EXHIBIT 1.1
2,300,000 Shares/1/
ONSALE, Inc.
Common Stock
UNDERWRITING AGREEMENT
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October __, 1997
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
BT ALEX. ▇▇▇▇▇ INCORPORATED
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
As Representatives of the several Underwriters
c/o NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SECTION 1. Introductory. ONSALE, Inc., a Delaware corporation (the
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"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 1,709,300 shares of its Common
Stock, par value $0.001 per share (the "Common Stock"); the stockholder of
the Company named in Schedule B (the "Significant Selling Stockholder") and
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certain other stockholders of the Company named in Schedule C (the Other Selling
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Stockholders," and, together with the Significant Selling Stockholder, the
"Selling Stockholders") severally propose to sell to the Underwriters an
aggregate of 590,700 shares of Common Stock. The 1,709,300 shares of Common
Stock to be sold by the Company and the 590,700 shares of Common Stock to be
sold by the Selling Stockholders are collectively called the "Firm Common
Shares." In addition, the Company has granted to the Underwriters an option to
purchase up to an additional 170,700 shares of Common Stock and two of the
Selling Stockholders have severally granted to the Underwriters an option to
purchase up to an additional 174,300 shares of Common Stock, each such Selling
Stockholder selling up to an amount set forth opposite such Selling
Stockholder's name in Schedule B, all as provided in Section 2. The additional
170,700 shares to be sold by the Company and the additional 174,300 shares to be
sold by two of the Selling Stockholders pursuant to such option are collectively
called the "Optional Common Shares." The Firm Common Shares and, if and to the
extent such option is exercised, the Optional Common Shares are collectively
called the "Common Shares." NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc. ("▇▇▇▇▇▇▇▇▇▇
Securities"), BT Alex. ▇▇▇▇▇ Incorporated, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC and BancAmerica
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ have agreed to act as representatives of the several
Underwriters (in such capacity, the "Representatives") in connection with the
offering and sale of the Common Shares.
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/1/ Plus an option to purchase from the Company and certain Selling
Stockholders up to 345,000 additional shares of Common Stock to cover over-
allotments, if any.
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The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 2. Representations and Warranties.
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A. Representations and Warranties of the Company and the Significant
Selling Stockholder. The Company and the Significant Selling Stockholder hereby
represent and warrant to the several Underwriters that:
(a) A registration statement on Form S-1 (File No.333-37171) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The Company has prepared and has filed or
proposes to file prior to the effective date of such registration statement
an amendment or amendments to such registration statement, which amendment
or amendments have been or will be similarly prepared. There have been
delivered to you two signed copies of such registration statement and
amendments, together with two copies of each exhibit filed therewith.
Conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus have been delivered to
you in such reasonable quantities as you have requested for each of the
Underwriters. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus, (ii) a
final prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations, or (iii) a term sheet (the "Term Sheet") as described in and
in accordance with Rules 434 and 424(b) of the Rules and Regulations. As
filed, the final prospectus, if one is used, or the Term Sheet and
Preliminary Prospectus (as hereinafter defined), if a final prospectus is
not used, shall include all Rule 430A Information (as hereinafter defined)
and, except to the extent that you shall agree to a modification, shall be
in all substantive respects in the form furnished to you prior to the date
and time that this Agreement was executed and delivered by the parties
hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes (beyond
that contained in the latest Preliminary Prospectus (as hereinafter
defined)) as the Company shall have previously advised you would be
included or made therein.
The term "Registration Statement" as used in this Agreement shall
mean such registration statement at the time such registration statement
becomes effective and, in the event any post-effective amendment thereto
becomes effective prior to the First Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended; provided,
however, that such term shall also include (i) all Rule 430A Information
deemed to be included in such registration statement at the time such
registration statement becomes effective as provided by Rule 430A of the
Rules and Regulations and (ii) a registration statement, if any, filed
pursuant to Rule 462(b) of the Rules and Regulations relating to the Common
Shares. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the time it becomes
effective that omits Rule 430A Information. The term "Prospectus" as used
in this Agreement shall mean either (i) the prospectus relating to the
Common Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, or (ii) if a Term
Sheet is not used and no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, the form of final prospectus included in the
Registration Statement at the time such registration statement becomes
effective, or (iii) if a Term Sheet is used, the Term Sheet in the form in
which it is first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations, together with the Preliminary Prospectus included in
the Registration Statement at the time it becomes effective. The term "Rule
430A Information" means information with respect to
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the Common Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of
the Rules and Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of
the Act and the Rules and Regulations and, as of its date, has not included
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and at the time the
Registration Statement becomes effective, and at all times subsequent
thereto up to and including each Closing Date hereinafter mentioned, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, will contain all material statements and information
required to be included therein by the Act and the Rules and Regulations
and will in all material respects conform to the requirements of the Act
and the Rules and Regulations, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, no representation or warranty contained
in this subsection 2(b) shall be applicable to information contained in or
omitted from any Preliminary Prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly,
any corporation, association or other entity. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full power and authority
(corporate and other) to own and lease its properties and conduct its
business as described in the Prospectus; the Company is in possession of
and operating in compliance with all authorizations, licenses, permits,
consents, certificates and orders material to the conduct of its business,
all of which are valid and in full force and effect; the Company is duly
qualified to do business and in good standing as a foreign corporation in
each jurisdiction in which the ownership or leasing of properties or the
conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company; and no proceeding has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(d) As of September 30, 1997 and subject to the assumptions set
forth in the Prospectus under the heading "Capitalization," the Company had
authorized and outstanding capital stock as set forth under the heading
"Capitalization" in the Prospectus; the issued and outstanding shares of
Common Stock have been duly authorized and validly issued, are fully paid
and nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities,
are not subject to any rescission rights, and conform to the description
thereof contained in the Prospectus. Except as disclosed in or contemplated
by the Prospectus and the financial statements of the Company, and the
related notes thereto, included in the Prospectus, the Company does not
have outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares
of its capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
and exercised thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
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(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Common Shares
by the Company pursuant to this Agreement. No stockholder of the Company
has any right which has not been waived to require the Company to register
the sale of any shares owned by such stockholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the stockholders or the Board of Directors of the Company will
be required for the issuance and sale of the Common Shares to be sold by
the Company as contemplated herein.
(f) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company in
accordance with its terms. The making and performance of this Agreement by
the Company and the consummation of the transactions herein contemplated
will not violate any provisions of the certificate of incorporation or
bylaws, or other organizational documents, of the Company, and will not
conflict with, result in the breach or violation of, or constitute, either
by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party or by
which the Company or any of its respective properties may be bound or
affected, or any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of its
properties. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
compliance with the Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Blue Sky laws applicable to the public offering
of the Common Shares by the several Underwriters and the clearance of such
offering with the National Association of Securities Dealers, Inc. (the
"NASD").
