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EXHIBIT 1.1
UNDERWRITING AGREEMENT
March 23, 2000
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxx Xxxxxxxx Incorporated
Xxxxx, Xxxxxxxx & Xxxx, Inc.
As Representatives of the several Underwriters
c/o FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
INTRODUCTORY. Net Perceptions, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 2,000,000 shares of its Common
Stock, par value $0.0001 per share (the "Common Shares"); and the stockholders
of the Company named in Schedule B (collectively, the "Selling Stockholders")
severally propose to sell to the Underwriters an aggregate of 625,471 Common
Shares. The 2,000,000 Common Shares to be sold by the Company and the 625,471
shares of Common Shares to be sold by the Selling Stockholders are collectively
called the "Firm Shares." In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 318,863 Common Shares and
certain Selling Stockholders have severally granted to the Underwriters an
option to purchase up to an additional 74,957 Common Shares, each Selling
Stockholder selling up to the amount set forth opposite such Selling
Stockholder's name in Schedule B, all as provided in Section 2. The additional
318,863 Common Shares to be sold by the Company and the additional 74,957 Common
Shares to be sold by certain Selling Stockholders pursuant to such option are
collectively called the "Option Shares." The Firm Shares and, if and to the
extent such option is exercised, the Option Shares are collectively called the
"Shares." FleetBoston Xxxxxxxxx Xxxxxxxx Inc. ("Xxxxxxxxx Xxxxxxxx"), Xxxxx
Securities Inc., U.S. Bancorp Xxxxx Xxxxxxx Inc., Xxxx Xxxxxxxx Incorporated and
Xxxxx, Xxxxxxxx & Xxxx, Inc. have agreed to act as representatives of the
several Underwriters (in such capacity, the "Representatives") in connection
with the offering and sale of the Common Shares.
The Company has prepared and filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (File No. 333-31230),
which contains a form of prospectus, subject to completion, to be used in
connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus." Such registration statement, as amended,
including the financial statements, exhibits and schedules thereto, in the form
in which it was declared effective by the Commission under the Securities Act of
1933 and the rules and regulations promulgated thereunder (collectively, the
"Securities Act"), including any information deemed to be a part thereof at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is called
the "Registration Statement." Any registration statement filed by the
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Company pursuant to Rule 462(b) under the Securities Act is called the "Rule
462(b) Registration Statement," and from and after the date and time of filing
of the Rule 462(b) Registration Statement the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. Such prospectus, in the
form first used by the Underwriters to confirm sales of the Shares, is called
the "Prospectus." All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX").
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 1. Representations and Warranties.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The
Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the Commission
for additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed with the
Commission complied in all material respects with the Securities Act. Each of
the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and up to and
on the Closing Date and on any later date on which the Option Shares are
purchased, complied and will comply in all material respects with the Securities
Act and did not and will 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. Each preliminary prospectus, as of its
date, and the Prospectus, as amended or supplemented, as of its date and at all
subsequent times through the 30th day after the date hereof, did not and will
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. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information furnished to the Company in writing by the
Representatives expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required.
(b) Offering Materials Furnished to Underwriters. The
Company has delivered to each of the Representatives one complete conformed copy
of the Registration Statement and of each consent and certificate of experts
filed as a part thereof, and conformed copies of the Registration Statement
(without exhibits) and preliminary prospectuses and the
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Prospectus, as amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company.
The Company has not distributed and will not distribute, prior to the later of
the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Shares, any offering material in connection
with the offering and sale of the Shares other than a preliminary prospectus,
the Prospectus or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has
been duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(e) Authorization of the Shares To Be Sold by the
Company. The Shares to be purchased by the Underwriters from the Company have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement, will be validly
issued, fully paid and nonassessable.
(f) Authorization of the Shares To Be Sold by the
Selling Stockholders. The Common Shares to be purchased by the Underwriters from
the Selling Stockholders, when issued, were validly issued, fully paid and
nonassessable.
(g) No Applicable Registration or Other Similar
Rights. There are no persons with registration or other similar rights to have
any equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement, other than
the Selling Stockholders with respect to the Shares included in the Registration
Statement, except for such rights as have been duly waived.
(h) No Material Adverse Change. Subsequent to the
respective dates as of which information is given in the Prospectus: (i) there
has been no material adverse change, or any development that could reasonably be
expected to result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change"); (ii) the Company
and its subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not in
the ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.
(i) Independent Accountants. PricewaterhouseCoopers
LLP, have expressed their opinion with respect to the financial statements
(which term as used in this Agreement includes the related notes thereto) and
supporting schedules filed with the Commission as a part of the Registration
Statement and included in the Prospectus, are
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independent public or certified public accountants as required by the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(j) Preparation of the Financial Statements.
(1) The financial statements of the Company
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the financial position of the Company as of and
at the dates indicated and the results of its operations and cash flows for the
periods specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The financial data set
forth in the Prospectus under the captions "Summary--Summary Financial Data,"
"Selected Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement.
