EXHIBIT 1.1
2,000,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
______________ __, 0000
X.X. Xxxxxxxxx + Co., LLC
DLJdirect Inc.
[________________________]
As representatives of the several Underwriters
x/x X.X. Xxxxxxxxx + Co., LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Aristotle International, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell up to an aggregate of 2,000,000 shares of its
authorized but unissued common stock, par value $0.001 per share (the "Common
Stock") (such shares of Common Stock being herein called the "Underwritten
Stock") to the Underwriters (as hereinafter defined) and to grant the
Underwriters an option (the "Option") to purchase up to an aggregate of 300,000
additional shares of Common Stock (the "Option Stock" and collectively with the
Underwritten Stock, the "Shares"). The Common Stock is more fully described in
the Registration Statement and the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Shares by the several underwriters, for whom you are acting as
representatives, named in Schedule I hereto (herein collectively called the
"Underwriters," which term shall also include any underwriter purchasing Shares
pursuant to Section 3(b) hereof). You represent and warrant that you have been
authorized by each of the Underwriters to enter into this Underwriting Agreement
(this "Agreement") on its behalf and to act for it in the manner herein
provided.
As a part of the offering contemplated by this Agreement, X.X.
Xxxxxxxxx + Co., LLC has agreed to reserve out of the Underwritten Stock up to
200,000 shares (equal to 10% of the total Underwritten Stock) in the aggregate
for sale to designated institutional investors or other parties associated with,
or specified by and reasonably acceptable to, the Company (collectively,
"Participants"), as set forth in the Prospectus under the heading "Plan of
Distribution" (the "Reserved Share Program"). The shares of Common Stock to be
sold by X.X. Xxxxxxxxx + Co., LLC pursuant to the Reserved Share Program (the
"Reserved Shares") will be sold by them pursuant to this Agreement at the
initial public offering price. Any Reserved Share not orally confirmed for
purchase by any Participant as of 7:00 A.M. California time on the first
___________________
/1/ Plus an option to purchase from the Company up to an aggregate of
300,000 additional shares to cover over-allotments.
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day that trading of the Shares commences or paid for by any Participants in
accordance with the customary policies of X.X. Xxxxxxxxx + Co., LLC may be
offered to the public in such lawful manner as X.X. Xxxxxxxxx + Co., LLC shall,
in its sole discretion, deem to be appropriate.
1. Registration Statement. The Company has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-1 (No. 333-37098), including the related preliminary prospectus, for
the registration of the Shares under the Securities Act of 1933, as amended (the
"Act"). Copies of such registration statement and of each amendment thereto, if
any, including the related preliminary prospectus (meeting the requirements of
Rule 430A of the rules and regulations of the Commission) heretofore filed by
the Company with the Commission have been delivered to you.
The term "Registration Statement" as used in this Agreement shall mean
the registration statement described above, including all exhibits and financial
statements, all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, in the form in which it became
effective, and any registration statement filed pursuant to Rule 462(b) of the
rules and regulations of the Commission with respect to the Shares (herein
called a "Rule 462(b) Registration Statement"), and, in the event of any
amendment thereto after the effective date of such Registration Statement
(herein called the "Effective Date"), shall also mean (from and after the
effectiveness of such amendment) such Registration Statement as so amended
(including any Rule 462(b) Registration Statement). The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Shares first
filed with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such
filing is required, as included in the Registration Statement) and, in the event
of any supplement or amendment to such prospectus after the Effective Date,
shall also mean (from and after the filing with the Commission of such
supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term "Preliminary Prospectus" as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the Act,
and no post-effective amendment to the Registration Statement has been filed as
of the date of this Agreement. The Company has caused to be delivered to you
copies of each Preliminary Prospectus and has consented to the use of such
copies for the purposes permitted by the Act.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Underwriters as follows:
(a) Neither the Commission nor any state securities commission
has issued any order preventing or suspending the use of any Preliminary
Prospectus or has instituted or, to the Company's knowledge, threatened to
institute any proceedings with respect to such an order. The Registration
Statement and the Prospectus comply, and on the Closing Date (as hereinafter
defined) and will comply, for the period thirty (30) days following the Closing
Date, in all material respects, with the provisions of the Act and the rules and
regulations of the Commission thereunder (the "Act and Rules"). On the Effective
Date, the Registration Statement did not contain any untrue statement of a
material fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements contained
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therein not misleading. On the Effective Date, the Prospectus did not and, on
the Closing Date and for the period of thirty (30) days from the Closing, will
not contain any untrue statement of a material fact and did not for the period
that is 30 days after the Closing Date omit to state any material fact required
to be stated therein, or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
subparagraph (a) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in conformity
with information herein or otherwise furnished in writing to the Company by or
on behalf of the Underwriters expressly for use in the Registration Statement or
Prospectus.
(b) Each of the Company and its subsidiary, AristotleOnline
Limited, a wholly-owned subsidiary (the "Subsidiary") (i) has been duly
organized and is validly existing and in good standing under the laws of the
state of Delaware in the case of the Company and the laws of the United Kingdom
in the case of the Subsidiary, having full power and corporate authority to own
or lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus; and (ii) is duly qualified to do
business as a foreign corporation and is in good standing in the following
jurisdictions, Washington D.C., California, Georgia, Illinois, Texas, Tennessee,
Washington, Alaska, Hawaii and Maryland, which are all the jurisdictions in
which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and the Subsidiary, taken as a whole). The Company and the Subsidiary,
collectively, have employees located in London, England and in Washington, D.C.,
California, Georgia, Illinois, Texas, Tennessee and Washington, and in no other
jurisdiction in the United States. Neither the Company nor the Subsidiary own
any capital stock or other equity securities in any entity, except as disclosed
in the Prospectus.
