ENGINEERING ANIMATION, INC.
1,429,000 Shares of Common Stock
Underwriting Agreement
June __, 1997
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇ & Company
As Representatives
of the Several Underwriters
Listed in Schedule I hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Engineering Animation, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters listed in Schedule I
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives") an aggregate of 870,000 shares of common stock, par value
$.01 per share, of the Company (the "Underwritten Company Shares") and the
Selling Stockholders listed on Schedule II hereto (the "Selling Stockholders")
propose to sell to the several Underwriters an aggregate of 559,000 shares of
common stock, par value $.01 per share, of the Company (the "Selling
Stockholders Underwritten Shares" and together with the Underwritten Company
Shares, the "Underwritten Shares"), and for the sole purpose of covering over-
allotments in connection with the sale of the Underwritten Shares, at the option
of the Underwriters, the Company proposes to sell to the several Underwriters up
to an additional 130,000 shares of common stock, par value $.01 per share, of
the Company (the "Company Option Shares") and certain of the Selling
Stockholders propose to sell to the Underwriters up to an additional 84,350
shares of common stock, par value $.01 per share, of the Company (the "Selling
Stockholders Option Shares" and together with the Company Option Shares, the
"Option Shares"). The Underwritten Shares and the
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Option Shares are herein referred to as the "Shares". The shares of common stock
of the Company, $.01 par value per share, is herein referred to as the "Common
Stock". The Common Stock, including the Shares, will have attached thereto
rights (the "Rights") to purchase one one-hundredth of a share of the Company's
Series A Junior Participating Preferred Stock for a price of $50.00 per one
hundredth of a share.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares and Rights. The
registration statement as amended at the time when it shall become effective,
or, if a post-effective amendment is filed with respect thereto, as amended by
such post-effective amendment at the time of its effectiveness, including in
each case information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement", and the
prospectus in the form first used to confirm sales of Shares is referred to in
this Agreement as the "Prospectus".
The Company and each Selling Stockholder hereby agree, severally and not
jointly, with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Company Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Company Shares set forth
opposite such Underwriter's name in Schedule I hereto at a purchase price per
share (the "Purchase Price") of $____. In addition, the Company agrees to sell
the Company Option Shares to the several Underwriters as hereinafter provided,
and the Underwriters on the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, shall have the
option to purchase, severally and not jointly, from the Company up to an
aggregate of 130,000 Company Option Shares at the Purchase Price,
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for the sole purpose of covering over-allotments (if any) in the sale of
Underwritten Shares by the several Underwriters.
Each Selling Stockholder agrees to sell to the several Underwriters as
hereinafter provided the number of Selling Stockholders Underwritten Shares set
forth opposite such Selling Stockholder's name in Schedule II hereto, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase,
severally and not jointly, from the Selling Stockholders the respective number
of Underwritten Selling Stockholders Shares set forth opposite such
Underwriter's name in Schedule I hereto at the Purchase Price. In addition,
each Selling Stockholder agrees to sell to the several Underwriters as
hereinafter provided the number of Selling Stockholders Option Shares set forth
opposite such Selling Stockholder's name in Schedule II hereto, and the
Underwriters on the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, shall have the
option to purchase, severally and not jointly, from the Selling Stockholders up
to an aggregate of 84,350 Selling Stockholders Option Shares at the Purchase
Price, for the sole purpose of covering over-allotments (if any) in the sale of
Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
aggregate number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 11 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company and the Selling Stockholders by the several
Underwriters, subject, however, to such adjustments to eliminate any fractional
Shares as the Representatives in their sole discretion shall make. If any
Option Shares are to be purchased, the number of Option Shares to be sold by the
Company and by each Selling Stockholder shall be the number of Option Shares
which bears the same ratio to the aggregate number of Option Shares being
purchased as, in the case of the Company, the number of Company Option Shares,
and in the case of each Selling Stockholder, the number of Selling Stockholders
Option Shares set forth opposite
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the name of such Selling Stockholder in Schedule II hereto, bears to the
aggregate number of Option Shares being offered by the Company and the Selling
Stockholders, subject, however, to such adjustments to eliminate any fractional
Shares as the Representatives in their sole discretion shall make and further
subject, in the case of the Company, to the maximum number of Company Option
Shares and, in the case of each Selling Stockholder, to the number of Selling
Stockholders Option Shares set forth opposite the name of such Selling
Stockholder in Schedule II hereto.