(g) Price Waterhouse LLP, who have expressed their opinion with
respect to the financial statements and schedule filed with the Commission
as a part of the Registration Statement and included in the Prospectus and
in the Registration Statement, are independent accountants as required by
the Act, the Rules and Regulations and the Exchange Act.
(h) The financial statements and schedule of the Company, and the
related notes thereto, included in the Registration Statement and the
Prospectus present fairly in all material respects the financial position
of the Company as of the respective dates of such financial statements and
schedule, and the results of operations and cash flows of the Company for
the respective periods covered thereby. Such statements, schedule and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by the
independent accountants named in subsection 2(g). No other financial
statements or schedules are required to be included in the Registration
Statement. The selected financial data set forth in the Prospectus under
the captions "Prospectus Summary - Summary Financial Information,"
"Capitalization" and "Selected Financial Data" fairly present in all
material respects the information set forth therein on the basis stated in
the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to
violations, defaults or breaches which individually or in the aggregate
would not be material to the Company, the Company is not in violation or
default of any provision of its certificate of incorporation or bylaws, or
other organizational documents, or is not in breach of or default with
respect to any provision of any
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agreement, judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which it is a
party or by which it or any of its properties are bound; and there does not
exist any state of facts which constitutes an event of default on the part
of the Company as defined in such documents or which, with notice or lapse
of time or both, would constitute such an event of default.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The contracts so described in
the Prospectus are in full force and effect on the date hereof and conform
in all material respects to the descriptions thereof contained in the
Prospectus; and neither the Company, nor to the best of the Company's
knowledge, any other party is in breach of or default under any of such
contracts, except for such breaches or defaults that, when considered
singly or in the aggregate, would not have a material adverse effect on the
Company's business, financial condition or results of operations.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company is or may be a party
or of which property owned or leased by the Company is or may be the
subject, or related to environmental or discrimination matters, which
actions, suits or proceedings might, individually or in the aggregate,
prevent or adversely affect the transactions contemplated by this
Agreement, result in a material adverse change in the condition (financial
or otherwise), properties, business or results of operations of the Company
or reasonably be expected to result in a material adverse change in the
prospects of the Company; and no labor disturbance by the employees of the
Company exists or is imminent which might be expected to materially and
adversely affect such condition, properties, business or results of
operations of the Company or might reasonably be expected to result in a
material adverse change in the prospects of the Company. The Company is not
a party or subject to the provisions of any material injunction, judgment,
decree or order of any court, regulatory body, administrative agency or
other governmental body.
(l) The Company has good and marketable title to all the
properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property by
the Company. The Company holds its leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company. Except as disclosed in the
Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(m) Since the respective dates as of which information is given
in the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company has not
incurred any material liabilities or obligations, indirect, direct or
contingent, or entered into any material verbal or written agreement or
other transaction which is not in the ordinary course of business or which
could result in a material reduction in the future earnings of the Company;
(ii) the Company has not sustained any material loss or interference with
its respective business or properties from fire, flood, windstorm, accident
or other calamity, whether or not covered by insurance; (iii) the Company
has not paid or declared any dividends or other distributions with respect
to its capital stock and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations that, when
considered singly or in the aggregate, would be material to the Company;
(iv) there has not been any change in the capital stock (other than upon
the sale of the Common Shares hereunder and upon the exercise of options
and warrants described in the Registration
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Statement) or indebtedness material to the Company (other than in the
ordinary course of business); and (v) there has not been any material
adverse change in the condition (financial or otherwise), business,
properties or results of operations of the Company or an event that might
reasonably be expected to result in a material adverse change in the
prospects of the Company.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, (i) the Company has sufficient trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted and as proposed to
be conducted in the Prospectus; (ii) the unenforceability of any
trademarks, trade names, patent rights, mask works, copyrights, licenses,
approvals or governmental authorizations would not have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or would not be reasonably expected to result in a material
adverse change in the prospects of the Company; and (iii) the Company has
no knowledge of any material infringement by it of trademark, trade name
rights, patent rights, mask works, copyrights, licenses, trade secret or
other similar rights of others, and there is no claim being made against
the Company regarding trademark, trade name, patent, mask work, copyright,
license, trade secret or other infringement which could have a material
adverse effect on the condition (financial or otherwise), business, results
of operations or might reasonably be expected to result in a material
adverse change in the prospects of the Company.
(o) The Company has not been advised, and has no reason to
believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure
to be so in compliance would not materially adversely affect the condition
(financial or otherwise), business or results of operations of the Company
or would not reasonably be expected to result in a material adverse change
in the prospects of the Company.
(p) The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown as
due thereon; and the Company has no knowledge of any tax deficiency which
has been or might be asserted or threatened against the Company which could
materially and adversely affect the business, operations or properties of
the Company.
(q) The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior
to the Second Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Prospectus, the
Registration Statement and the other materials permitted by the Act.
(s) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not
limited to, insurance covering real and personal property owned or leased
by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in
full force and effect.
(t) The Company has not at any time during the last five years
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
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(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Common Shares.
(v) The Common Stock (including the Common Shares) is registered
pursuant to Section 12(g) of the Exchange Act and has been approved for
inclusion on the Nasdaq National Market.
(w) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
in violation of Section 517.075 of the Florida Statutes.
(x) The documents filed by the Company under the Exchange Act, at
the time they were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act, and, when read together
with the other information in the Prospectus, at the time the Registration
Statement and any amendments thereto become effective and at the First
Closing Date and the Second Closing Date, as the case may be, do 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 fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
B. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder represents, warrants and covenants to each Underwriter as
follows:
(a) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(b) The Custody Agreement and Power of Attorney. Each of the (i)
Custody Agreement signed by such Selling Stockholder and The First National
Bank of Boston, as custodian (the "Custodian"), relating to the deposit of
the Common Shares to be sold by such Selling Stockholder (the "Custody
Agreement") and (ii) Power of Attorney appointing certain individuals named
therein as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), has been duly authorized, executed and delivered by such
Selling Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(c) Title to Common Shares to be Sold; All Authorizations
Obtained. Such Selling Stockholder on the First Closing Date and the Second
Closing Date (as defined below) will have, good and valid title to all of
the Common Shares which may be sold by such Selling Stockholder pursuant to
this Agreement on such date and the legal right and power, and all
authorizations and approvals required by law to enter into this Agreement
and his or her Custody Agreement and Power of Attorney, to sell, transfer
and deliver all of the Common Shares which may be sold by
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such Selling Stockholder pursuant to this Agreement and to comply with its
other obligations hereunder and thereunder.