(2) The financial statements of Knowledge
Discovery One, Inc. ("KD One") filed with the Commission as part of the
Registration Statement present fairly the financial position of KD One as if and
for the dates indicated and the results of its operations and cash flows for the
periods specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules
relating to KD One are required to be included in the Registration Statement.
(3) The pro forma financial statements of
the Company and its subsidiaries and the related notes thereto included under
the caption "Summary - Summary Consolidated Financial Data," "Pro Forma
Consolidated Selected Financial Data" and elsewhere in the Prospectus and in the
Registration Statement present fairly the information contained therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly presented on
the bases described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. No other pro forma
financial information is required to be included in the Registration Statement.
(k) Company's Accounting System. The Company and each
of its subsidiaries maintain a system of 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.
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(l) Subsidiaries of the Company. The Company does not
own or control, directly or indirectly, any corporation, association or other
entity other than those listed in Exhibit 21 to the Registration Statement.
(m) Incorporation and Good Standing of the Company
and its Subsidiaries. Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is organized with full corporate power and
authority to own its properties and conduct its business as described in the
prospectus, and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction which requires such
qualification, except where a failure to be so qualified or in good standing
would not result in a Material Adverse Change.
(n) Capitalization of the Subsidiaries. All the
outstanding shares of capital stock of each subsidiary have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except
as otherwise set forth in the Prospectus, all outstanding shares of capital
stock of the subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any security interests, claims,
liens or encumbrances.
(o) No Prohibition on Subsidiaries from Paying
Dividends or Making Other Distributions. No subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such subsidiary's capital stock,
from repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as described in or
contemplated by the Prospectus.
(p) Capitalization and Other Capital Stock Matters.
The authorized, issued and outstanding capital stock of the Company is as set
forth in the Prospectus under the caption "Capitalization" (other than
subsequent issuances, if any, pursuant to employee benefit plans described in
the Prospectus or upon exercise of outstanding options described in the
Prospectus). The Common Shares (including the Shares) conform in all material
respects to the description thereof contained in the Prospectus. All of the
issued and outstanding Common Shares have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding Common Shares was
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those described in the Prospectus.
The description of the Company's stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted thereunder, set forth
in the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(q) Stock Exchange Listing. The Shares are registered
pursuant to Section 12(g) of the Exchange Act and are listed on the Nasdaq
National Market and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Shares under the
Exchange Act or delisting the Common Shares from the Nasdaq National Market, nor
has the Company received any notification that the
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Commission or the National Association of Securities Dealers, Inc. (the "NASD")
is contemplating terminating such registration or listing.
(r) No Consents, Approvals or Authorizations
Required. No consent, approval, authorization, filing with or order of any court
or governmental agency or regulatory body is required in connection with the
transactions contemplated herein, except such as have been obtained or made
under the Securities Act and such as may be required (i) under the blue sky laws
of any jurisdiction in connection with the purchase and distribution of the
Shares by the Underwriters in the manner contemplated here and in the
Prospectus, (ii) by the National Association of Securities Dealers, Inc. and
(iii) by the federal and provincial laws of Canada.
(s) Non-Contravention of Existing Instruments and
Agreements. Neither the issuance and sale of the Shares nor the consummation of
any other transactions herein contemplated nor the fulfillment of the terms
hereof will conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, (i) the charter or by-laws of the Company or any
of its subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
properties, except, in the cases of (ii) and (iii) only, for breaches,
violations, liens, charges or encumbrances that would not result in a Material
Adverse Change.
(t) No Defaults or Violations. Neither the Company
nor any subsidiary is in violation or default of (i) any provision of its
charter or by-laws, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or bound or to which
its property is subject or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or any of its properties, as applicable, except any
such violation or default which would not, singly or in the aggregate, result in
a Material Adverse Change except as otherwise disclosed in the Prospectus.
(u) No Actions, Suits or Proceedings. No action, suit
or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any of its subsidiaries or its or
their property is pending or, to the best knowledge of the Company, threatened
that (i) could reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to result in a Material
Adverse Change.
(v) All Necessary Permits, Etc. The Company and its
subsidiaries possess such valid and current certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory agencies
or bodies necessary to conduct their respective businesses, and neither the
Company nor any subsidiary has received any notice of proceedings relating to
the revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
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(w) Title to Properties. The Company and each of its
subsidiaries has good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1(A)(j)
above, in each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary. The real property, improvements, equipment and
personal property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not material and
do not materially interfere with the use made or proposed to be made of such
real property, improvements, equipment or personal property by the Company or
such subsidiary.
(x) Tax Law Compliance. The Company and its
subsidiaries have filed all necessary federal, state and foreign income and
franchise tax returns or have properly requested extensions thereof and have
paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them. The
Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(A)(j) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined. The Company is not aware of any tax deficiency that has been
or might be asserted or threatened against the Company that could result in a
Material Adverse Change.