(c) The Company has the duly authorized and validly issued
outstanding capitalization set forth under the caption "Capitalization" in the
Prospectus and will have the adjusted capitalization set forth therein on the
Closing Date and for the period which is thirty (30) days from the Closing Date
based on the assumptions set forth therein. The securities of the Company
conform to the descriptions thereof contained in the Prospectus. The form of
certificates for the Shares conforms to the corporate law of the State of
Delaware. The outstanding shares of Common Stock (other than the Shares) have
been duly authorized and validly issued by the Company and are fully paid and
nonassessable, and were issued in transactions that were exempt from the
registration requirements of the Act, without violation of any preemptive
rights, rights of first refusal or similar rights. Except as created hereby or
referred to in the Prospectus, there are no outstanding options, warrants,
rights or other arrangements requiring the Company at any time to issue any
capital stock. Except as disclosed in the Prospectus, no holders of outstanding
shares of capital stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Shares, and neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those that have been waived
or satisfied, for or relating to, the registration of any securities of the
Company. The Shares are duly authorized, and will be, when sold to the
Underwriters as provided herein, validly issued, fully paid and nonassessable
and conform to the description thereof contained in the Prospectus. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be
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required for the issuance and sale of the Shares as contemplated herein. The
outstanding shares of capital stock or ownership interests of the Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable,
and are solely owned by the Company free and clear of all liens, encumbrances
and equities and claims; and except as disclosed in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital stock or
ownership interests in such subsidiary are outstanding.
(d) The Company has full legal right, power and authority to
enter into this Agreement and to consummate the transactions provided for
herein. This Agreement has been duly authorized, executed and delivered by the
Company and, assuming it is a binding agreement of the Underwriters, constitutes
a legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws), and none of the Company's execution or delivery of this Agreement,
its performance hereunder, its consummation of the transactions contemplated
herein, its application of the net proceeds of the offering in the manner set
forth under the caption "Use of Proceeds" or the conduct of its business as
described in the Prospectus, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, causes or will cause (or permits
or will permit) the maturation or acceleration of any liability or obligation or
the termination of any right under, or result in the creation or imposition of
any lien, charge or encumbrance upon, any property or asset of the Company or
the Subsidiary pursuant to the terms of (i) the certificate of incorporation or
bylaws of the Company or the Subsidiary; (ii) any indenture, mortgage, deed of
trust, voting trust agreement, stockholders' agreement, note agreement or other
agreement or instrument to which the Company or the Subsidiary is a party or by
which it is bound or to which its respective property is subject; or (iii) any
statute, judgment, decree, order, rule or regulation applicable to the Company
or the Subsidiary of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or the Subsidiary, or their activities or
properties, which would materially and adversely affect the business or
properties of the Company and the Subsidiary, taken as a whole.
(e) The Common Stock has been approved for quotation on The
Nasdaq National Market and, prior to the Closing Date, (i) the Common Stock
shall be listed and duly admitted to trading on The Nasdaq National Market and
(ii) the Shares will be authorized for inclusion in The Nasdaq National Market.
(f) The financial statements of the Company, and where
applicable, the consolidated financial statements of the Company and the
Subsidiary, and the related notes and schedules thereto included in the
Registration Statement and the Prospectus fairly present the financial position,
results of operations, stockholders' equity and cash flows of the Company and
the Subsidiary at the dates and for the periods specified therein. Such
financial statements and consolidated financial statements and the related notes
and schedules thereto have been prepared
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in accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein) and all
adjustments necessary for a fair presentation of results for such periods have
been made; provided, however, that the unaudited financial statements for the
six-month period ended June 30, 2000 are subject to normal year-end audit
adjustments (which are not expected to be material) and do not contain all
footnotes required under generally accepted accounting principles. The summary
and selected financial and statistical data included in the Registration
Statement and the Prospectus present fairly the information shown therein and
such data have been prepared on a basis consistent with the financial statements
contained therein and in the books and records of the Company.
(g) KPMG LLP, who have certified the financial statements and
schedule as of December 31, 1999, and for the year then ended, filed with the
Commission as part of the Registration Statement, are independent public
accountants as required by the Act and the rules and regulations promulgated
thereunder. Xxxxxx Xxxxxx & Company, LLP, who have certified the financial
statements and schedules as of December 31, 1998, and for each of the years in
the two-year period ended December 31, 1998, filed with the Commission as part
of the Registration Statement, are independent public accountants as required by
the Act and the rules and regulations promulgated thereunder.
(h) Each of the Company and the Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(i) Subject to applicable law, the Subsidiary is not currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on the Subsidiary's capital stock, from
repaying to the Company any loans or advances to the Subsidiary from the Company
or from transferring any of the Subsidiary's property or assets to the Company.
(j) The Company and the Subsidiary have filed all necessary
federal, state and local income, franchise and other material tax returns and
has paid all taxes shown as due thereunder, and the Company and the Subsidiary
have no tax deficiency that has been or, to their knowledge, that might be
assessed against the Company and the Subsidiary that, if so assessed, would
materially and adversely affect the business or properties of the Company and
the Subsidiary, taken as a whole. All tax liabilities accrued through the date
hereof have been adequately provided for on the books of the Company and the
Subsidiary.
(k) The Company and the Subsidiary maintain insurance
underwritten by insurers of recognized financial responsibility of the types and
in amounts and with such deductibles as customary for companies in the same or
similar business, all of which insurance is in full force and effect.
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(l) Except as disclosed in the Prospectus, there is no action,
suit, claim, proceeding or investigation pending or, to the Company's knowledge,
threatened against the Company or the Subsidiary before or by any court,
regulatory body or administrative agency or any other governmental agency or
body, domestic or foreign, that (i) questions the validity of the capital stock
of the Company or this Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement; (ii) is required to be
disclosed in the Registration Statement, which is not so disclosed (and such
proceedings, if any, as are summarized in the Registration Statement are
accurately summarized in all material respects); or (iii) may have a material
adverse affect upon the business operations, financial conditions or income of
the Company and the Subsidiary, taken as a whole.