(d) Delivery of the Common Shares to be Sold. Delivery of the
Common Shares which are sold by such Selling Stockholder pursuant to this
Agreement will pass good and valid title to such Common Shares, free and
clear of any security interest, mortgage, pledge, lien, encumbrance or
other claim.
(e) Non-Contravention; No Further Authorizations or Approvals
Required. The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement and the Power of Attorney will not
contravene or conflict with, result in a breach of, or constitute a default
under, or require the consent of any other party to, the charter or by-
laws, or other organizational documents of such Selling Stockholder or any
other agreement or instrument to which such Selling Stockholder is a party
or by which it is bound or under which it is entitled to any right or
benefit, any provision of applicable law or any judgment, order, decree or
regulation applicable to such Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder. No consent, approval,
authorization or other order of, or registration or filing with, any court
or other governmental authority or agency, is required for the consummation
by such Selling Stockholder of the transactions contemplated in this
Agreement, except such as have been obtained or made and are in full force
and effect under the Securities Act, applicable state securities or blue
sky laws and from the NASD.
(f) No Registration or Other Similar Rights. Such Selling
Stockholder does not have any registration or other similar rights to have
any equity or debt securities registered for sale by the Company under the
Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as are described in the Prospectus under
"Shares Eligible for Future Sale."
(g) No Further Consents, etc. No consent, approval or waiver is
required under any instrument or agreement to which such Selling
Stockholder is a party or by which it is bound or under which it is
entitled to any right or benefit, in connection with the offering, sale or
purchase by the Underwriters of any of the Common Shares which may be sold
by such Selling Stockholder under this Agreement or the consummation by
such Selling Stockholder of any of the other transactions contemplated
hereby.
(h) Disclosure Made by Such Selling Stockholder in the
Prospectus. All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration Statement and
Prospectus is, and on the First Closing Date and the Second Closing Date
will be, true, correct, and complete in all material respects, and does
not, and on the First Closing Date and the Second Closing Date will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading. Such
Selling Stockholder confirms as accurate the number of shares of Common
Stock set forth opposite such Selling Stockholder's name in the Prospectus
under the caption "Principal and Selling Stockholders" (both prior to and
after giving effect to the sale of the Common Shares).
(i) No Price Stabilization or Manipulation. Such Selling
Stockholder has not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
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(j) No Prospectus Distribution. Such Selling Stockholder has not
distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares.
(k) Confirmation of Company Representations and Warranties. Such
Other Selling Stockholder has no reason to believe that the representations
and warranties of the Company and the Significant Selling Stockholder
contained in Section 2(A) hereof are not true and correct, is familiar with
the Registration Statement and the Prospectus and has no knowledge of any
material fact, condition or information not disclosed in the Registration
Statement or the Prospectus which has had or may have a material adverse
effect on the Company and is not prompted to sell shares of Common Stock by
any information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
Any certificate signed by or on behalf of any Selling Stockholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
SECTION 3. Representations and Warranties of the Underwriters. The
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Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set forth (i) on the cover page of the
Prospectus with respect to price and underwriting discount, (ii) the legend on
the inside front cover page of the Prospectus concerning stabilization by the
Underwriters and (iii) the table and the first paragraph thereunder under the
caption "Underwriting" in the Prospectus was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all material
respects. The Representatives represent and warrant that they have been
authorized by each of the other Underwriters as the Representatives to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 4. Purchase, Sale and Delivery of the Common Shares.
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(a) The Firm Common Shares. Upon the terms herein set forth, (i)
the Company agrees to issue and sell to the several Underwriters an
aggregate of 1,709,300 Firm Common Shares and (ii) the Selling Stockholders
agree to sell to the several Underwriters an aggregate of 590,700 Firm
Common Shares, each Selling Stockholder selling the number of Firm Common
Shares set forth opposite such Selling Stockholder's name on Schedule B and
Schedule C. On the basis of the representations, warranties and agreements
----------
herein contained, and upon the terms but subject to the conditions herein
set forth, the Underwriters agree, severally and not jointly, to purchase
from the Company and the Selling Stockholders the respective number of Firm
Common Shares set forth opposite their names on Schedule A. The purchase
price per Firm Common Share to be paid by the several Underwriters to the
Company and the Selling Stockholders shall be [$____] per share.
(b) The First Closing Date. Delivery of certificates
for the Firm Common Shares to be purchased by the Underwriters and payment
therefor shall be made at the offices of ▇▇▇▇▇▇▇▇▇▇ Securities, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (or such other place as may
be agreed to by the Company and the Representatives) at 6:00 a.m. San
Francisco time, on [___], or such other time and date not later than 10:30
a.m. San Francisco time, on [___] as the Representative shall designate by
notice to the Company (the time and date of such closing are called the
"First Closing Date"). The Company and the Selling Stockholders hereby
acknowledge that circumstances under which the Representative may provide
notice to postpone the First Closing Date as originally scheduled include,
but are in no way limited to, any determination by the Company, the Selling
Stockholders or the Representative to recirculate to the public copies of
an amended or supplemented Prospectus or a delay as contemplated by the
provisions of Section 11.
9
(c) The Optional Common Shares; the Second Closing Date. In
addition, on the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein
set forth, the Company and certain of the Selling Stockholders hereby grant
an option to the several Underwriters to purchase, severally and not
jointly, up to an aggregate of 345,000 Optional Common Shares from the
Company and such Selling Stockholders at the purchase price per share to be
paid by the Underwriters for the Firm Common Shares. The option granted
hereunder is for use by the Underwriters solely in covering any over-
allotments in connection with the sale and distribution of the Firm Common
Shares. The option granted hereunder may be exercised at any time (but not
more than once) upon notice by the Representatives to the Company and such
Selling Stockholders, which notice may be given at any time within 30 days
from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii)
the time, date and place at which such certificates will be delivered
(which time and date may be simultaneous with, but not earlier than, the
First Closing Date; and in such case the term "First Closing Date" shall
refer to the time and date of delivery of certificates for the Firm Common
Shares and the Optional Common Shares). Such time and date of delivery, if
subsequent to the First Closing Date, is called the "Second Closing Date"
and shall be determined by the Representatives and shall not be earlier
than three nor later than five full business days after delivery of such
notice of exercise. If any Optional Common Shares are to be purchased, (a)
each Underwriter agrees, severally and not jointly, to purchase the number
of Optional Common Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Optional Common Shares to be purchased as
the number of Firm Common Shares set forth on Schedule A opposite the name
of such Underwriter bears to the total number of Firm Common Shares and (b)
the Company and each such Selling Stockholder agree, severally and not
jointly, to sell the number of Optional Common Shares (subject to such
adjustments to eliminate fractional shares as the Representative may
determine) that bears the same proportion to the total number of Optional
Common Shares to be sold as the number of Optional Common Shares set forth
in Schedule B and Schedule C opposite the name of such Selling
----------
Stockholder (or, in the case of the Company, as the number of Optional
Common Shares to be sold by the Company as set forth in the paragraph
"Introductory" of this Agreement) bears to the total number of Optional
Common Shares. The Representatives may cancel the option at any time prior
to its expiration by giving written notice of such cancellation to the
Company and the Selling Stockholders.