(y) Intellectual Property Rights. Each of the Company
and its subsidiaries owns or possesses adequate rights to use all patents,
patent rights or licenses, inventions, collaborative research agreements, trade
secrets, know-how, trademarks, service marks, trade names and copyrights that
are necessary to conduct its businesses as described in the Registration
Statement and Prospectus, except where failure to own or possess such rights
would not result in a Material Adverse Change; the expiration of any patents,
patent rights, trade secrets, trademarks, service marks, trade names or
copyrights would not result in a Material Adverse Change that is not otherwise
disclosed in the Prospectus; the Company has not received any notice of, and has
no knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might result in a
Material Adverse Change. There is no claim pending or, to the Company's
knowledge, threatened against the Company regarding patents, patent rights or
licenses, inventions, collaborative research, trade secrets, know-how,
trademarks, service marks, trade names or copyrights. The Company and its
subsidiaries do not in the conduct of their business as now or proposed to be
conducted as described in the Prospectus infringe or conflict with any right or
patent of any third party, or any discovery, invention, product or process which
is the subject of a patent application filed by any third party, known to the
Company or any of its subsidiaries, which such infringement or conflict is
reasonably likely to result in a Material Adverse Change.
(z) Y2K. There are no Y2K issues related to the
Company, or any of its subsidiaries, that (i) are of a character required to be
described or referred to in the Registration Statement or Prospectus by the
Securities Act or by the Exchange Act or the rules and regulations of the
Commission thereunder that have not been accurately described in the
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Registration Statement or Prospectus or (ii) might reasonably be expected to
result in any Material Adverse Change.
(aa) No Transfer Taxes or Other Fees. There are no
transfer taxes or other similar fees or charges under 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.
(bb) Company Not an "Investment Company." The Company
has been advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not, and
after receipt of payment for the Shares will not be, an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(cc) Insurance. Each of the Company and its
subsidiaries are insured by institutions that are, to the Company's knowledge,
financially sound and reputable, with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and earthquakes, general
liability and directors and officers liability. The Company has no reason to
believe that it or any subsidiary will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain comparable
coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company nor any subsidiary has been denied any
insurance coverage which it has sought or for which it has applied.
(dd) Labor Matters. To the best of Company's
knowledge, no labor disturbance by the employees of the Company or any of its
subsidiaries exists or is imminent; and the Company is not aware of any existing
or imminent labor disturbance by the employees of any of its principal
suppliers, value added resellers or original equipment manufacturers that could
reasonably be expected to result in a Material Adverse Change.
(ee) No Price Stabilization or Manipulation. The
Company has not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(ff) Lock-Up Agreements. Each officer and director of
the company, each Selling Stockholder and the beneficial owners of an additional
______ shares of Common Stock of the Company has agreed to sign an agreement
substantially in the form attached hereto as Exhibit A (the "Lock-up
Agreements"). The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
Lock-up Agreements presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers, directors
or other stockholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of Xxxxxxxxx Xxxxxxxx.
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(gg) Related Party Transactions. There are no
business relationships or related-party transactions involving the Company or
any subsidiary or any other person required to be described in the Prospectus
which have not been described as required.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
(hh) No Unlawful Contributions or Other Payments.
Neither the Company nor any of its subsidiaries nor, to the best of the
Company's knowledge, any employee or agent of the Company or any subsidiary, has
made any contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(ii) Environmental Laws. (i) the Company is in
compliance with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment ("Environmental Laws") that are applicable to its business, except
where the failure to comply would not result in a Material Adverse Change, (ii)
the Company has received no notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim is required to
be disclosed in the Registration Statement and the Prospectus, (iii) the Company
is not currently aware that it will be required to make future material capital
expenditures to comply with Environmental Laws and (iv) no property which is
owned, leased or occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(jj) Periodic Review of Costs of Environmental
Compliance. In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review and the amount of its
established reserves, the Company has reasonably concluded that such associated
costs and liabilities would not, individually or in the aggregate, result in a
Material Adverse Change.
(kk) ERISA Compliance. The Company and its
subsidiaries and any "employee benefit plan" (as defined under the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company, its subsidiaries or their "ERISA Affiliates" (as
defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a subsidiary, any member of any
group of organizations described in Sections 414(b),(c),(m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such subsidiary
is a member. No "reportable event" (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates. No "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates, if such "employee benefit
plan" were terminated, would have any "amount
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of unfounded benefit liabilities" (as defined under ERISA). Neither the Company,
its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan" established
or maintained by the Company, its subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder, severally and not jointly. represents, warrants and
covenants to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has
been duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and is a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(b) The Custody Agreement and Power of Attorney. Each
of the (i) Custody Agreement signed by such Selling Stockholder and Norwest Bank
Minnesota, N.A., as custodian (the "Custodian"), relating to the deposit of the
Shares to be sold by such Selling Stockholder (the "Custody Agreement") and (ii)
Power of Attorney appointing certain individuals named therein as such Selling
Stockholder's attorneys-in-fact (each, an "Attorney-in-Fact") to the extent set
forth therein relating to the transactions contemplated hereby and by the
Prospectus (the "Power of Attorney"), of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, enforceable in accordance
with its terms, except as rights to indemnification thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles. Each Selling Stockholder agrees that the Shares to be sold
by such Selling Stockholder on deposit with the Custodian are subject to the
interests of the Underwriters, that the arrangements made for such custody are
to that extent irrevocable, and that the obligations of such Selling Stockholder
hereunder shall not be terminated, except as provided in this Agreement or in
the Custody Agreement, by any act of the Selling Stockholder, by operation of
law, by death or incapacity of such Selling Stockholder or by the occurrence of
any other event. If such Selling Stockholder should die or become incapacitated,
or if any other event should occur, before the delivery of the Shares to be sold
by such Selling Stockholder hereunder, the documents evidencing the Shares to be
sold by such Selling Stockholder then on deposit with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not occurred,
regardless of whether or not the Custodian shall have received notice thereof.