(m) All executed agreements or copies of executed agreements
filed or incorporated by reference as exhibits to the Registration Statement
have been duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company enforceable by
and against it in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to enforcement of
creditors' rights generally, and general equitable principles relating to the
availability of remedies, and except as rights to indemnity or contribution may
be limited by federal or state laws and the public policy underlying such laws).
The descriptions in the Registration Statement of contracts and other documents
are accurate and fairly present the information required to be shown with
respect thereto by the Act and Rules, and there are no contracts or other
documents that are required by the Act or Rules to be described in the
Registration Statement or filed as exhibits to the Registration Statement that
are not described or filed as required and the exhibits that have been filed are
complete and correct copies of the documents of which they purport to be copies,
except to the extent that such agreements are subject to a request for
confidential treatment that has been duly filed under the Act. Except for such
rights as described in the Registration Statement and the Prospectus, no party
has any right to require the Company to register any securities for sale under
the Act.
(n) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as expressly
contemplated therein, neither the Company nor the Subsidiary has incurred, other
than in the ordinary course of its business, any material liabilities or
obligations, direct or contingent, purchased any of its outstanding capital
stock, paid or declared any dividend or other distribution on its capital stock
or entered into any material transaction, and there has been no material change
in capital stock or debt or any material adverse change in the business,
properties, assets, net worth, condition (financial or otherwise) or results of
operations of the Company and the Subsidiary, taken as a whole, whether or not
arising from transactions in the ordinary course of business.
(o) Neither the Company nor the Subsidiary is, or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under, any term or provision of (i) its certificate of incorporation,
bylaws or operating agreement; (ii) any indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note agreement or other
agreement or instrument to which it is a party or by which it is bound or to
which any of its property is subject, or any indebtedness, the effect of which
breach or default singly or in the aggregate would have a material adverse
effect on the business, management, properties, assets,
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rights, operations, or condition (financial or otherwise) of the Company and the
Subsidiary, taken as a whole; or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company or the Subsidiary or of any
arbitrator, court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or the Subsidiary or its activities or properties and the effect of
which breach or default singly or in the aggregate would have a material adverse
effect on the business, management, properties, assets, rights, operations or
condition (financial or otherwise) of the Company and the Subsidiary, taken as a
whole.
(p) The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby.
(q) No labor disturbance by the employees of the Company or the
Subsidiary or disturbance between the Company and its principal suppliers or
customers exists or, to the Company's knowledge, is imminent.
(r) Except as disclosed in the Prospectus, each of the Company
and the Subsidiary owns, is licensed or otherwise possesses all rights to use,
all patents, patent rights, inventions, know-how (including trade secrets and
other unpatented or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names, copyrights and
other intellectual property rights (collectively, the "Rights") necessary for
the conduct of its business as described in the Prospectus. Except as disclosed
in the Prospectus, to the Company's knowledge, no claims have been asserted
against the Company or the Subsidiary by any person with respect to the use of
any such Rights or challenging or questioning the validity or effectiveness of
any such Rights. The continued use of the Rights in connection with the business
and operations of the Company and the Subsidiary does not, to the knowledge of
the Company and the Subsidiary, infringe on the rights of any person, which, if
the subject of an unfavorable decision, ruling or filing, would have a material
adverse effect on the financial condition, business or properties of the Company
and the Subsidiary, taken as a whole.
(s) The Company and the Subsidiary are conducting their
businesses in compliance with all applicable laws, ordinances or governmental
rules or regulations of the jurisdictions in which they are conducting business,
except where the failure to be so in compliance would not materially and
adversely affect the business or properties of the Company and the Subsidiary,
taken as a whole. Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD"), the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or to qualify or exempt
the Shares for public offering by the Underwriters under state securities or
Blue Sky laws) has been obtained or made and is in full force and effect.
(t) Neither the Company nor, to the Company's knowledge, any of
its officers, directors or affiliates (within the meaning of the rules and
regulations promulgated under the Act) has taken or may take, directly or
indirectly, any action designed to cause or result
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in, or that has constituted or that might reasonably be expected to constitute,
the stabilization or manipulation of the price of the shares of Common Stock of
the Company, to facilitate the sale or resale of the Shares or otherwise.
(u) Neither the Company nor the Subsidiary is, or after giving
effect to the issuance and sale of the Shares by the Company will be, an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
(v) There are no transfer taxes or similar fees or charges under
United Kingdom law, federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance and sale by the Company of the
Shares.
(w) The Company and the Subsidiary have good and marketable
title to all properties and assets described in the Prospectus as owned by them,
free and clear of all liens, encumbrances, security interests, equities, claims
and defects, except such as are described in the Registration Statement and
Prospectus, or such as are not materially important in relation to the business
of the Company and the Subsidiary, taken as a whole. The Company has valid and
enforceable leases for the properties described in the Prospectus as leased by
it, free and clear of all liens, encumbrances, security interests, equities,
claims and defects, except such as are not material and do not interfere with
the use made by the Company and the Subsidiary thereof. The Company and the
Subsidiary own or lease all such properties as are necessary to their operations
as now conducted, as set forth in the Registration Statement and the Prospectus
and the properties and business of the Company and the Subsidiary conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(x) Each of the Company and the Subsidiary holds all franchises,
licenses, permits, approvals, certificates and other authorizations from
federal, state and other governmental or regulatory authorities necessary to the
ownership, leasing and operation of its properties or required for the present
conduct of its business, and such franchises, licenses, permits, approvals,
certificates and other governmental authorizations are in full force and effect
and the Company and the Subsidiary are in compliance therewith in all material
respects, except where the failure so to obtain, maintain or comply with would
not have a materially adverse effect on the business, financial condition or
results of operations of the Company and the Subsidiary, taken as a whole.
(y) The Company and the Subsidiary are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (herein called "ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or the Subsidiary would have any
liability; the Company and the Subsidiary have not incurred and do not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan"; or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "Pension Plan" for
which the Company and the Subsidiary would have liability that is intended
8
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(z) No relationship, direct or indirect, exists between or among
the Company or the Subsidiary, on the one hand, and the current or prior
directors, officers, stockholders, customers or suppliers of the Company or the
Subsidiary, on the other hand, which is required to be described in the
Prospectus that is not so described.