The Underwriters may exercise the option to purchase the Option Shares at
any time (but no more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Representatives to the
Company and to each Selling Stockholder. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised and
the date and time when the Option Shares are to be delivered and paid for which
may be the same date and time as the Closing Date (as hereinafter defined) but
shall not be earlier than the Closing Date nor later than the tenth full
Business Day (as hereinafter defined) after the date of such notice (unless such
time and date are postponed in accordance with the provisions of Section 11
hereof). Any such notice shall be given at least two Business Days prior to the
date and time of delivery specified therein.
2. The Company and the Selling Stockholders understand that the
Underwriters intend (i) to make a public offering of the Shares as soon after
the Registration Statement and this Agreement have become effective as in the
judgment of the Representatives is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
3. Payment for the Company Underwritten Shares and the Company Option
Shares, if any, shall be made to the Company or to its order and payment for the
Selling Stockholders Underwritten Shares and the Selling Stockholders Option
Shares, if any, shall be made to each Selling Stockholder or to its order, in
each case, by wire transfer of immediately available funds at the office of
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ at 9:00 A.M., Chicago time, in the case of the Underwritten Shares, on
June __, 1997, or at such
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other time on the same or such other date, not later than the fifth Business Day
thereafter, as the Representatives, the Company and the Selling Stockholders may
agree upon in writing or, in the case of the Option Shares, on the date and time
specified by the Representatives in the written notice of the Underwriters'
election to purchase such Option Shares. The time and date of such payment for
the Underwritten Shares are referred to herein as the Closing Date and the time
and date for such payment for the Option Shares, if other than the Closing Date,
are herein referred to as the Additional Closing Date. As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company or the Selling
Stockholders, as the case may be. The certificates for the Shares will be made
available for inspection and packaging by the Representatives at the office of
▇.▇. ▇▇▇▇▇▇ Securities, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ not later than
12:00 noon, New York time, on the Business Day prior to the Closing Date or the
Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to
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make the statements therein, in light of the circumstances under which they
were made, not misleading; provided that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as amended,
or supplemented at the Closing Date, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the foregoing
representations and warranties shall not apply to statements or omissions
in the Registration Statement or the Prospectus made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use therein;
(d) the financial statements, and the related notes thereto, included
in the Registration Statement and the Prospectus present fairly the
financial position of the Company as of the dates indicated and the results
of its operations and changes in its cash flows for the periods specified;
and said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis, and
the supporting schedules
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included in the Registration Statement present fairly the information
required to be stated therein;
(e) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company otherwise than as set forth or contemplated in
the Prospectus; and except as set forth or contemplated in the Prospectus
the Company has not entered into any transaction or agreement (whether or
not in the ordinary course of business) material to the Company;
(f) 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 power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company;
(g) the Company has no Significant Subsidiaries, as such term is
defined in Rule 405 under the Securities Act;
(h) this Agreement has been duly authorized, executed and delivered by
the Company and constitutes the valid and binding agreement of the Company,
except as enforcement thereof may be limited by fraudulent conveyance,
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by general equitable principles
and except as rights to indemnity and contribution hereunder may be limited
by applicable law;
(i) the capitalization of the Company is as set forth in the
Registration Statement and the Prospectus under the caption
"Capitalization"; the authorized capital stock of
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the Company conforms as to legal matters to the description thereof set
forth in the Registration Statement and the Prospectus, and all of the
outstanding shares of capital stock of the Company, including the Shares to
be sold by the Selling Stockholders to the Underwriters hereunder, have
been duly authorized and validly issued, are fully-paid and non-assessable
and are not subject to any preemptive or similar rights; and, except as