(c) Title to Shares to be Sold. Such Selling
Stockholder is the lawful owner of the Shares to be sold by such Selling
Stockholder hereunder and upon sale and delivery of, and payment for, such
Shares, as provided herein, such Selling Stockholder will convey good and
marketable title to such Shares, free and clear of all liens, encumbrances,
equities and claims whatsoever.
10.
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(d) All Authorizations Obtained. Such Selling
Stockholder has, and on the First Closing Date and the Second Closing Date (as
defined below) will have, good and valid title to all of the Company Shares
which may be sold by such Selling Stockholder pursuant to this Agreement on such
date and the legal right and power, and all authorizations and approvals
required by law and, if applicable, under its charter or other organizational
documents to enter into this Agreement and its Custody Agreement and Power of
Attorney, to sell, transfer and deliver all of the Shares which may be sold by
such Selling Stockholder pursuant to this Agreement and to comply with its other
obligations hereunder and thereunder.
(e) No Further Consents, Authorization or Approvals.
No consent, approval, authorization or order of any court or governmental agency
or body is required for the consummation by such Selling Stockholder of the
transactions contemplated herein, except such as may have been obtained under
the Securities Act and such as may be required under the federal and provincial
securities laws of Canada or the blue sky laws or any jurisdiction in connection
with the purchase and distribution of the Shares by the Underwriters and such
other approvals as have been obtained.
(f) Non-Contravention. Neither the sale of the
Securities being sold by such Selling Stockholder nor the consummation of any
other of the transactions herein contemplated by such Selling Stockholder or the
fulfillment of the terms hereof by such Selling Stockholder will conflict with,
result in a breach or violation of, or constitute a default under any law or the
terms of any indenture or other agreement or instrument to which such Selling
Stockholder is party or bound, any judgment, order or decree applicable to such
Selling Stockholder or any court or regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder.
(g) No Registration or Other Similar Rights. Such
Selling Stockholder does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the Company under the
Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as are described in the Prospectus under
"Shares Eligible for Future Sale."
(h) No Preemptive, Co-sale or other Rights. Such
Selling Stockholder does not have, or has waived prior to the date hereof, any
preemptive right, co-sale right or right of first refusal or other similar right
to purchase any of the Shares that are to be sold by the Company or any of the
other Selling Stockholders to the Underwriters pursuant to this Agreement; and
such Selling Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, right, warrants, options or other securities from the Company required to
be described in the Registration Statement and the Prospectus that is not
described in the Registration Statement and the Prospectus.
(i) Disclosure Made by Such Selling Stockholder in
the Prospectus. All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration Statement and
Prospectus is, and on the First Closing Date and the Second Closing Date (as
defined below) will be, true, correct, and complete in all material respects,
and does not, and on the First Closing Date and the Second Closing Date will
not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading. Such Selling
Stockholder confirms as accurate the number of shares of Company Shares set
forth opposite such Selling Stockholder's name in the
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Prospectus under the caption "Principal and Selling Stockholders" (both prior to
and after giving effect to the sale of the Shares).
(j) No Price Stabilization or Manipulation. Such
Selling Stockholder has not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(k) No Transfer Taxes or Other Fees. There are no
transfer taxes or other similar fees or charges under 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 sale by the
Selling Stockholders of the Shares.
(l) Distribution of Offering Materials by the Selling
Stockholders. The Selling Stockholders have not distributed and will not
distribute, prior to the later of the Second Closing Date (as defined below) and
the completion of the Underwriters' distribution of the Shares, any offering
material in connection with the offering and sale of the Shares by such Selling
Stockholder other than a preliminary prospectus, the Prospectus or the
Registration Statement.
(m) Confirmation of Company Representations and
Warranties. Such Selling Stockholder is not prompted to sell the Shares to be
sold by such Selling Stockholder by any material information concerning the
Company that is not set forth in the Registration Statement or the Prospectus.
Such Selling Stockholder, if a director or officer of the Company, is aware of
no fact that causes such Selling Stockholder to believe that the representations
and warranties of the Company contained in Section 1(A) hereof are not true and
correct.