(aa) Neither the Company nor the Subsidiary, nor to the
Company's knowledge any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or the Subsidiary, has used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provisions of the Foreign
Corrupt Practices Act of 1972; or made any bribe, rebate, payoff, influence,
payment, kickback or other unlawful payment.
(bb) The business, operations and facilities of the Company and
the Subsidiary have been and are being conducted or operated in compliance with
all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational safety
and health, pollution, protection of health or the environment (including,
without limitation, those relating to emissions, discharges, release or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use treatment,
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) or otherwise relating to remediating real
property in which the Company or the Subsidiary has or has had any interest,
whether owned or leased, of any governmental department, commission, board,
bureau, agency or instrumentality of the United States, any state or political
subdivision thereof and all applicable judicial or administrative agency or
regulatory decrees, awards, judgments and orders relating thereto, except for
such failures to so comply as would not, individually or in the aggregate, have
a material adverse effect on the business of the Company and the Subsidiary
taken as a whole, and neither the Company nor the Subsidiary has received any
notice from a governmental instrumentality or any third party alleging any
violation thereof or liability thereunder (including, without limitation,
liability for costs of investigating or remediating sites containing hazardous
substances or damage to natural resources).
(cc) Neither the Company nor the Subsidiary, nor to the
Company's knowledge any officer or employee of the Company or the Subsidiary, is
a party to any contract or commitment that restricts in any material respect the
ability of the Company, the Subsidiary or such individual to engage in the
business of the Company or the Subsidiary as described in the Registration
Statement and the Prospectus.
(dd) The Company has not offered, or caused X.X. Xxxxxxxxx +
Co., LLC to offer, Reserved Shares to any person pursuant to the Reserved Share
Program with
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the specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products. Neither the Company nor any
person acting on its behalf has furnished any written materials of any kind to
any individual or entity with respect to the Reserved Share Program unless such
recipient first received a copy of the Company's Preliminary Prospectus.
3. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company shall issue
and sell the Underwritten Stock to the Underwriters, and the Underwriters agree
to purchase from the Company the Underwritten Stock. The price at which such
shares of Underwritten Stock shall be sold by the Company and purchased by the
Underwriters shall be $______ per share (the "Purchase Price"). In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one of the Underwriters shall fail or
refuse (other than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 7 or 12 hereof) to purchase and pay
for the number of Shares agreed to be purchased by such Underwriter, the non-
defaulting Underwriters shall have the right within 24 hours after the receipt
by you of notice of such failure or refusal to so purchase to purchase, or
procure one or more other Underwriters to purchase, in such proportions as may
be agreed upon between you and such purchasing Underwriters and upon the terms
herein set forth, all or any part of the Shares that such defaulting Underwriter
agreed to purchase. If the non-defaulting Underwriters fail so to make such
arrangements with respect to all such Shares and portion, the number of Shares
that the non-defaulting Underwriters are otherwise obligated to purchase under
this Agreement shall be automatically increased on a pro rata basis to absorb
the remaining Shares and portion that the defaulting Underwriter agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the Shares and portion that the defaulting Underwriter
agreed to purchase if the aggregate number of such Shares exceeds 10% of the
total number of Shares that the Underwriters agreed to purchase under this
Agreement. If the total number of Shares that the defaulting Underwriter agreed
to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within 24 hours next
succeeding the 24-hour period referred to above, to make arrangements with other
underwriters or purchasers satisfactory to you for purchase of such Shares and
portion on the terms herein set forth. In any such case, either you or the
Company shall have the right to postpone the Closing Date determined as provided
in Section 5 hereof for not more than seven (7) business days after the date
originally fixed as the Closing Date pursuant to said Section 5 in order that
any necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made. If the non-defaulting Underwriters do not
make arrangements within the 24-hour periods stated above for the purchase of
all the Shares that the defaulting Underwriter agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to the non-defaulting Underwriters and
without any liability on the part of the non-defaulting Underwriters to the
Company. Nothing in this paragraph (b), and no action taken
10
hereunder, shall relieve the defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein set
forth, the Company grants the Option to the Underwriters, which Option shall
enable the Underwriters to purchase, severally and not jointly, the Option Stock
at the Purchase Price. The Option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth (30) day after the date of this agreement upon written or telegraphic
notice by the Underwriters to the Company setting forth the aggregate number of
shares of Option Stock as to which the Underwriters are exercising the Option.
Delivery of the certificates for the shares of Option Stock, and payment
therefor shall be made as provided in Section 5 hereof. The number of shares of
the Option Stock to be purchased by each Underwriter shall be in such amounts as
the Underwriters shall agree upon prior to the exercise of the Option set forth
hereunder.
4. Offering by the Underwriters.
(a) The terms of the initial public offering by the Underwriters
of the Shares to be purchased by them shall be as set forth in the Prospectus.
The Underwriters may from time to time change the public offering price after
the closing of the initial public offering and increase or decrease the
concessions and discounts to dealers as they may determine.
(b) The information set forth in (i) the paragraph in the large
box on the right hand side of the front cover page, (ii) the last paragraph
under the caption "the Offering" and (iii) under the caption "Plan of
Distribution" in the Registration Statement, any Preliminary Prospectus and the
Prospectus (insofar as such information relates to the Underwriters or related
persons) constitutes the only information furnished by the Underwriters to the
Company for inclusion in the Registration Statement, any Preliminary Prospectus
and the Prospectus, and you on behalf of the Underwriters represent and warrant
to the Company that the statements made therein (insofar as they relate to the
Underwriters or related persons) are correct and do not omit any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5. Delivery of and Payment for the Shares.