described in or expressly contemplated by the Prospectus, there are no
outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
the Company, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of
the Company, any such convertible or exchangeable securities or any such
rights, warrants or options;
(j) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and, when delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will have been
duly issued and will be fully paid and non-assessable and will conform to
the descriptions thereof in the Prospectus; and the issuance of the Shares
is not subject to any preemptive or similar right;
(k) the Rights attached or to be attached, as the case may be, to the
Shares have been duly authorized and, when the Shares have been duly and
validly issued in accordance with the terms with this Agreement will have
been validly issued;
(l) the Company is not, or with the giving of notice or lapse of time
or both would not be, in violation of or in default under, its Certificate
of Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which it or any of its properties is bound, except for violations and
defaults which individually and in the aggregate are not material to the
Company; the issue and sale of the Shares and the performance by the
Company of its obligations under this Agreement and the consummation of the
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transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company
is subject, nor will any such action result in any violation of the
provisions of the Certificate of Incorporation or the By-Laws of the
Company or any applicable law or statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Company or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions contemplated
by this Agreement, except such consents, approvals, authorizations,
registrations or qualifications as have been obtained under the Securities
Act and as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters;
(m) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending or, to the knowledge of
the Company, threatened to which the Company is or may be a party or to
which any property of the Company is or may be the subject which, if
determined adversely to the Company, could individually or in the aggregate
reasonably be expected to have a material adverse effect on the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described
as required;
(n) the Company has good and marketable title in fee simple to all
items of real property and good and marketable
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title to all personal property owned by it, in each case free and clear of
all liens, encumbrances and defects except such as are described or
referred to in the Prospectus or such as do not materially affect the value
of such property and do not interfere with the use made or proposed to be
made of such property by the Company; and any real property and buildings
held under lease by the Company are held by it under valid, existing and
enforceable leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company;
(o) no relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
by the Securities Act to be described in the Registration Statement and the
Prospectus which is not so described;
(p) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Shares;
(q) the Company owns or possesses, or can acquire on reasonable terms,
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names presently employed by it in connection with the business now operated
by it, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a any material adverse
effect on the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company; and
(r) the Company is not, and after completion of the sale of the Shares
contemplated hereby, will not be, an
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"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
5. Each Selling Stockholder, severally and not jointly, represents and
warrants to each Underwriter that:
(a) the execution and delivery of this Agreement, the sale of such
Selling Stockholders Underwritten Shares and Selling Stockholders Option
Shares and the performance by such Selling Stockholder of its obligations
under this Agreement, and the consummation of the transactions contemplated
herein will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument to which
such Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the property or assets of such Selling Stockholder
is subject;
(b) such Selling Stockholder has and will have at the Closing Date and
the Additional Closing Date good and marketable title to the Shares to be
sold by such Selling Stockholder hereunder, free and clear of any pledge,
lien, security interest, encumbrance, claim or equity other than pursuant
to this Agreement; such Selling Stockholder has full right, power and
authority to sell, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder; and upon delivery of the Shares to be sold
by such Selling Stockholder hereunder and payment of the Purchase Price
therefor as herein contemplated, each of the Underwriters will receive good
and marketable title to the Shares purchased by it from such Selling
Stockholder, free and clear of any pledge, lien security interest,
encumbrance, claim or equity;
(c) such Selling Stockholder has duly executed and delivered in the
form heretofore furnished to the