(d) Public Offering of the Common Shares. The Representatives
hereby advise the Company and the Selling Stockholders that the
Underwriters intend to offer for sale to the public, as described in the
Prospectus, their respective portions of the Common Shares as soon after
this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, have
determined is advisable and practicable.
(e) Payment for the Common Shares. Payment for the Common Shares
to be sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company. Payment for the Common Shares
to be sold by the Selling Stockholders shall be made at the First Closing
Date (and, if applicable, at the Second Closing Date) by wire transfer of
immediately available funds to the order of the Custodian.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have agreed
to purchase. ▇▇▇▇▇▇▇▇▇▇ Securities, individually and not as the Representative
of the Underwriters, may (but shall not be obligated to) make payment for any
Common Shares to be purchased by any Underwriter whose
10
funds shall not have been received by the Representatives by the First Closing
Date or the Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Common Shares to be sold by such Selling Stockholder to
the several Underwriters, or otherwise in connection with the performance of
such Selling Stockholder's obligations hereunder and (ii) the Custodian is
authorized to deduct for such payment any such amounts from the proceeds to such
Selling Stockholder hereunder and to hold such amounts for the account of such
Selling Stockholder with the Custodian under the Custody Agreement.
(f) Delivery of the Common Shares. The Company and the Selling
Stockholders shall deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters certificates
for the Firm Common Shares to be sold by them at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company and the
Selling Stockholders shall also deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters, certificates
for the Optional Common Shares the Underwriters have agreed to purchase
from them at the First Closing Date or the Second Closing Date, as the case
may be, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The
certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall
have requested at least two full business days prior to the First Closing
Date (or the Second Closing Date, as the case may be) and shall be made
available for inspection on the business day preceding the First Closing
Date (or the Second Closing Date, as the case may be) at a location in New
York City as the Representatives may designate. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is
a further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than
12:00 p.m. on the second business day following the date the Common Shares
are released by the Underwriters for sale to the public, the Company shall
deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request.
SECTION 5. Covenants.
---------
A. Covenants of the Company. The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereto, if not effective at the
time and date that this Agreement is executed and delivered by the parties
hereto, to become effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A of the Rules and Regulations, or
the filing of the Prospectus is otherwise required under Rule 424(b) of the
Rules and Regulations, the Company will file the Prospectus, properly
completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules
and Regulations within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company will promptly advise
you (i) of the receipt of any comments of the Commission, (ii) of any
request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information,
(iii) when the Registration Statement shall have become effective and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose. If the Commission shall enter any such stop
order at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. The Company will not
file any amendment or supplement to the
11
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been
furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or which is not in compliance with the Act and the
Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus which in your judgment may be
necessary or advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to cause
the same to become effective as promptly as possible. The Company will
fully and completely comply with the provisions of Rule 430A of the Rules
and Regulations with respect to information omitted from the Registration
Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or if it is necessary at any
time to amend the Prospectus, including any amendments or supplements, to
comply with the Act or the Rules and Regulations, the Company will promptly
advise you thereof and will promptly prepare and file with the Commission,
at its own expense, an amendment or supplement which will correct such
statement or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become
effective as soon as possible; and, in case any Underwriter is required to
deliver a prospectus after such nine-month period, the Company upon
request, but at the expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and such Prospectus
or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the
end of the first quarter ending after one year following the "effective
date of the Registration Statement" (as defined in Rule 158(c) of the Rules
and Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you or mail to your order
copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents in each
case as soon as available and in such quantities as you may request, for
the purposes contemplated by the Act, and will file, on a timely basis,
with the Commission and the Nasdaq National Market all reports and
documents required to be filed under the Exchange Act.
(f) The Company shall cooperate with you and your counsel in
order to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such jurisdictions
as you designate, will comply with such laws and will continue such
qualifications, registrations and exemptions in effect so long as
reasonably required for the distribution of the Common Shares. The Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise you promptly of the suspension
of the qualification or registration of (or any such exemption relating to)
the Common
12
Shares for offering, sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, will use its best efforts to
obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request of any Representative, to
each of the other Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public
accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Current Report on Form 8-K or other report filed by the Company
with the Commission, the NASD or any securities exchange; and (iii) as soon
as available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 90 days following the date that any of
the Common Shares are released by you for sale to the public (the "Release
Period"), without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities (which
consent may be withheld at the sole discretion of ▇▇▇▇▇▇▇▇▇▇ Securities),
the Company will not issue, offer, pledge, sell, grant options to purchase
or otherwise dispose of, directly or indirectly, any of the Company's
equity securities or any other securities convertible into or exchangeable
with its Common Stock or other equity security, other than (i) the
Company's issuance of Common Stock upon the exercise of warrants and stock
options that are presently outstanding and described as such in the
Prospectus or any other issuance of Common Stock hereafter under the option
or equity incentive plans described in the Prospectus, (ii) the Company's
issuance of Common Stock under the employee stock purchase plan described
in the Prospectus and (iii) the Company's issuance of shares of Common
Stock in an acquisition of another corporation or entity provided that (1)
such shares represent less than 20% of the Company's then outstanding
shares of Common Stock and (2) the individuals or entities to whom such
shares are issued agree in writing with ▇▇▇▇▇▇▇▇▇▇ Securities that such
shares may not be resold during the Release Period.
(i) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements
under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register
if necessary its Common Stock for sale in non-issuer transactions under (or
obtain exemptions from the application of) the Blue Sky laws of the State
of California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with such
Blue Sky laws and will continue such qualifications, registrations and
exemptions in effect for a period of five years after the date hereof.
(k) The Company will use its best efforts to maintain the listing
of its Common Stock on the Nasdaq National Market.
B. Covenants of the Selling Stockholders. Each Selling Stockholder
further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such
Selling Stockholder will not, without the prior written consent of
▇▇▇▇▇▇▇▇▇▇ Securities (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any
option to sell
13
(including without limitation any short sale), pledge, transfer, establish
an open "put equivalent position" within the meaning of Rule 16a-1(h) under
the Exchange Act, or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of
the foregoing, for a period commencing on the date that any of the Common
Shares are released by the Underwriters for sale to the public and
continuing through the later of 90 days thereafter or two days after the
Company announces its financial results for the year ended December 31,
1997.