Any certificate signed by or on behalf of any Selling Stockholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) The Firm Shares. Upon the terms herein set forth,
(i) the Company agrees to issue and sell to the several Underwriters an
aggregate of 2,000,000 Firm Shares and (ii) the Selling Stockholders agree to
sell to the several Underwriters an aggregate of 625,471 Firm Shares, each
Selling Stockholder selling the number of Firm Shares set forth opposite such
Selling Stockholder's name on Schedule B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Stockholders the
respective number of Firm Shares set forth opposite their names on Schedule A.
The purchase price per Firm Share to be paid by the several Underwriters to the
Company and the Selling Stockholders shall be $[___] per share.
(b) The First Closing Date. Delivery of the Firm
Shares to be purchased by the Underwriters and payment therefor shall be made by
the Company and the Representatives at 9:00 a.m. Boston time, at the offices of
Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx LLP, One Beacon Street, Boston, Massachusetts
(or at such other place as may be agreed upon among the Representatives and the
Company), (i) on the third full business day following the first day that Shares
are traded, (ii) if this Agreement is executed and delivered after 4:30 P.M.,
Boston time, the fourth full business day following the day that this Agreement
is executed
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and delivered or (iii) at such other time and date not later that seven full
business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "Closing
Date;" provided, however, that if the Company has not made available to the
Representatives copies of the Prospectus within the time provided in Section
2(g) and 3(e) hereof, the Representatives may, in their sole discretion,
postpone the Closing Date until no later that two full business days following
delivery of copies of the Prospectus to the Representatives.
(c) The Option Shares; the Second Closing Date. In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company and certain Selling Stockholders hereby grant an option to the
several Underwriters to purchase, severally and not jointly, up to an aggregate
of 393,820 Option Shares from the Company and the Selling Stockholders at the
purchase price per share to be paid by the Underwriters for the Firm Shares. The
option granted hereunder is for use by the Underwriters solely in covering any
over-allotments in connection with the sale and distribution of the Firm Shares.
The option granted hereunder may be exercised at any time upon notice by the
Representatives to the Company and the Selling Stockholders, which notice may be
given at any time within 30 days from the date of this Agreement. The time and
date of delivery of the Option Shares, if subsequent to the First Closing Date,
is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Option Shares
are to be purchased, (i) each Underwriter agrees, severally and not jointly, to
purchase the number of Option Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Option Shares to be purchased as the number of
Firm Shares set forth on Schedule A opposite the name of such Underwriter bears
to the total number of Firm Shares and (ii) the Company and each Selling
Stockholder agree, severally and not jointly, to sell the number of Option
Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be sold as the number of Option Shares set forth in
Schedule B opposite the name of such Selling Stockholder (or, in the case of the
Company, as the number of Option Shares to be sold by the Company as set forth
in the paragraph "Introductory" of this Agreement) bears to the total number of
Option Shares. The Representatives may cancel the option at any time prior to
its expiration by giving written notice of such cancellation to the Company and
the Selling Stockholders.
(d) Public Offering of the Shares. The
Representatives hereby advises the Company and the Selling Stockholders that the
Underwriters intend to offer for sale to the public, as described in the
Prospectus, their respective portions of the Shares as soon after this Agreement
has been executed and the Registration Statement has been declared effective as
the Representatives, in their sole judgment, has determined is advisable and
practicable.
(e) Payment for the Shares. Payment for the Shares to
be sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company. Payment for the Shares to be sold
by the Selling Stockholders shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Custodian.
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It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of, and make payment of the purchase price for, the Firm Shares and any
Option Shares the Underwriters have agreed to purchase. Xxxxxxxxx Xxxxxxxx,
individually and not as a Representative of the Underwriters, may (but shall not
be obligated to) make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by the Representatives by the First
Closing Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter from
any of its obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Shares to be sold by such Selling Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement.
(f) Delivery of the Shares. The Company and the
Selling Stockholders shall deliver, or cause to be delivered a credit
representing the Firm Shares to an account or accounts at The Depository Trust
Company as designated by the Representatives for the accounts of the
Representatives and the several Underwriters at the First Closing Date, against
the irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The Company and the Selling
Stockholders shall also deliver, or cause to be delivered a credit representing
the Option Shares to an account or accounts at The Depository Trust Company as
designated by the Representatives for the accounts of the Representatives and
the several Underwriters, at the First Closing Date or the Second Closing Date,
as the case may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. Time
shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not
later than 3:00 p.m. Boston time on the second business day following the date
the Shares are released by the Underwriters for sale to the public, the Company
shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request.
SECTION 3. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
A. COVENANTS OF THE COMPANY. The Company further covenants and
agrees with each Underwriter as follows:
(a) Registration Statement Matters. The Company will
(i) use its best efforts to cause the Registration Statement to become effective
or, if the procedure in Rule 430A of the Securities Act is followed, to prepare
and timely file with the Commission under Rule 424(b) under the Securities Act a
Prospectus in a form approved by the Representatives containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Securities Act and (ii) not file any amendment to
the Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall
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have reasonably objected in writing or that is not in compliance in all material
respects with the Securities Act. If the Company elects to rely on Rule 462(b)
under the Securities Act, the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) under the
Securities Act prior to the time confirmations are sent or given, as specified
by Rule 462(b)(2) under the Securities Act, and shall pay the applicable fees in
accordance with Rule 111 under the Securities Act.