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Underwriters a Power of Attorney with [▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇] and [▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇], as attorneys-in-fact (each, an "Attorney-in-Fact"), and a
Custody Agreement with [First Chicago Trust Company of New York], as
custodian (the "Custodian") and such agreements are valid and binding
agreements of such Selling Stockholder enforceable against such Selling
Stockholder in accordance with their terms; the Attorneys-in-Fact, or
either of them, are authorized to execute and deliver this Agreement on
behalf of such Selling Stockholder, to determine the Purchase Price to be
paid by the Underwriters to such Selling Stockholder within the limits, if
any, specified in the Power of Attorney, to authorize the delivery of the
Shares to be sold by such Selling Stockholder hereunder, to accept payment
therefor, and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement;
(d) all authorizations, approvals and consents necessary for the
execution and delivery by such Selling Stockholder of the Power of Attorney
and the Custody Agreement, the execution and delivery by or on behalf of
such Selling Stockholder of this Agreement, and the sale and delivery of
the Shares to be sold by such Selling Stockholder hereunder (except such
consents, approvals, authorizations, registrations or qualifications as may
be required under the Securities Act and the state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters) have been obtained and are in full force and effect; and such
Selling Stockholder has the full right, power and authority to enter into
this Agreement and such Power of Attorney and Custody Agreement and to
sell, transfer and deliver the Shares to be sold by such Selling
Stockholder;
(e) all information furnished to the Company by such Selling
Stockholder or on such Selling Stockholder's behalf for use in connection
with the preparation of the Registration Statement and Prospectus
(including, without limiting the generality of the foregoing, all
representations and warranties of such Selling Stockholder in the Power of
Attorney) is true and correct and does not omit to state any material fact
necessary to be stated therein in order to make such information not
misleading;
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(f) such Selling Stockholder has no reason to believe that any of the
representations and warranties of the Company set forth in Section 4 of
this Agreement is or will be untrue or inaccurate in any material respect;
(g) such Selling Stockholder is not prompted to sell the Shares to be
sold by such Selling Stockholder hereunder by any information concerning
the Company which is not set forth in the preliminary prospectus;
(h) such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(i) certificates in negotiable form for all Shares to be sold
hereunder by such Selling Stockholder have been placed in custody with the
Custodian for the purpose of effecting delivery hereunder; and
(j) any statements in the Registration Statement and the Prospectus,
insofar as they relate to such Selling Stockholder, do not and will not
contain 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.
6. The Company covenants and agrees with the several Underwriters as
follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file
the final Prospectus with the Commission within the time periods specified
by Rule 424(b) and Rule 430A under the Securities Act;
(b) to deliver, at the expense of the Company, to the Representatives
three signed copies of the Registration Statement (as originally filed) and
each amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement
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(as originally filed) and each amendment thereto, in each case without
exhibits and, during the period mentioned in paragraph (e) below, to each
of the Underwriters as many copies of the Prospectus (including all
amendments and supplements thereto) as the Representatives may reasonably
request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representatives
a copy of the proposed amendment or supplement for review and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(d) to advise the Representatives promptly, and to confirm such advice
in writing (i) when the Registration Statement shall become effective, (ii)
when any amendment to the Registration Statement shall have become
effective, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or the initiation or threatening of any proceeding for that purpose and (v)
of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and to use its best efforts to prevent the issuance of any such
stop order or notification and, if issued, to obtain as soon as possible
the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
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comply with law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addresses
the Representatives will furnish to the Company) to which Shares may have
been sold by the Representatives on behalf of the Underwriters and to any
other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives
shall reasonably request and to continue such qualification in effect so
long as reasonably required for distribution of the Shares and to pay all
fees and expenses (including fees and disbursements of counsel to the