(b) Delivery of Forms W-8 and W-9. Such Selling Stockholder will
deliver to the Representatives prior to the First Closing Date, a properly
completed and executed United States Treasury Department Form W-8 (if the
Selling Stockholder is a non-United States person) or Form W-9 (if the
Selling Stockholder is a United States Person).
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company or the Selling Stockholders of
any one or more of the foregoing covenants or extend the time for their
performance.
SECTION 6. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and the Selling Stockholders, jointly and severally,
agree to pay all costs, fees and expenses incurred in connection with the
performance of the Company's and the Selling Stockholders' obligations hereunder
and in connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing, (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel and the Company's
independent accountants, (v) all costs and expenses incurred in connection with
the preparation, printing, filing, shipping and distribution of the Registration
Statement, each Preliminary Prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements provided
for herein, this Agreement, the Agreement Among Underwriters, the Selected
Dealers Agreement, the Underwriters' Questionnaire, the Underwriters' Power of
Attorney and the Blue Sky memorandum, (vi) all filing fees, attorneys' fees and
expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the Blue Sky laws, (vii) the filing fee of the National Association of
Securities Dealers, Inc., (viii) fees and expenses of counsel and other advisors
for the Selling Stockholders, (ix) fees and expenses of the Custodian and (x)
all other fees, costs and expenses referred to in Item 13 of the Registration
Statement. Except as provided in this Section 6, Section 8 and Section 10
hereof, the Underwriters shall pay all of their own expenses, including the fees
and disbursements of their counsel (excluding those relating to qualification,
registration or exemption under the Blue Sky laws and the Blue Sky memorandum
referred to above).
The Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all taxes incident to the sale and delivery
of the Common Shares to be sold by such Selling Stockholders to the Underwriters
hereunder (which taxes, if any, may be deducted by the Custodian under the
provisions of Section 2 of this Agreement).
SECTION 7. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the
14
Optional Common Shares on the Second Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Stockholders herein set forth as of the date hereof and as of the
First Closing Date or the Second Closing Date, as the case may be, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company and the Selling Stockholders of their
respective obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. (or, in the case of a registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations relating to the Common
Shares, not later than 10:00 P.M.), Washington, D.C. Time, on the date of
this Agreement, or at such later time as shall have been consented to by
you; if the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) of the Rules and Regulations, the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b) of the Rules and Regulations; and prior to such
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge
of the Company or you, shall be contemplated by the Commission; and any
request of the Commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to your
satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any change in the capital stock other than
pursuant to the exercise of outstanding options and warrants disclosed in
the Prospectus of the Company or any material change in the indebtedness
(other than in the ordinary course of business) of the Company, (ii) except
as set forth or contemplated by the Registration Statement or the
Prospectus, no material verbal or written agreement or other transaction
shall have been entered into by the Company, which is not in the ordinary
course of business or which could result in a material reduction in the
future earnings of the Company, (iii) no loss or damage (whether or not
insured) to the property of the Company shall have been sustained which
materially and adversely affects the condition (financial or otherwise),
business or results of operations of the Company or might reasonably be
expected to result in a material adverse change in the prospects of the
Company, (iv) no legal or governmental action, suit or proceeding affecting
the Company which is material to the Company or which affects or may affect
the transactions contemplated by this Agreement shall have been instituted
or threatened and (v) there shall not have been any material change in the
condition (financial or otherwise), business, management or results of
operations of the Company or any change that might reasonably be expected
to result in a material adverse change in the prospects of the Company
which makes it impractical or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase the Common
Shares as contemplated hereby.
(c) There shall have been furnished to you, as Representatives of
the Underwriters, on each Closing Date, in form and substance satisfactory
to you, except as otherwise expressly provided below:
(i) An opinion of Fenwick & West LLP, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters
and dated the First Closing Date, or the Second Closing Date, as the
case may be, to the effect that:
(1) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, is duly qualified to do
business as a foreign corporation and is in good standing in all
other jurisdictions where the ownership or leasing of properties
or the conduct of its business requires such qualification,
except as described in the Prospectus and except
15
for jurisdictions in which the failure to so qualify would not
have a material adverse effect on the Company, and has full
corporate power and corporate authority to own its properties and
conduct its business as described in the Registration Statement;
(2) The authorized, issued and outstanding capital
stock of the Company as of September 30, 1997 and subject to the
assumptions set forth in the Prospectus under the heading
"Capitalization" is as set forth under the caption
"Capitalization" in the Prospectus and conforms as of the date
set forth therein and as of the applicable Closing Date as to
legal matters in all material respects to the description thereof
contained in the Registration Statement and the Prospectus under
the caption "Description of Capital Stock"; all necessary and
proper corporate proceedings have been taken in order to
authorize validly such authorized Common Stock; all outstanding
shares of Common Stock have been duly and validly issued, are
fully paid and nonassessable, have been issued in compliance with
the registration and qualification requirements of federal and
state securities laws, and, to such counsel's knowledge were not
issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase any securities;
(3) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware
law, and when duly countersigned by the Company's transfer agent
and registrar, and delivered to you or upon your order against
payment of the agreed consideration therefor in accordance with
the provisions of this Agreement, the Common Shares represented
thereby will be duly authorized and validly issued, fully paid
and nonassessable, to such counsel's knowledge will not have been
issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities and will
conform in all material respects to the description thereof
contained in the Prospectus;
(4) Except as disclosed in or specifically contemplated
by the Prospectus, to such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the
issuance of, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;
(5) (a) Based solely upon oral advice from the staff of
the Commission, the Registration Statement has become effective
under the Act, and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or contemplated by the Commission; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of
the Rules and Regulations has been made in the manner and within
the time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and
each amendment or supplement thereto (except for the financial
statements, financial data and schedule included therein as to
which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act and the
Rules and Regulations;
(c) To such counsel's knowledge, there are no
franchises, leases, contracts, agreements or documents of a
character required to be disclosed in
16
the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not disclosed or
filed, as required;
(d) To such counsel's knowledge, there are no legal
or governmental actions, suits or proceedings pending or
threatened against the Company which are required to be described
in the Prospectus which are not described as required; and
(6) The Company has the corporate power and corporate
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the several Underwriters;
this Agreement has been duly and validly authorized by all
necessary corporate action by the Company's board of directors
and stockholders, has been duly and validly executed and
delivered by and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance with its terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for
liabilities arising under the Act as to which no opinion need be
expressed; and to such counsel's knowledge no approval,
authorization, order, consent, registration, filing,
qualification, license or permit of or with any court,
regulatory, administrative or other governmental body or agency
is required for the execution and delivery of this Agreement by