(b) Securities Act Compliance. The Company will
advise the Representatives promptly (i) when the Registration Statement or any
post-effective amendment thereto shall have become effective, (ii) of receipt of
any comments from the Commission, (iii) of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the use
of the Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(c) Blue Sky Compliance. The Company will cooperate
with the Representatives and counsel for the Underwriters in endeavoring to
qualify the Shares for sale under the securities laws of such jurisdictions
(both national and foreign) as the Representatives may reasonably have
designated in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose,
provided the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction where it
is not now so qualified or required to file such a consent. 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 the Representatives may reasonably request for
distribution of the Shares.
(d) Amendments and Supplements to the Prospectus and
Other Securities Act Matters. The Company will comply in all material respects
with the Securities Act and the Exchange Act, and the rules and regulations of
the Commission thereunder, so as to permit the completion of the distribution of
the Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Representatives or
counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission, and furnish at its own expense to the Underwriters and to
dealers, an appropriate amendment to the Registration Statement or supplement to
the Prospectus so that the Prospectus as so amended or supplemented will not, in
the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the law.
(e) Copies of any Amendments and Supplements to the
Prospectus. The Company agrees to furnish the Representatives, without charge,
during the period beginning on the date hereof and ending on the later of the
First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
15.
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Period"), as many copies of the Prospectus and any amendments and supplements
thereto as the Representatives may reasonably request.
(f) Insurance. The Company shall (i) obtain Directors
and Officers liability insurance in the minimum amount of $10 million which
shall apply to the offering contemplated hereby and (ii) cause Xxxxxxxxx
Xxxxxxxx to be added to such policy such that up to $500,000 of its expenses
pursuant to section 7(a) shall be paid directly by such insurer.
(g) Notice of Subsequent Events. If at any time
during the 90-day period after the Registration Statement becomes effective, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which, in your opinion, the market price of the Company Shares has
been or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(h) Use of Proceeds. The Company shall apply the net
proceeds from the sale of the Shares sold by it in the manner described under
the caption "Use of Proceeds" in the Prospectus.
(i) Transfer Agent. The Company shall continue to
engage and maintain, at its expense, a registrar and transfer agent for the
Company Shares.
(j) Earnings Statement. As soon as practicable, the
Company will make generally available to its security holders and to the
Representatives an earnings statement (which need not be audited) covering the
12-month period ending June 30, 2001 that satisfies the provisions of Section
11(a) of the Securities Act.
(k) Periodic Reporting Obligations. During the
Prospectus Delivery Period the Company shall file, on a timely basis, with the
Commission and the National Association of Securities Dealers, Inc. all reports
and documents required to be filed under the Exchange Act.
(l) Agreement Not to Offer or Sell Additional
Securities. The Company will not offer, sell or contract to sell, or otherwise
dispose of or enter into any transaction which is designed to, or could be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise by the
Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company) directly or indirectly, or announce the
offering of, any other Common Shares or any securities convertible into, or
exchangeable for, Common Shares; provided, however, that the Company may (i)
grant options to purchase and issue and sell Common Shares pursuant to any
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and
described in the Prospectus so long as none of those shares may be transferred
and the Company shall enter stop transfer instructions with its transfer agent
and registrar against the transfer of any such Common Shares and (ii) issue
Common Shares issuable upon the conversion of securities or the exercise of
options or warrants outstanding at the date of the Prospectus and described in
the Prospectus. These restrictions terminate after the close of
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trading of the Shares on the Nasdaq National Market on the 90th day following
the effective date of the Registration Statement (the "Lock-Up Period").
(m) Future Reports to the Representatives. During the
period of three years hereafter the Company will furnish to the Representatives
(i) as soon as practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of the Company as of
the close of such fiscal year and statements of income, stockholders' equity and
cash flows for the year then ended and the opinion thereon of the Company's
independent public or certified public accountants; (ii) as soon as practicable
after the filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the National Association of Securities
Dealers, Inc. or any securities exchange; and (iii) as soon as available, copies
of any report or communication of the Company mailed generally to holders of its
capital stock.
(n) Exchange Act Compliance. During the Prospectus
Delivery Period, the Company will file all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the
manner and within the time periods required by the Exchange Act.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional
Securities. Such Selling Stockholder will not, during the Lock-Up Period, make a
disposition of Securities (as defined in Exhibit A hereto) now owned or
hereafter acquired directly by such person or with respect to which such person
has or hereafter acquires the power of disposition, otherwise than (i) as a bona
fide gift or gifts, provided the donee or donees thereof agree in writing to be
bound by this restriction, (ii) as a distribution to partners or stockholders of
such person, provided that the distributees thereof agree in writing to be bound
by the terms of this restriction, (iii) with respect to dispositions of Common
Shares acquired on the open market or (iv) with the prior written consent of
Xxxxxxxxx Xxxxxxxx. The foregoing restriction has been expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a disposition of Securities during the Lock-Up Period, even if such Securities
would be disposed of by someone other than such holder. Such prohibited hedging
or other transactions would include, without limitation, any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person has also agreed and consented to the entry
of stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by such person except in compliance with this
restriction.