Underwriters) reasonably incurred in connection with such qualification;
provided that the Company shall not be required to file a general consent
to service of process in any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a
period of at least twelve months beginning with the first fiscal quarter of
the Company occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
(i) for a period of 180 days after the date of the initial public
offering of the Shares not to (i) offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock of the Company or any
securities convertible
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into or exercisable or exchangeable for shares of Common Stock of the
Company without the prior written consent of the Representatives, other
than the Shares to be sold hereunder and any shares of common stock of the
Company issued upon the exercise of options granted under existing employee
stock option plans or (ii) file a registration statement with the
Commission relating to shares of Common Stock of the Company issuable upon
exercise or exchange of securities convertible into shares of Common Stock
of the Company, in either case without the prior written consent of the
Representatives;
(j) to not take, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares;
(k) to use its best efforts to have the shares of Common Stock which
it agrees to sell under this Agreement listed, subject to notice of
issuance, on the Nasdaq National Market;
(l) to use the net proceeds for the sale of the Shares to be sold by
it hereunder substantially in accordance with the description set forth in
the Prospectus under "Use of Proceeds"; and
(m) to pay all costs and expenses incident to the performance of its
obligations hereunder, including without limiting the generality of the
foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution and delivery of the Shares, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus
(including in each case all exhibits, amendments and supplements thereto),
(iii) incurred in connection with the registration or qualification of the
Shares under the laws of such jurisdictions as the Representatives may
designate (including reasonable fees and disbursements of counsel for the
Underwriters), (iv) in connection with the listing of the Shares on any
stock exchange, (v) related to the filing with, and clearance of
-17-
the offering by, the National Association of Securities Dealers, Inc.
(including the reasonable fees and disbursements of counsel for the
Underwriters) and (vi) in connection with the printing (including word
processing and duplication costs) and delivery of this Agreement, the
Preliminary and Supplemental Blue Sky Memoranda and the furnishing to the
Underwriters and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided.
The provisions of this paragraph (m) shall not affect any agreement which
the Company and any of the Selling Stockholders may make for the allocation
or sharing of such expenses and costs.
7. (a) Each Selling Stockholder, severally and not jointly, covenants and
agrees (except ▇▇▇▇▇ ▇▇▇▇▇▇▇, who covenants and agrees with respect to each
of the following except Section 7(a) (v) (B)) with the several Underwriters
as follows:
(i) to cooperate to the extent necessary to cause the
Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time;
(ii) to pay all federal and other taxes, if any, on the transfer
or sale of the Shares being sold by the Selling Stockholder to the
Underwriters;
(iii) to do or perform all things required to be done or
performed by such Selling Stockholder prior to the Closing Date or any
Additional Closing Date, as the case may be, to satisfy all conditions
precedent to the delivery of the Shares by such Selling Stockholder
pursuant to this Agreement;
(iv) not to not take, directly or indirectly, any action designed
to or that might reasonably be expected to case or result in
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares; and
(v) to advise the Representatives promptly, and if requested by
any Representative, will confirm such
-18-
advice in writing during any period during which an Underwriter is
required to deliver a Prospectus in connection with the offering
contemplated hereby, of (A) any change in the Company's general
affairs, business, prospects, management, financial position,
stockholders' equity or results of operations or of any change in the
information relating to such Selling Stockholder, or (B) the happening
of any event, which change or event makes any statement of a material
fact made in the Registration Statement or the Prospectus untrue or
which requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to state a material
fact required by the Securities Act to be stated therein or necessary
in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus in order to comply
with the Securities Act or any other law; and
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇ ▇.
▇▇▇▇▇▇▇, each a Selling Stockholder, severally and not jointly, covenants
and agrees with the several Underwriters for a period of 180 days after the
date of the initial public offering of the Shares not to offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock of the
Company or any securities convertible into or exercisable or exchangeable
for shares of Common Stock of the Company without the prior written consent
of the Representatives, other than the Shares to be sold hereunder.
