivery to
sell the number of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any non-
defaulting party; provided, however, that the provisions of Sections 1, 4, 6, 7
and 8 shall remain in full force and effect. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
SECTION 12. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of
▇▇▇▇ ▇▇▇▇▇▇, with a copy to IBK Counsel, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of Juno ▇▇▇▇▇, Esq.; and notices to the
Company or the Selling Stockholders shall be directed to it or them, as the case
may be, at MicroStrategy Incorporated, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 13. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the Underwriters, the Selling Stockholders and the Company
and their respective successors or assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Selling Stockholders and the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs and legal.
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Selling Stockholders and the Company
and their respective successors or assigns, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor or assigns by reason merely of
such purchase.
SECTION 14. Governing Law And Time. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
29
SECTION 15. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
30
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters, the Selling Stockholder and the Company in accordance with its
terms.
Very truly yours,
MICROSTRATEGY INCORPORATED
By:____________________________
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Shangri-La LLC, acting by and through ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLC, acting by and through ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:____________________________
Name:
As Attorney-in-Fact acting on behalf of each of the
Selling Stockholders named in Schedule D hereto
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:_____________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
31
SCHEDULE A
Total Number of
Name of Underwriter Initial Securities
------------------- ------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
[syndicate underwriter]...............................
[syndicate underwriter]...............................
[syndicate underwriter]...............................
[syndicate underwriter]...............................
Total................................................. 4,000,000
=========
Number of Initial Securities to be sold by:
Company............................................. 3,146,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇..................................... 24,000
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇................................. 100,000
Shangri-La LLC, acting by and through its sole
member, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.......................... 300,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇..................................... 9,000
▇▇▇▇ ▇. ▇▇▇▇▇....................................... 50,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.................................. 60,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................... 100,000
▇▇▇▇▇▇ ▇▇▇▇▇........................................ 40,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.................................. 80,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.................................... 16,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.................................. 75,000
Total................................................. 4,000,000
=========
Number of Option Securities, if any, to be sold by:
▇▇▇▇▇▇▇▇▇ LLC, acting by and through its sole
member, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 600,000
SCHEDULE B
MICROSTRATEGY INCORPORATED
4,000,000 Shares of Class A Common Stock
(Par Value $.001 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_____.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $______, being an amount equal to the initial
public offering price set forth above less $______ per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
SCHEDULE C
List of persons and entities
subject to lock-up
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Shangri-La LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Annuity Trust
The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Annuity Trust No. 1
The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Annuity Trust No. 2
SCHEDULE D
List of Selling Stockholders
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Shangri-La LLC, acting by and through its sole member, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇*
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇*
▇▇▇▇▇▇▇▇▇ LLC, acting by and through its sole member, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇*
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇*
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇*
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
*Those persons designated with an "*" above are "Principal Selling Stockholders"
for purposes of Sections 1(a) and 6.
EXHIBIT A
February ___, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
World Financial Center
North Tower, 30th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
MicroStrategy Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned officer, director or beneficial owner of securities of
MicroStrategy Incorporated, a Delaware corporation (the "Company"), understands
that the Company is engaged in the preparation of a registration statement (the
"Registration Statement") for the public offering (the "Offering") of shares of
its Class A common stock, par value $.001 per share (the "Shares") underwritten
by ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC and
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. (the "Representatives") and several other
underwriters (collectively with the Representatives, the "Underwriters").
The undersigned recognizes that it is in the best financial interest of the
undersigned, as an officer, director or beneficial owner of securities of the
Company, that the Company complete the Offering, and you have requested this
agreement to facilitate the Offering.
In connection therewith, the undersigned hereby agrees that during the
period beginning on the date hereof and continuing to and including the date 90
days after the effective date of the Registration Statement, the undersigned
will not offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder any securities of the Company that are substantially similar
to the Shares, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive, common stock
or any substantially similar securities.
The undersigned further represents and agrees that the undersigned has not
taken and will not take, directly or indirectly, any action which is designed to
or which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares, or which has otherwise
constituted or will constitute any prohibited bid for or purchase of the Shares
or any related securities.
Notwithstanding the foregoing restrictions on transfer, the undersigned
shall be permitted to make the following transfers: (i) transfers made by gift,
provided the donee thereof agrees in writing to be bound by the terms hereof;
(ii) transfers to the transferor's affiliates, as such term is defined in Rule
405 promulgated under the Securities Act of 1933, as amended, provided that each
transferee agrees in writing to be bound by the terms hereof; (iii) transfers
made with the prior written consent of the Representatives; and (iv) transfers
pursuant to the Registration Statement.
The undersigned also agrees and consents to the entry of stock transfer
instructions with the Company's transfer agent against the transfer of shares of
common stock issued or issuable to the undersigned, except in accordance with
the terms hereof. This instrument shall terminate if (a) the purchase agreement
relating to the Offering shall not have been entered into by February 15, 1999,
or (b) the purchase agreement relating to the Offering (other than the
provisions thereof that survive termination) shall terminate or be terminated
prior to payment for the delivery of the Shares hereunder.
Executed as an instrument under seal.
Sincerely yours,