the Company or the consummation of the transactions set forth in
this Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required under
applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the
clearance of such offering with the NASD;
(7) The execution and performance of this Agreement and
the consummation of the transactions herein set forth will not
conflict with, result in the breach of, or constitute, either by
itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such
counsel to which the Company is a party or by which the Company
or any of its property may be bound or affected which is material
to the Company, or violate any of the provisions of the
certificate of incorporation or bylaws or other organizational
documents of the Company, or, to such counsel's knowledge,
violate any statute, judgment, decree, order, rule or regulation
of any court or governmental body having jurisdiction over the
Company or any of its property;
(8) To such counsel's knowledge, the Company is not in
violation of its certificate of incorporation or bylaws, or other
organizational documents, or in breach of or default with respect
to any provision of any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument
to which the Company is a party or by which it or any of its
properties may be bound or affected, except where such default
would not materially adversely affect the Company; and, to such
counsel's knowledge, the Company is in compliance with all laws,
rules, regulations, judgments, decrees, orders and statutes of
any court or jurisdiction to which it is subject, except where
noncompliance would not materially adversely affect the Company
and except as disclosed in the Prospectus;
17
(9) To such counsel's knowledge, no holders of
securities of the Company have rights which have not been waived
to the registration of shares of Common Stock or other
securities, because of the filing of the Registration Statement
by the Company or the offering contemplated hereby;
(10) To such counsel's knowledge, the Underwriting
Agreement has been duly authorized, executed and delivered by or
on behalf of, and is a valid and binding agreement of, each
Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification thereunder may be limited by
applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(11) To such counsel's knowledge, the execution and
delivery by each Selling Stockholder of, and the performance by
each Selling Stockholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of
Attorney will not contravene or conflict with, result in a breach
of, or constitute a default under, the charter or by-laws,
partnership agreement, trust agreement or other organizational
documents, as the case may be, of any Selling Stockholder, or, to
the best of such counsel's knowledge, violate or contravene any
provision of applicable law or regulation, or violate, result in
a breach of or constitute a default under the terms of any other
agreement or instrument to which any Selling Stockholder is a
party or by which it is bound, or any judgment, order or decree
applicable to any Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator
having jurisdiction over any Selling Stockholder.
(12) To such counsel's knowledge, each Selling
Stockholder has good and valid title to all of the Common Shares
which may be sold by such Selling Stockholder under the
Underwriting Agreement and has the legal right and power, and all
authorizations and approvals required under its charter and by-
laws, partnership agreement, trust agreement or other
organizational documents, as the case may be, to enter into the
Underwriting Agreement and its Custody Agreement and its Power of
Attorney, to sell, transfer and deliver all of the Common Shares
which may sold by such Selling Stockholder under the Underwriting
Agreement and to comply with its other obligations under the
Underwriting Agreement, its Custody Agreement and its Power of
Attorney.
(13) To such counsel's knowledge, each of the Custody
Agreement and Power of Attorney of each Selling Stockholder has
been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable
law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally
or by general equitable principles.
(14) To such counsel's knowledge, assuming that the
Underwriters purchase the Common Shares which are sold by such
Selling Stockholder pursuant to the Underwriting Agreement for
value, in good faith and without notice of any adverse claim, the
delivery of such Common Shares pursuant to the Underwriting
Agreement will pass good and valid
18
title to such Common Shares, free and clear of any security
interest, mortgage, pledge, lieu encumbrance or other claim.
(15) To such counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with,
any court or governmental authority or agency, is required for
the consummation by such Selling Stockholder of the transactions
contemplated in the Underwriting Agreement, except as required
under the Securities Act, applicable state securities or blue sky
laws, and from the NASD.
In rendering such opinion, such counsel may rely, as to matters of
local law, on opinions of local counsel, and as to matters of fact, on
certificates of officers of the Company, the Selling Stockholders and of
governmental officials, in which case their opinion is to state that they are so
doing and that the Underwriters are justified in relying on such opinions or
certificates and copies of said opinions or certificates are to be attached to
the opinion. Such counsel shall also state that they have participated in
conferences with officials and other representatives of the Company, the
Representatives, counsel to the Underwriters and the independent certified
public accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed. In
addition to the matters set forth above, counsel rendering the foregoing opinion
shall also include a statement to the effect that, although it has not
independently verified the accuracy or completeness of the statements in the
Registration Statement and the Prospectus, nothing has come to the attention of
such counsel that causes it to believe that the Registration Statement (except
as to the financial statements and other financial and statistical data
contained therein, as to which such counsel need not express any opinion or
belief) at the date the Registration Statement becomes effective contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus (except as to the financial statements and other
financial and statistical data contained therein, as to which such counsel need
not express any opinion or belief) as of its date or at the First Closing Date
(or, if there is a second closing, any later date on which Optional Common
Shares are purchased), contained or contains any untrue statement of a material
fact or omitted or omits 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.
(ii) Such opinion or opinions of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, counsel for the Underwriters dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement, the
validity of the Common Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably require,
and the Company shall have furnished to such counsel such documents
and shall have provided to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such
matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the Chairman
of the Board or President and the chief financial or accounting
officer of the Company, dated the First Closing Date or the Second
Closing Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company
set forth in Section 2 of this Agreement are true and correct as
of the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied on or prior to such
Closing Date;
19
(2) The Commission has not issued any order preventing
or suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the best of
the knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or contemplated under
the Act;
(3) Each of the respective signers of the certificate
has carefully examined the Registration Statement and the
Prospectus; in his opinion and to the best of his knowledge,
neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto includes any untrue statement of
a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which is required to be set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed in such
a supplement or amendment;
(5) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, (a)
there has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), business, properties, results of operations or
management of the Company or any change or development that might
reasonably be expected to result in a material adverse change in
the prospects of the Company; (b) no legal or governmental
action, suit or proceeding is pending or threatened against the
Company which is material to the Company, whether or not arising
from transactions in the ordinary course of business, or which
may adversely affect the transactions contemplated by this
Agreement; (c) the Company has not entered into any verbal or
written agreement or other transaction which is not in the
ordinary course of business or which could result in a material
reduction in the future earnings of the Company or incurred any
material liability or obligation, direct, contingent or indirect,
made any change in its capital stock, made any material change in
its short-term debt or funded debt or repurchased or otherwise
acquired any of the Company's capital stock; and (d) the Company
has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the First Closing Date
or Second Closing Date; and
(6) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus and
except as disclosed in or contemplated by the Prospectus, the
Company has not sustained a material loss or damage by strike,
fire, flood, windstorm, accident or other calamity (whether or
not insured).