8. The several obligations of the Underwriters hereunder to purchase the
Underwritten Shares are subject to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than
5:00 P.M., New York City time, on the date hereof; and no stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such
-19-
purpose shall be pending before or threatened by the Commission; and all
requests for additional information shall have been complied with to the
satisfaction of the Representatives;
(b) the representations and warranties of the Company and of each
Selling Stockholder contained herein are true and correct on and as of the
Closing Date as if made on and as of the Closing Date and each of the
Company and each Selling Stockholder shall have complied with all
agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date;
(c) since the respective dates as of which information is given in the
Prospectus there shall not have been any material adverse change or any
development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company
otherwise than as set forth or contemplated in the Prospectus, the effect
of which in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares on the terms and in the manner contemplated in the Prospectus;
(d) the Representatives shall have received on and as of the Closing
Date a certificate of an executive officer of the Company satisfactory to
the Representatives to the effect set forth in subsections (a) and (b) of
this Section and to the further effect that there has not occurred any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or results
of operations of the Company from that set forth or contemplated in the
Registration Statement;
(e) the Representatives shall have received on and as of the Closing
Date a certificate of [▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇] or [▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇], as
Attorney-in-Fact for the Selling Stockholders, to the effect that the
representations and warranties of each Selling Stockholder contained herein
are
-20-
true and correct on and as of the Closing Date as if made on and as of the
Closing Date and each Selling Stockholder shall have complied with all
agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date;
(f) ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇, special counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
(i) 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 power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a material adverse effect on the Company;
(iii) the Company has no Significant Subsidiaries, as such term
is defined in Rule 405 under the Securities Act;
(iv) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or, to the best
of such counsel's knowledge, threatened to which the Company is or may
be a party or to which any property of the Company is or may be the
subject which, if determined adversely to the Company, could
individually or in the aggregate reasonably be expected to have a
material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company; to the best of
-21-
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and
such counsel does not know of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus which are not filed or described as required;
(v) this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement to the
Company, except as enforcement thereof may be limited by fraudulent
conveyance, bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally or by general
equitable principles and except as rights to indemnity and
contribution hereunder may be limited by applicable law;
(vi) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(vii) the shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be sold by the Company have
been duly authorized and are validly issued, fully paid and non-
assessable;
(viii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when delivered to and paid for the
Underwriters in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable and the issuance of the
Shares is not subject to any preemptive or similar rights;
(ix) the Rights attached or to be attached to the Shares,as the
case may be, have been duly authorized and, when the Shares have been
duly and validly issued in accordance with the terms with this
Agreement, will have been validly issued;
-22-
(x) the Company is not, or with the giving of notice or lapse of
time or both would not be, in violation of or in default under, its
Certificate of Incorporation or By-Laws or any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company is a party or by which it or any
of its properties is bound, except for violations and defaults which
individually and in the aggregate are not material to the Company; the
issue and sale of the Shares and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, nor will any such
action result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties;
(xi) no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issue and sale of the Shares or the consummation of
the other transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or qualifications
as have been obtained under the Securities Act and as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(xii) the statements in the Prospectus under "Proprietary
Rights," "Facilities," "Legal Proceedings," "Description of Capital
Stock" and "Underwriting", and in the Registration Statement in
-23-
Items 14 and 15, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents or proceedings;
(xiii) the Company is not, and after completion of the sale of
the Shares contemplated hereby, will not be, an "investment company"
as such term is defined in the Investment Company Act of 1940, as
amended; and
(xiv) such counsel (A) is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements
thereto (except for the financial statements included therein as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and (B)
believes that (except for the financial statements included therein as
to which such counsel need express no belief) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that the Prospectus, as amended or supplemented, if
applicable, does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinions, such counsel may rely (A) as to matters of law
involving the application of the laws of the State of New York upon the
assumption that such laws are identical to the laws of the State of Illinois;
(B) as to matters involving the application of laws other than the laws of the
United States and the States of New York, Illinois and Delaware, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; (C) as to matters of
fact, to
-24-
the extent such counsel deems proper, on certificates of responsible officers of
the Company and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company. The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are justified
in relying thereon. With respect to the matters to be covered in subparagraph
(xiv) above counsel may state their opinion and belief is based upon their
participation in the preparation of the Registration Statement and the
Prospectus and any amendment or supplement thereto and review and discussion of
the contents thereof but is without independent check or verification except as
specified.