(b) Delivery of Forms W-8 and W-9. To deliver to the
Representatives prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-8 (if the Selling Stockholder
is a non-United States person) or Form W-9 (if the Selling Stockholder is a
United States Person).
(c) Notification of Untrue Statements, etc. If, at
any time prior to the date on which the distribution of the Common Shares as
contemplated herein and in the Prospectus has been completed, as determined by
the Representatives, such Selling
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Stockholder has knowledge of the occurrence of any event as a result of which
the Prospectus or the Registration Statement, in each case as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, such Selling
Stockholder will promptly notify the Company and the Representatives.
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein on the First Closing Date and, with respect to the Option
Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders set forth in Sections 1(A) and 1(B) hereof as of the date hereof
and as of the First Closing Date as though then made and, with respect to the
Option Shares, as of the Second Closing Date as though then made, to the timely
performance by the Company and the Selling Stockholders of their respective
covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) Compliance with Registration Requirements; No
Stop Order; No Objection from the National Association of Securities Dealers,
Inc. The Registration Statement shall have become effective prior to the
execution of this Agreement, or at such later date as shall be consented to in
writing by you; and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company, any Selling Stockholder or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of Underwriters'
Counsel; and the National Association of Securities Dealers, Inc. shall have
raised no objection to the fairness and reasonableness of the underwriting terms
and arrangements.
(b) Corporate Proceedings. All corporate proceedings
and other legal matters in connection with this Agreement, the form of
Registration Statement and the Prospectus, and the registration, authorization,
issue, sale and delivery of the Shares, shall have been reasonably satisfactory
to Underwriters' Counsel, and such counsel shall have been furnished with such
papers and information as they may reasonably have requested to enable them to
pass upon the matters referred to in this Section.
(c) No Material Adverse Change. Subsequent to the
execution and delivery of this Agreement and prior to the First Closing Date, or
the Second Closing Date, as the case may be, there shall not have been any
Material Adverse Change in the condition (financial or otherwise), earnings,
operations or business of the Company and its subsidiaries considered as one
enterprise from that set forth in the Registration Statement or Prospectus,
that, in your sole judgment, is material and adverse and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public offering
of the Shares as contemplated by the Prospectus.
(d) Opinion of Counsel for the Company. You shall
have received on the First Closing Date, or the Second Closing Date, as the case
may be, an opinion of Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx LLP, counsel for the
Company, substantially in the form of Exhibit B attached hereto, dated the First
Closing Date, or the Second Closing Date, addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the Underwriters.
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Counsel rendering the opinion contained in Exhibit B may rely as to
questions of law not involving the laws of the United States or the States of
Massachusetts and Delaware upon opinions of local counsel, and as to questions
of fact upon representations or certificates of officers of the Company, the
Selling Stockholders or officers of the Selling Stockholders (when the Selling
Stockholder is not a natural person), and of government officials, in which case
their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(e) Opinion of Counsel for the Underwriters. You
shall have received on the First Closing Date or the Second Closing Date, as the
case may be, an opinion of Xxxxxx Godward LLP, substantially in the form of
Exhibit C hereto. The Company shall have furnished to such counsel such
documents as they may have requested for the purpose of enabling them to pass
upon such matters.
(f) Accountants' Comfort Letter. You shall have
received on the First Closing Date and on the Second Closing Date, as the case
may be, a letter from PricewaterhouseCoopers LLP, addressed to the Underwriters,
dated the First Closing Date or the Second Closing Date, as the case may be,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Act and the applicable published Rules
and Regulations and based upon the procedures described in such letter delivered
to you concurrently with the execution of this Agreement (herein called the
"Original Letter"), but carried out to a date not more than four (4) business
days prior to the First Closing Date or the Second Closing Date, as the case may
be, (i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the First Closing Date or the
Second Closing 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
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of such letter, or to reflect the availability of
more recent financial statements, data or information. The letter shall not
disclose any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise from that set forth in the Registration Statement
or Prospectus, which, in your sole judgment, is material and adverse and that
makes it, in your sole judgment, impracticable or inadvisable to proceed with
the public offering of the Shares as contemplated by the Prospectus. The
Original Letter from PricewaterhouseCoopers LLP shall be addressed to or for the
use of the Underwriters in form and substance satisfactory to the Underwriters
and shall (i) represent, to the extent true, that they are independent certified
public accountants with respect to the Company within the meaning of the Act and
the applicable published Rules and Regulations, (ii) set forth their opinion
with respect to their examination of the balance sheets of the Company and KD
One as of December 31, 1999 and related statements of operations, stockholders'
equity and cash flows for the 12 months ended December 31, 1999, (iii) state
that PricewaterhouseCoopers LLP has performed the procedures set out in
Statement on Auditing Standards No. 71 ("SAS 71") for a review of interim
financial information on the financial statements for each of the quarters in
the eight-quarter period ended December 31, 1999 (the "Quarterly Financial
Statements"), (iv) state that in the course of such review, nothing came to
their attention that leads them to believe that any material modifications need
to be made to any of the Quarterly Financial Statements in order for them to be
in compliance with generally accepted accounting principles consistently applied
across the periods presented, and address other matters agreed upon by
PricewaterhouseCoopers LLP and you. In addition, you shall have received from
PricewaterhouseCoopers LLP a letter addressed to the Company and made
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available to you for the use of the Underwriters stating that their review of
the Company's and KD One's systems of internal accounting controls, to the
extent they deemed necessary in establishing the scope of their examination of
the financial statements as of December 31, 1999, did not disclose any
weaknesses in internal controls that they considered to be material weaknesses.