(iv) On the date this Agreement is executed and also on the
First Closing Date and the Second Closing Date a letter addressed to
you, as Representatives of the Underwriters, from Price Waterhouse
LLP, independent accountants, the first one to be dated the date of
this Agreement, the second one to be dated the First Closing Date and
the third one (in the event of a Second Closing) to be dated the
Second Closing Date, in form and substance satisfactory to you.
20
(v) On each of the First Closing Date and the Second Closing
Date the Representatives shall have received a written certificate
executed by the Attorney-in-Fact of each Selling Stockholder, dated as
of such Closing Date, to the effect that:
(1) the representations, warranties and covenants of
such Selling Stockholder set forth in this Agreement are true and
correct with the same force and effect as though expressly made by
such Selling Stockholder on and as of such Closing Date; and
(2) such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(vi) On the date hereof, the Company and the Selling
Stockholders shall have furnished for review by the Representatives
copies of the Powers of Attorney and Custody Agreements executed by
each of the Selling Stockholders and such further information,
certificates and documents as the Representatives may reasonably
request.
(vii) On or before the First Closing Date, letters from
each holder of 100,000 shares or more of the Company's Common Stock
and each director and officer of the Company, in form and substance
satisfactory to you, confirming that for the Release Period such
person will not directly or indirectly offer to sell, pledge, sell or
contract to sell or otherwise dispose of any shares of Common Stock or
any right to acquire such shares or securities convertible into or
exchangeable for any shares of Common Stock without the prior written
consent of ▇▇▇▇▇▇▇▇▇▇ Securities, which consent may be withheld at the
sole discretion of ▇▇▇▇▇▇▇▇▇▇ Securities.
(viii) The Common Stock shall have been approved for
quotation as a national market system security on The Nasdaq Stock
Market upon notice of issuance.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters. The Company
shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to the Representatives or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by the Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company without liability on the part of any Underwriter
except for the expenses to be paid or reimbursed by the Company pursuant to
Sections 6 and 8 hereof and except to the extent provided in Section 10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses. Notwithstanding
---------------------------------------
any other provisions hereof, if this Agreement shall be terminated by you
pursuant to Section 7 or Section 13 hereof, or if the sale to the Underwriters
of the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Common Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph and telefax charges and telephone charges relating
directly to the offering contemplated by the Prospectus. Any such termination
shall
21
be without liability of any party to any other party except that the provisions
of this Section, Section 6 and Section 10 shall at all times be effective and
shall apply.
SECTION 9. Effectiveness of Registration Statement. You and the
---------------------------------------
Company will use your and its best efforts to cause the Registration Statement
to become effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 10. Indemnification.
---------------
(a) Each of the Company and each of the 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
the Act against any losses, claims, damages, liabilities or expenses, joint
or several, to which such Underwriter or such controlling person may become
subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company or the
Selling Stockholders contained herein or any failure of the Company or the
Selling Stockholders to perform their respective obligations hereunder or
under law; and will reimburse each Underwriter and each such controlling
person for any legal and other expenses as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
Company and the Selling Stockholders will not be liable in any such case to
the extent that any such loss, claim, damage, liability or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with the information furnished
to the Company and the Selling Stockholders pursuant to Section 3 hereof;
and provided further that the foregoing indemnity agreement with respect to
any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages
or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such person at
or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or
liabilities; and provided, further, that each Other Selling Stockholder
will be liable in any such case only to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with information furnished to the Company
by such Other Selling Stockholder in its capacity as a Selling Stockholder
or arises out of or is based in whole or in part on any inaccuracy in the
representations and warranties of such Other Selling Stockholder contained
herein or any failure of such Other Selling Stockholder to perform its
obligations hereunder or under law. In addition to its other obligations
under this Section 10(a), the Company and the Selling Stockholders agree
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out
22
of or based upon any statement or omission, or any alleged statement or
omission, or any inaccuracy in the representations and warranties of the
Company or the Selling Stockholders herein or failure to perform its
obligations hereunder, all as described in this Section 10(a), it will
reimburse each Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety
and enforceability of the Company's and the Selling Stockholders'
obligations to reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company and the Selling Stockholders, as
applicable, together with interest, compounded daily, determined on the
basis of the prime rate (or other commercial lending rate for borrowers of
the highest credit standing) announced from time to time by Bank of America
NT&SA, San Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30 days
of a request for reimbursement, shall bear interest at the Prime Rate from
the date of such request. This indemnity agreement will be in addition to
any liability which the Company and the Selling Stockholders may otherwise
have.
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Stockholders and each person, if any,
who controls the Company or any Selling Stockholder within the meaning of
the Act, against any losses, claims, damages, liabilities or expenses to
which the Company, or any such director, officer, Selling Stockholder or
controlling person may become subject, under the Act, the Exchange Act, or
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
the information furnished to the Company and the Selling Stockholders
pursuant to Section 3 hereof; and will reimburse the Company, or any such
director, officer, Selling Stockholder or controlling person for any legal
and other expense as such expenses are reasonably incurred by the Company,
or any such director, officer, Selling Stockholder or controlling person in
connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action. In addition to
its other obligations under this Section 10(b), each Underwriter severally
agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission,
described in this Section 10(b) which relates to information furnished to
the Company and the Selling Stockholders pursuant to Section 3 hereof, it
will reimburse the Company and the Selling Stockholders (and, to the extent
applicable, each officer, director, or controlling person) on a quarterly
basis for all reasonable legal or other expenses incurred in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Underwriters'
obligation to reimburse the Company and the Selling Stockholders
23
(and, to the extent applicable, each officer, director, or controlling
person) for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to
have been improper, the Company and the Selling Stockholders (and, to the
extent applicable, each officer, director, or controlling person) shall
promptly return it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company or its officers,
directors, Selling Stockholders or controlling persons, as the case may be,
within 30 days of a request for reimbursement, shall bear interest at the
Prime Rate from the date of such request. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement
contained in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends
to seek indemnity from an indemnifying party, the indemnifying party will
be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting
the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses
of more than one separate counsel, approved by the Representatives in the
case of paragraph (a), representing the indemnified parties who are parties
to such action) or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 10 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Selling
Stockholders and the Underwriters from the offering of the Common Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the Selling Stockholders and the Underwriters in
connection with the
24
statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company,
the Selling Stockholders and the Underwriters shall be deemed to be in the
same proportion, in the case of the Company as the total price paid to the
Company for the Common Shares sold by it to the Underwriters (net of
underwriting commissions but before deducting expenses), in the case of
each Selling Stockholder as the total price paid to that Selling
Stockholder for the Common Shares sold by him, her or it to the
Underwriters (net of the underwriting commission but before deducting
expenses) and in the case of each Underwriter as the underwriting
commissions received by it bears to the total of such amounts paid to the
Company and the Selling Stockholders and received by the Underwriters as
underwriting commissions. The relative fault of the Company, the Selling
Stockholders and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
or the inaccurate or the alleged inaccurate representation and/or warranty
relates to information supplied by the Company, the Selling Stockholders or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subparagraph (c) of
this Section 10, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or
claim. The provisions set forth in subparagraph (c) of this Section 10 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this subparagraph (d); provided, however,
that no additional notice shall be required with respect to any action for
which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to
this Section 10 were determined solely 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 in this subparagraph (d). Notwithstanding the
provisions of this Section 10, no Underwriter shall be required to
contribute any amount in excess of the amount of the total underwriting
commissions received by such Underwriter in connection with the Common
Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11 of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 10 are several in proportion to their
respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections
10(a) and 10(b) hereof, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Constitution
and Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does
not make such designation of an arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to
do so. Such an arbitration would be limited to the operation of the interim
reimbursement provisions contained in Sections 10(a) and 10(b) hereof and
would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 10(a) and 10(b) hereof.