(g) [▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇], special counsel for the Selling
Stockholders, shall have furnished to the Representatives their written
opinion, dated the Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) this Agreement, the Power of Attorney and Custody Agreement
have been duly authorized, executed and delivered by or on behalf of
each Selling Stockholder and are valid and binding agreements of each
Selling Stockholder enforceable against each Selling Stockholder in
accordance with their terms;
(ii) to the knowledge of such counsel, the Selling Stockholders
have full right, power and authorization, and any approval required by
law, to sell, assign, transfer and deliver good and marketable title
to Shares which the Selling Stockholders have agreed to sell pursuant
to this Agreement;
(iii) the execution and delivery of this Agreement, the Power of
Attorney and Custody Agreement by the Selling Stockholders and the
consummation of the transactions contemplated hereby and thereby will
not conflict with, violate, result in a breach of or constitute a
default under the terms or provisions of any agreement, indenture,
mortgage or other instrument known to such counsel to which any
Selling Stockholder
-25-
is a party or by which any of them or any of their assets or property
is bound, or any court order or decree or any law, rule or regulation
known by such counsel to be applicable to any Selling Stockholder or
to any of the property or assets of any Selling Stockholder; and
(iv) to the best of its knowledge and information, each Selling
Stockholder has good and marketable title to the Shares to be sold by
such Selling Stockholder hereunder and full power, right and authority
to sell such Shares, and upon the delivery of and payment for the
Shares as herein contemplated, each of the Underwriters will receive
good and marketable, title to the Shares purchased by it from such
Selling Stockholder, free and clear of any mortgage, pledge, lien,
security interest, encumbrance, claim or equity. In rendering such
opinion, counsel may assume that the Underwriters are without notice
of any defect in the title of such Selling Stockholder to the Shares
being purchased from such Selling Stockholder;
(h) on the Effective Date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date, Ernst & Young LLP
shall have furnished to you letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, containing statements
and information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus;
(i) the Representatives shall have received on and as of the Closing
Date an opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Underwriters, with
respect to the due authorization and valid issuance of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
-26-
(j) the Shares shall have been approved for listing on the NASDAQ
National Market, subject to official notice of issuance; and
(k) on or prior to the Closing Date the Company shall have furnished
to the Representatives such further certificates and documents as the
Representatives shall reasonably request.
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to satisfaction of the conditions set forth in paragraphs
(a) - (k) above on and as of the Additional Closing Date, except that the
certificates called for by paragraph (d) and (e) above, the opinions called for
by paragraphs (f), (g) and (i) above and the third letter called for by
paragraph (h) above shall be dated the Additional Closing Date.
9. 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 either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use
therein; provided that the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
such losses,
-27-
claims, damages or liabilities purchased Shares if such untrue statement or
omission or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) and, if required by law, a copy of the Prospectus (as so amended or
supplemented) shall not have been furnished to such person at or prior to the
written confirmation of the sale of such Shares to such person.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, each of the Selling Stockholders and each person who controls the
Company or any of the Selling Stockholders within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Selling Stockholders to each
Underwriter, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties
-28-
in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by ▇.▇. ▇▇▇▇▇▇ Securities Inc., any such separate
firm for the Company, its directors, its officers who sign the Registration
Statement and such control persons of the Company shall be designated in writing
by the Company and any such separate firm for the Selling Stockholders shall be
designated in writing by a majority of the Selling Stockholders who are
Indemnified Parties with respect to such action. The Indemnifying Person shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
-29-
If the indemnification provided for in the first and second paragraphs of
this Section 9 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting expenses)
received by the Company and the Selling Stockholders and the total underwriting
discounts and the commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Selling
Stockholders or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation that does not
take account of the equitable considerations referred to in the
-30-
immediately preceding paragraph. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
In no event shall any Selling Stockholder's aggregate liability under this
Section 9 be greater than an amount equal to the net proceeds received by such
Selling Stockholder from the sale of the Shares offered by such Selling
Stockholder pursuant to this Agreement.