(a) Delivery of certificates for the shares of the Underwritten
Stock and the Option Stock (if the Option granted by Section 3(c) hereof shall
have been exercised not later than 7:00 A.M., San Francisco time, on the date
two (2) business days preceding the Closing Date), and payment therefor, shall
be made at the office of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, on the third (3rd) business day after the date of
this Agreement, or at such time on such other day, not later than seven (7) full
business days after such third (3rd) business day, as shall be agreed upon in
writing by the Company and you. The date and hour of such delivery and payment
are herein called the Closing Date.
(b) If the Option granted by Section 3(c) hereof shall be
exercised after 7:00 A.M., San Francisco time, on the date two (2) business days
preceding the Closing
11
Date, delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made at the office of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, at 7:00 A.M., San Francisco time, on
the third (3rd) business day after the exercise of such Option, or at such time
on such other day, not later than seven (7) full business days after such third
(3rd) business day, as shall be agreed upon in writing by the Company and you.
(c) Payment for the Shares purchased from the Company shall be
made to the Company or its order by wire transfer in same day funds. Such
payment shall be made upon delivery of certificates for the Shares to you
against receipt therefor signed by you. Certificates for the Shares to be
delivered to you shall be registered in the name or names and shall be in such
denominations as you may request at least one (1) business day before the
Closing Date, in the case of Underwritten Stock, and at least one (1) business
day prior to the purchase thereof, in the case of Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging on the business day preceding the Closing Date or, in the case of
Option Stock, by 12:00 P.M., San Francisco time, on the business day preceding
the date of purchase.
6. Covenants of the Company. The Company covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the
Commission under 424(b) a Prospectus containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on Rule
430A; and (ii) not file with the Commission any amendment to the Registration
Statement or supplement to the Prospectus of which (A) the Underwriters shall
not previously have been advised and furnished with a copy a reasonable period
of time prior to the proposed filing and as to which filing the Underwriters
shall not have given their consent, which consent shall not be unreasonably
withheld, or (B) is not in compliance with the Act and the Rules.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Underwriters of (i) any request made by the
Commission for amendment of the Registration Statement, for supplement to the
Prospectus or for additional information; (ii) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, or
the institution or threat of any action, investigation or proceeding for that
purpose; or (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction,
or the receipt by it of notice of the initiation or threatening of any
proceeding for that purpose. The Company will use its best efforts to prevent
the issuance of any such order and, if issued, to obtain the lifting or
withdrawal thereof as soon as possible.
(c) The Company will (i) on or before the Closing Date, deliver
to the Underwriters a signed copy of the Registration Statement as originally
filed and of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a signed copy
of each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless previously delivered
to the Underwriter); (ii) as promptly as possible deliver to the Underwriters,
at such office as the Underwriters may designate, as many copies of the
Prospectus as the Underwriters
12
may reasonably request; and (iii) thereafter from time to time during the period
in which a prospectus is required by law to be delivered by an Underwriter or
dealer, likewise send to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the Prospectus and of any
amended prospectus, filed by the Company with the Commission, as the
Underwriters may reasonably request for the purposes contemplated by the Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer (the "Prospectus
Delivery Period") any event relating to or affecting the Company, or of which
the Company shall be advised in writing by the Underwriters, shall occur as a
result of which it is necessary, in the opinion of counsel for the Company or of
counsel for the Underwriters, to supplement or amend the Prospectus in order to
make the Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser of the Shares, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus so that the Prospectus as so supplemented or amended will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the Shares
by the Underwriters and during the Prospectus Delivery Period, the Underwriters
shall propose to vary the terms of the offering of the Shares by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Shares may be sold by the
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Shares in accordance with the
applicable provisions of the Act and the applicable rules and regulations
thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company
will submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in
the qualification of the Shares (including the Reserved Shares to be offered in
connection with the Reserved Share Program) for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you may designate and,
during the Prospectus Delivery Period, in keeping such qualifications in good
standing under said securities or Blue Sky laws; provided, however, that the
Company shall not be required to qualify as a foreign corporation or file any
general consent to service of process in any jurisdiction in which it is not so
qualified. The Company will from time to time, prepare and file such statements,
reports and other documents as are or may be required to continue such
qualifications in effect for so long a period as you may reasonably request for
distribution of the Shares.
(g) The Company agrees to pay all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including, without limitation, all costs and expenses incident to (i) the
preparation, printing and filing with the
13
Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus; (ii) the furnishing to the Underwriters of copies
of any Preliminary Prospectus and of the several documents required by paragraph
(c) of this Section 6 to be so furnished; (iii) the printing of this Agreement
and related documents delivered to the Underwriters; (iv) the preparation,
printing and filing of all supplements and amendments to the Prospectus referred
to in paragraph (d) of this Section 6; (v) the furnishing to you of the reports
and information referred to in paragraph (j) of this Section 6; and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees.
(h) The Company agrees to reimburse you, for the account of the
several Underwriters, for Blue Sky fees and related disbursements (including
reasonable counsel fees and disbursements and cost of printing memoranda for the
Underwriters) paid by or for the account of the Underwriters or their counsel in
qualifying the Shares under state securities or Blue Sky laws and in the review
of the offering by the NASD.
(i) As soon as practicable, but in any event not later than 45
days after the end of the first fiscal quarter first occurring after the first
anniversary of the Effective Date, the Company will make generally available to
its security holders, in the manner specified in Rule 158(b) of the rules and
regulations promulgated under the Act, an earnings statement that will be in the
detail required by, and will otherwise comply with, the provisions of Section
11(a) of the Act and Rule 158(a) of the rules and regulations promulgated
thereunder.
(j) During a period of three (3) years after the date hereof,
the Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to stockholders of
the Company and of all information, documents and reports filed with the
Commission.
(k) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(l) The Company will not, directly or indirectly, without the
prior written consent of X.X. Xxxxxxxxx + Co., LLC on behalf of the
Underwriters, issue, offer, sell, grant any option to purchase or otherwise
dispose (or announce any issuance, offer, sale, grant of any option to purchase
or other disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock for
a period of 180 days following the commencement of the public offering of the
Shares by the Underwriters, except pursuant to this Agreement and except for
issuances pursuant to the exercise of stock options outstanding on or granted
subsequent to the date hereof, pursuant to a stock option or other employee
benefit plan in existence on the date hereof and except as contemplated by the
Prospectus.