(f) Notwithstanding anything herein to the contrary, no Selling
Stockholder shall be liable under this Agreement or otherwise, whether for
indemnity, contribution, reimbursement of expenses, breaches of
representations or warranties, failure to comply with covenants or any
other reason, in an aggregate amount that exceeds the net proceeds received
by such Selling Stockholder hereunder from the sale of its shares.
SECTION 11. Default of Underwriters. It shall be a condition to this
-----------------------
Agreement and the obligation of the Company to sell and deliver the Common
Shares hereunder, and of each Underwriter to purchase the Common Shares in the
manner as described herein, that, except as hereinafter in this paragraph
25
provided, each of the Underwriters shall purchase and pay for all the Common
Shares agreed to be purchased by such Underwriter hereunder upon tender to the
Representatives of all such shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares which such defaulting Underwriter or Underwriters agreed
but failed to purchase on such Closing Date does not exceed 10% of the total
number of Common Shares which the Underwriters are obligated to purchase on such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and the aggregate
number of Common Shares with respect to which such default occurs is more than
the above percentage and arrangements satisfactory to the Representatives and
the Company for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company except
for the expenses to be paid by the Company pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 12. Effective Date. This Agreement shall become effective
--------------
immediately as to Sections 6, 8, 10, 12, 13 and 14 and, as to all other
provisions, (i) if at the time of execution of this Agreement the Registration
Statement has not become effective, at 2:00 P.M., California Time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii) if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 2:00 P.M., California Time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by notice
to the Company or by release of any of the Common Shares for sale to the public.
For the purposes of this Section 12, the Common Shares shall be deemed to have
been so released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 13. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to
you or by you by notice to the Company and the Selling Stockholder at any
time prior to the time this Agreement shall become effective as to all its
provisions, and any such termination shall be without liability on the part
of the Company and the Selling Stockholders to any Underwriter (except for
the expenses to be paid or reimbursed by the Company and the Selling
Stockholders pursuant to Sections 6 and 8 hereof and except to the extent
provided in Section 10 hereof) or of any Underwriter to the Company and the
Selling Stockholders (except to the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company and the Selling Stockholders
(i) if additional material governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New
26
York Stock Exchange or on the American Stock Exchange or in the over the
counter market by the NASD, or trading in securities generally shall have
been suspended on either such Exchange or in the over the counter market by
the NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred
or shall have accelerated or escalated to such an extent, as, in the
judgment of the Representatives, to affect adversely the marketability of
the Common Shares, (iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material respect any statement
or information contained in the Registration Statement or Prospectus or
which is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or information
contained therein not misleading in any material respect, or (iv) if there
shall be any action, suit or proceeding pending or threatened, or there
shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or the
transactions contemplated by this Agreement, which, in the reasonable
judgment of the Representatives, may materially and adversely affect the
Company's business or earnings and makes it impracticable or inadvisable to
offer or sell the Common Shares. Any termination pursuant to this
subsection (b) shall be without liability on the part of any Underwriter to
the Company or the Selling Stockholders or on the part of the Company or
the Selling Stockholders to any Underwriter (except for expenses to be paid
or reimbursed by the Company and the Selling Stockholders pursuant to
Sections 6 and 8 hereof and except to the extent provided in Section 10
hereof.
SECTION 14. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 15. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Representatives shall be mailed, delivered, telefaxed, or
telegraphed and confirmed to you at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, Two Embarcadero Place, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and if sent to the Company shall be mailed,
delivered or telegraphed and confirmed to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, with a copy to Fenwick
& West LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇ III; and if sent to the Selling Stockholders shall be mailed,
delivered, telefaxed, or telegraphed and confirmed to the Custodian of the
Selling Stockholders at BankBoston, N.A., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ with a copy to Fenwick & West
LLP. The Company or you may change the address for receipt of communications
hereunder by giving notice to the others.
SECTION 16. Successors. This Agreement will inure to the benefit of
----------
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 11 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 10, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 17. Representation of Underwriters. You will act as
------------------------------
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this
27
Agreement taken by you jointly or by ▇▇▇▇▇▇▇▇▇▇ Securities, as Representatives,
will be binding upon all the Underwriters.
SECTION 18. Partial Unenforceability. The invalidity or
------------------------
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 19. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of New York.
SECTION 20. General. This Agreement constitutes the entire agreement
-------
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you.
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement between the Company and the several Underwriters
including you, all in accordance with its terms.
Very truly yours,
ONSALE, INC.
By:
-------------------------------------
S. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
President
SELLING STOCKHOLDERS
By:
-------------------------------------
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
BT ALEX. ▇▇▇▇▇ INCORPORATED
BANCAMERICA ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
By: ________________________________________
Managing Director
29
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.............. ________
BT Alex. ▇▇▇▇▇ Incorporated......................... ________
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇...................... ________
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC............................... ________
TOTAL............................................ ========
A-1
SCHEDULE B
Number of Firm Maximum Number of
Significant Common Shares Optional Common Shares
Selling Stockholders to be Sold to be Sold
----------------------- -------------- ----------------------
S. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 427,500 142,500
A-2
SCHEDULE C
Number of Firm Maximum Number of
Common Shares Optional Common Shares
Selling Stockholders to be Sold to be Sold
----------------------- -------------- ----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 40,000
Fenwick and West 25,000
▇▇▇▇▇▇ ▇▇▇▇▇ 10,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 10,000
▇▇▇▇ ▇▇▇▇▇ 10,000
▇▇▇▇▇▇ ▇▇▇▇▇ 28,200 31,800
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 10,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 20,000
Company Shares 1,709,300 170,700
--------- ----------------------
TOTAL 2,300,000 202,500
========= ======================
A-3