The indemnity and contribution agreements contained in this Section 9 are
in addition to any liability which the Indemnifying Persons may otherwise have
to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section 9 and
the representations and warranties of the Company and the Selling Stockholders
set forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Company, its officers or directors or any other person
controlling the Company or the Selling Stockholders and (iii) acceptance of and
payment for any of the Shares.
-31-
10. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company and the Selling Stockholders, if after the execution and delivery
of this Agreement and prior to the Closing Date (or, in the case of the Option
Shares, prior to the Additional Closing Date) (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, and the National
Association of Securities Dealers, Inc., (ii) trading of any securities of or
guaranteed by the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the reasonable judgment of the Representatives, is material and adverse
and which, in the reasonable judgment of the Representatives, makes it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
11. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any post-
effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as the Representatives may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or
-32-
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If on the
Closing Date or the Additional Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares which it or they have
agreed to purchase hereunder on such date, and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives, the Company and the Selling Stockholders
for the purchase of such Shares are not made within 36 hours after such default,
this Agreement (or the obligations of the several Underwriters to purchase the
Option Shares, as the case may be) shall terminate without liability on the part
of any nondefaulting Underwriter, the Company or any Selling Stockholder. In any
such case either you or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Shares, the Additional Closing Date), but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
12. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or any of the
Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company or any of the
Selling Stockholders shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company and each of the Selling Stockholders, jointly and severally, agree
to reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the reasonable fees and expenses of its counsel) reasonably incurred
by the Underwriter in connection with this Agreement or the offering
contemplated hereunder.
-33-
13. This Agreement shall inure to the benefit of and be binding upon the
Company, the Selling Stockholders, the Underwriters, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Shares from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
14. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by ▇.▇. ▇▇▇▇▇▇ Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
▇.▇. ▇▇▇▇▇▇ Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: Syndicate Department.
Notices to the Company or the Selling Stockholders shall be given them at
Engineering Animation, Inc., ISU Research Park, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇); Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, General
Counsel.
15. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
* * *
-34-
If the foregoing is in accordance with your understanding, please sign and
return six counterparts hereof.
Very truly yours,
ENGINEERING ANIMATION, INC.
By:
Title: Chief Executive Officer and
President
Each of the Selling Stockholders
Listed on Schedule II hereto
By:
Attorney-in-Fact
Accepted: June __, 1997
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇ & Company
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: ▇.▇. ▇▇▇▇▇▇ Securities Inc.
Acting on behalf of itself and the
several Underwriters listed in
Schedule I hereto.
By:
Title: Vice President
-35-
SCHEDULE I
Number of
Number of Shares
Shares To Be
To Be Purchased
Purchased from
From the Selling
the Company Stockholders
Underwriter
▇.▇. ▇▇▇▇▇▇ Securities Inc...
▇▇▇▇▇ & Company..............
Total................... 870,000 559,000
-36-
SCHEDULE II
Number of Number of
Selling Selling
Stockholders Stockholders
Underwritten Option
Shares Shares
Selling Stockholder
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇....... 146,066 42,175
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇.. 153,934 42,175
▇▇▇▇ ▇. ▇▇▇▇........... 66,000 0
▇▇▇ ▇. ▇▇▇▇▇▇▇......... 24,000 0
▇▇▇▇▇▇▇ ▇▇▇▇........... 11,000 0
▇▇▇▇▇ ▇▇▇▇▇▇▇.......... 78,000 0
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
Charitable Remainder
Trust................. 18,934 0
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Charitable Remainder
Trust................. 30,000 0
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Charitable Remainder
Trust................. 30,000 0
▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇
Charitable Remainder
Trust................. 20,000 0
------- ------
Total............. 559,000 84,350
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