(m) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the Closing Date.
(n) The Company will not take, directly or indirectly, and will
use its best efforts to cause its officers, directors or affiliates not to take,
directly or indirectly, any
14
action designed to, or that might in the future reasonably be expected to cause
or result in, stabilization or manipulation of the price of any securities of
the Company.
(o) The Company will apply the net proceeds of the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(p) The Company will file in a timely manner all such reports,
forms or other documents as may be required from time to time, under the Act and
the Rules, the Exchange Act and the rules and regulations promulgated
thereunder, and all such reports, forms and documents filed will comply as to
form and substance with the applicable requirements under the Act and the Rules,
the Exchange Act and the rules and regulations promulgated thereunder.
(q) The Company is familiar with the Investment Company Act of
1940, as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was not
and will not be an "investment company" or a "company" controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(r) The Company either has caused to be delivered to you or will
cause to be delivered to you prior to the effective date of the Registration
Statement a letter (the "Lock-Up Agreement") from each of the Company's
directors, officers and holders of the outstanding capital stock of the Company
stating that such person agrees that he or she will not, without the prior
written consent of X.X. Xxxxxxxxx + Co., LLC directly or indirectly, sell,
offer, contract or grant any option to sell (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 (or enter into any transaction that is designed to, or could be expected to,
result in the disposition by any person of) any shares of Common Stock, 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 (within the meaning of Rule
13d-3 under the Exchange Act) by him or her, or publicly announce his or her
intention to do any of the foregoing, prior to the date of the Prospectus and
for a period of 180 days after the first date any Underwritten Stock is released
by the Underwriters for sale to the public.
(s) The Company will comply with all applicable securities and
other applicable laws, rules and regulations in each jurisdiction in which the
Reserved Shares are offered in connection with the Reserved Share Program. The
Company hereby agrees that it will direct the Company's transfer agent to place
a stop transfer restriction for a period of three (3) months from the date of
this Agreement upon any Reserved Shares that are restricted by the NASD or the
NASD rules from sale, transfer, assignment, pledge or hypothecation for such
three (3)-month period following the date of this Agreement. X.X. Xxxxxxxxx +
Co., LLC will notify the Company in writing as to which persons purchasing
Reserved Shares will need to be so restricted. If the Company shall release, or
seek to release, from such restrictions any of such Reserved Shares, the Company
agrees to reimburse X.X. Xxxxxxxxx + Co., LLC for any reasonable expenses
(including without limitation legal expenses) they incur in connection with, or
as a result of, such release.
15
7. Conditions of the Underwriter's Obligations. The obligations of
the several Underwriters under this Agreement are subject to the performance by
the Company on and as of the Closing Date or any later date on which Option
Stock is to be purchased, as the case may be, of its covenants and agreements
hereunder, and the following additional conditions:
(a) The Registration Statement shall have become effective, and
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 to the knowledge of the Company or the Underwriters threatened or shall be
contemplated by the Commission.
(b) The Underwriters shall be satisfied that (i) as of the
Effective Date, the statements made in the Registration Statement and the
Prospectus were true and correct and neither the Registration Statement nor the
Prospectus omitted to state a fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) since the Effective Date, no
event has occurred that should have been set forth in a supplement or amendment
to the Prospectus that has not been set forth in an effective supplement or
amendment; (iii) since the respective dates as of which information is given in
the Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change in the
business, properties, financial condition or results of operations of the
Company and the Subsidiary, taken as a whole, whether or not arising from
transactions in the ordinary course of business, and since such dates, except in
the ordinary course of business, neither the Company nor the Subsidiary has
entered into any material transaction not referred to in the Registration
Statement in the form in which it originally became effective and the Prospectus
contained therein; (iv) neither the Company nor the Subsidiary has any material
contingent obligations that are not disclosed in the Registration Statement and
the Prospectus; (v) there are no pending or, to the Company's knowledge,
threatened legal proceedings to which the Company or the Subsidiary is a party
or of which property of the Company or the Subsidiary is subject that are
material and that are not disclosed in the Registration Statement and the
Prospectus; (vi) there are not any franchises, contracts, leases or other
documents that are required to be filed as exhibits to the Registration
Statement that have not been filed as required; and (vii) the representations
and warranties of the Company herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be.
(c) On or prior to the Closing Date, the legality and
sufficiency of the sale of the Shares hereunder and the validity and form of the
certificates representing the Shares, all corporate proceedings and other legal
matters incident to the foregoing, and the form of the Registration Statement
and of the Prospectus (except as to the financial statements contained therein),
shall have been approved by Xxxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters. The Underwriters shall have received from counsel to the
Underwriters, such opinion or opinions with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as the Underwriters reasonably may request and such counsel shall have
received such documents and other information as they request to enable them to
pass upon such matters.
(d) On the Closing Date, and if Option Stock is purchased at any
date after the Closing Date, on such later date, the Underwriters shall have
received an opinion
16
addressed to the Underwriters, dated the Closing Date or, if related to the
later sale of Option Stock, such later date, of Pillsbury Madison & Sutro LLP,
counsel to the Company, substantially to the effect set forth in Exhibit A
---------
hereto. In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. References to the Registration
Statement and the Prospectus in this paragraph (d) shall include any amendment
or supplement thereto at the date of such opinion.
(e) You shall have received from each of KPMG LLP and Xxxxxx
Xxxxxx & Company, LLP, as applicable, a letter or letters, addressed to the
Underwriters and dated the Closing Date and any later date on which Option Stock
is purchased, confirming that they are independent public accountants with
respect to the Company within the meaning of the Act and the applicable
published rules and regulations thereunder and based upon the procedures
described in their letter delivered to the Underwriters concurrently with the
execution of this Agreement (the "Original Letter"), but carried out to a date
not more than three (3) business days prior to the Closing Date or such later
date on which Option Stock is purchased (i) confirming, to the extent true, that
the statements and conclusions set forth in the Original Letter are accurate as
of the Closing Date or such later date, as the case may be; and (ii) setting
forth any revisions and additions to the statements and conclusions set forth in
the Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company or the Subsidiary, which in your sole judgment, makes it impractical
or inadvisable to proceed with the public offering of the Shares or the purchase
of the Option Stock as contemplated by the Prospectus.
(f) You shall have received from KPMG LLP a letter stating that
their review of the Company's internal accounting controls, to the extent they
deemed necessary in establishing the scope of their examination of the Company's
financial statements as of December 31, 1999, did not disclose any weakness in
internal controls that they considered to be material weaknesses.
(g) On the Closing Date, and on any later date on which Option
Stock is purchased, you shall have received a certificate, dated the Closing
Date or such later date, as the case may be, signed by the Chief Executive
Officer and Chief Financial Officer of the Company stating that the respective
signers of said certificate have carefully examined the Registration Statement
in the form in which it originally became effective and the Prospectus contained
therein and any amendments or supplements thereto and this Agreement, and that
the statements included in paragraph (b) of this Section 7 are true and correct.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Shares shall have been duly
authorized for inclusion on the Nasdaq National Market upon official notice of
issuance.
17
In case any of the conditions specified in this Section 7 shall not be
fulfilled, this Agreement may be terminated by you by giving written notice to
the Company. Any such termination shall be without liability of the Company to
the Underwriters and without liability of the Underwriters to the Company;
provided, however, that (i) in the event of such termination, the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company under this
Agreement, including all costs and expenses referred to in paragraphs (g) and
(h) of Section 6 hereof; and (ii) if this Agreement is terminated by you because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally upon demand for all out-
of-pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the transactions
contemplated hereby.
8. Conditions of the Obligations of the Company.
(a) The obligations of the Company to deliver the Shares shall
be subject to the conditions that (i) the Registration Statement shall have
become effective and (ii) no stop order suspending the effectiveness thereof
shall be in effect and no proceedings therefor shall be pending or threatened by
the Commission.
(b) In case either of the conditions specified in paragraph (a)
of this Section 8 shall not be fulfilled, this Agreement may be terminated by
the Company by giving written notice to you. Any such termination shall be
without liability of the Company to the Underwriters and without liability of
the Underwriters to the Company; provided, however, that in the event of any
such termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (g) and (h) of Section 6 hereof.
9. Indemnification and Contribution.
(a) Subject to the provisions of paragraph (d) of this Section
9, the Company agrees to indemnify and hold harmless each Underwriter (and any
person participating in the distribution who is deemed to be an underwriter (as
defined in Section 2(11) of the Act and who is registered as a broker dealer)
and each person (including each member or officer thereof), if any, who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages or
liabilities, joint or several (and actions in respect thereof), to which such
indemnified parties or any of them may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities, or in connection with
any investigation or inquiry of, or other proceeding that may be brought
against, the respective indemnified parties, in each case arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in
18
the Registration Statement (including the Prospectus as part thereof and any
Rule 462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement) or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) any untrue
statement or alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstance under which they were made, not misleading; provided,
however, that (x) the indemnity agreement of the Company contained in this
paragraph (a) shall not apply to any such loss, claim, damage, liability or
action if such statement or omission was made in reliance upon and in conformity
with information furnished as herein stated or otherwise furnished in writing to
the Company by or on behalf of any Underwriter expressly for use in any
Preliminary Prospectus or the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto, and (y) that the indemnity
agreement contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or such persons)
if the person asserting any such loss, claim, damage, liability or action
purchased Shares that are the subject thereof to the extent that any such loss,
claim, damage, liability or action (A) results from the fact that such
Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Shares to such person in any case where such delivery is required by the Act and
(B) arises out of or is based upon an untrue statement or omission of a material
fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (as amended and supplemented), unless such failure resulted from non-
compliance by the Company with paragraph (c) of Section 6 hereof. The indemnity
agreement of the Company contained in this paragraph (a) and the representations
and warranties of the Company contained in Section 2 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery and payment
for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the Registration Statement, each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the
other Underwriters against any and all losses, claims, damages or liabilities,
joint or several (and actions in respect thereof), to which such indemnified
parties or any of them may become subject, under the Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise
and to reimburse each of them for any legal or other expenses (including, except
as otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding that may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) any untrue statement or alleged
19
untrue statement of any material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstance under which they were made, not misleading, in each case to the
extent, but only to the extent, that such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing by or on behalf of such indemnifying Underwriter
to the Company expressly for use in the Registration Statement or the Prospectus
or any such amendment thereof or supplement thereto, and will reimburse, as
incurred, all legal or other expenses reasonably incurred by the Company or any
such director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. The indemnity
agreement of each Underwriter contained in this paragraph (b) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery and payment
for the Shares.
(c) Each party indemnified under the provisions of paragraph (a)
or (b) of this Section 9 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against it, in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, such indemnified party will promptly notify in writing any party or
parties from whom indemnification may be sought hereunder of the commencement
thereof. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give such notice if the party to whom such
notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which such notice would have related and was materially prejudiced
by the failure to give the notice, but the omission so to notify such
indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability that it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party or parties against which a
claim is to be made will be entitled, at its own expense, to participate in the
defense of such action, suit, investigation or inquiry of, an indemnified party.
Any indemnifying party shall be entitled, if it so elects within a reasonable
time after receipt of notice from the indemnified party or parties of an action,
suit, investigation or inquiry to which indemnity may be sought, to assume the
entire defense thereof (alone or in conjunction with any other indemnifying
party or parties), at its own expense, in which case such defense shall be
conducted by counsel reasonably satisfactory to the indemnified party or
parties; provided, however, that (i) if the indemnified party or parties has
reasonably concluded that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action, suit, investigation, inquiry or
proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct such defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties; and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
20
such action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses (other than the reasonable costs of investigation)
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party has employed such counsel in connection
with the assumption of different or additional legal defenses in accordance with
the proviso to the immediately preceding sentence; or (ii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party. If no such notice to assume the
defense of such action has been given within a reasonable time of the
indemnified party's or parties' notice to such indemnifying party or parties,
the indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any loss, claim, damage, expense or
liability (or actions in respect thereof) referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
referred to in paragraphs (a) and (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties 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 each of the contributing
parties, on the one hand, and the party to be indemnified, on the other hand, 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, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Shares (before deducting
expenses) and the total underwriting discount received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus, bear to
the aggregate public offering price of the Shares. Relative fault 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 each indemnifying party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable consideration referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph (d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount applicable to the Shares purchased by the Underwriter hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent
21
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect to which a claim for contribution may be made against another
party or parties under this paragraph (d), it will promptly notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation it may have hereunder or otherwise
(except as specifically provided in paragraph (c) of this Section 9). The
contribution agreement set forth above shall be in addition to any liabilities
that any indemnifying party may have at common law or otherwise.
(e) No indemnifying party will, without the prior written
consent of the indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls such Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act is a party to such
claim, action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such indemnified party and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
(f) The Company agrees to indemnify and hold harmless X.X.
Xxxxxxxxx + Co., LLC and each person (including each member or officer thereof),
if any, who controls X.X. Xxxxxxxxx + Co., LLC within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act ("Indemnified
Entities"), from and against any and all losses, claims, damages and liabilities
(including without limitation any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) (i) caused
by any untrue statement or alleged untrue statement of a material fact contained
in any material prepared by or with the consent of the Company for distribution
to participants in connection with the Reserved Share Program, 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; or
(ii) related to, arising out of, or in connection with the Reserved Share
Program other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the bad
faith or gross negligence of Indemnified Entities.
10. Reimbursement of Certain Expenses. In addition to its other
obligations under Section 9 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending 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
paragraph (a) of Section 9 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 10 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent that any such payment
is ultimately held to be improper, the Underwriters shall
22
promptly refund it; and (ii) the Underwriters shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
11. Representations, etc. to Survive Delivery. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, and the Underwriters,
respectively, 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
the Underwriters, and will survive delivery of and payment for the Shares. Any
successors to the Underwriters or the Company shall be entitled to the
indemnity, contribution and reimbursement agreements contained in this
Agreement.
12. Termination.
(a) This Agreement (except for the provisions of Section 9
hereof) may be terminated by you by notice to the Company at any time prior to
the Closing Date if: (i) the Company shall have sustained a loss by strike,
fire, flood, accident or other calamity of such a character as to interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss was insured; (ii) trading in the Common
Stock shall have been suspended or trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market
shall have been suspended or limitations on such trading shall have been imposed
or limitations on prices shall have been established on any such exchange or
market system; (iii) the engagement in hostilities or an escalation of major
hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof shall have occurred;
(iv) any outbreak of hostilities or other national or international calamity or
crisis or material adverse change in economic or political conditions shall have
occurred if the effect of such outbreak, calamity, crisis or change in economic
or political conditions in the financial markets of the United States would, in
your reasonable judgment, make the offering or delivery of the Shares
impracticable; (v) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of, or commencement of
any proceeding or investigation by, any court, legislative body, agency or other
governmental authority shall have occurred that in the Underwriter's reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company; (vi) a banking moratorium shall have
been declared by New York or United States authorities; or (vii) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs shall have occurred that in your reasonable judgment
has a material adverse effect on the securities markets in the United States.
(b) If this Agreement is terminated pursuant to this Section 12,
there shall be no liability of the Company to the Underwriters and no liability
of the Underwriters to the Company; provided, however, that in the event of any
such termination, the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (g) and (h) of Section 6. Notwithstanding any
termination of this Agreement, the provisions of Section 9 hereof shall survive
and remain in full force and effect.
23
13. Notices. All communications hereunder shall be in writing and if
sent to the Underwriters shall be mailed or delivered or telegraphed and
confirmed by letter or telecopied and confirmed by letter to X.X. Xxxxxxxxx +
Co., LLC at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, with
copies to Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attn: Xxxxx X. Xxxx, Esq., or, if sent to the Company, shall be mailed or
delivered or telegraphed and confirmed to the Company at 00 X Xxxxxx, X.X.,
Xxxxx 000, Xxxxxxxxxx, XX 00000, with copies to Pillsbury Madison & Sutro LLP,
000 Xxxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attn: Xxxxx Xxxxxx,
Esq.
14. Successors. This Agreement shall be to the benefit of and be
binding upon the Company and the Underwriters and, with respect to the
provisions of Section 9 hereof, the several parties (in addition to the Company
and the Underwriters) indemnified under the provisions of said Section 9, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the Shares
from the Underwriters.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California. Any legal suit, action
or proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in the federal courts of the United States
of America located in the City and County of San Francisco or the courts of the
State of California in each case located in the City and County of San Francisco
(collectively, the "Specified Courts"), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court, as to which such jurisdiction is
non-exclusive) of such courts in any such suit, action or proceeding. Service of
any process, summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.
If the foregoing correctly sets forth our understanding, please
indicate the Underwriters' acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
ARISTOTLE INTERNATIONAL, INC.
24
By:______________________________________
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
Accepted as of the date first above
written:
X.X. Xxxxxxxxx + Co., LLC
DLJDIRECT INC.
[___________________]
as representatives of the
several Underwriters
By: X.X. Xxxxxxxxx + Co., LLC
By:__________________________
Name:_____________________
Title:____________________
25
SCHEDULE I
UNDERWRITERS
Underwriters Number of Shares
------------------------------ to be Purchased
-----------------
X.X. Xxxxxxxxx + Co., LLC............................
DLJdirect Inc........................................
[_______________]....................................
26
Exhibit A
---------
Form of Opinion of Pillsbury Madison & Sutro LLP
[to be filed by amendment]
27