(g) Officers' Certificate. You shall have received on
the First Closing Date and the Second Closing Date, as the case may be, a
certificate of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, to the effect that, and you shall be satisfied
that:
(i) The representations and warranties of
the Company in this Agreement are true and correct, as if made on and as of the
First Closing Date or the Second Closing Date, as the case may be, and the
Company has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the First Closing Date or
the Second Closing Date, as the case may be;
(ii) To the Company's knowledge, no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened under the Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery of such
certificate, (A) the Registration Statement and the Prospectus, and any
amendments or supplements thereto, contained all material information required
to be included therein by the Securities Act or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the case may
be, and in all material respects conformed to the requirements of the Securities
Act or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and (B) the Registration Statement
and the Prospectus, and any amendments or supplements thereto, did not and does
not include any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and, since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as
of which information is given in the Registration Statement and Prospectus,
there has not been (a) any Material Adverse Change in the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise, (b) any transaction
that is material to the Company and its subsidiaries considered as one
enterprise, except transactions entered into in the ordinary course of business,
(c) any obligation, direct or contingent, that is material to the Company and
its subsidiaries considered as one enterprise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course of business,
(d) any change in the capital stock or outstanding indebtedness of the Company
or any of its subsidiaries that is material to the Company and its subsidiaries
considered as one enterprise, (e) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
subsidiaries, or (f) any loss or damage (whether or not insured) to the property
of the Company or any of its subsidiaries which has been sustained or will have
been sustained which has a material adverse effect on the condition
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(financial or otherwise), earnings, operations or business of the Company and
its subsidiaries considered as one enterprise.
(h) Lock-up Agreement from Certain Stockholders of
the Company. The Company shall have obtained and delivered to you an agreement
substantially in the form of Exhibit A attached hereto from each person and
entity identified in Section 1.A.(ff) above.
(i) Opinion of Counsel for the Selling Stockholders.
You shall have received on the First Closing Date and the Second Closing Date,
as the case may be, an opinion of Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx LLP, counsel
for the Selling Stockholders, substantially in the form of Exhibit D hereto.
In rendering such opinion, such counsel may rely as to questions of law
not involving the laws of the United States or State of Massachusetts and
Delaware upon opinions of local counsel and as to questions of fact upon
representations or certificates of the Selling Stockholders or officers of the
Selling Stockholders (when the Selling Stockholder is not a natural person), and
of governmental officials, in which case their opinion is to state that they are
so relying and that they have no knowledge of any material misstatement or
inaccuracy of any material misstatement or inaccuracy in any such opinion,
representation or certificate so relied upon shall be delivered to you, as
Representatives of the Underwriters, and to Underwriters' Counsel.
(j) Selling Stockholders' Certificate. On each of the
First Closing Date and the Second Closing Date, as the case may be, the
Representatives shall received a written certificate executed by the
Attorney-in-Fact of each Selling Stockholder, dated as of such Closing Date, to
the effect that:
(i) the representations, warranties and
covenants of such Selling Stockholder set forth in Section 1(B) of this
Agreement are true and correct with the same force and effect as though
expressly made by such Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(k) Selling Stockholders' Documents. At least three
business days prior to the date hereof, the Company and the Selling Stockholders
shall have furnished for review by the Representatives copies of the Powers of
Attorney and Custody Agreements executed by each of the Selling Stockholders and
such further information, certificates and documents as the Representatives may
reasonably request.
(l) Stock Exchange Listing. The Shares shall have
been approved for listing on the Nasdaq National Market, subject only to
official notice of issuance where applicable.
(m) Compliance with Prospectus Delivery Requirements.
The Company shall have complied with the provisions of Sections 2(g) and 3(e)
hereof with respect to the furnishing of Prospectuses.
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(n) Additional Documents. On or before each of the
First Closing Date and the Second Closing Date, as the case may be, the
Representatives and counsel for the Underwriters shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Option
Shares, at any time prior to the Second Closing Date, which termination shall be
without liability on the part of any party to any other party, except that
Section 5 (Payment of Expenses), Section 6 (Reimbursement of Underwriters'
Expenses), Section 7 (Indemnification and Contribution) and Section 10
(Representations and Indemnities to Survive Delivery) shall at all times be
effective and shall survive such termination.
SECTION 5. PAYMENT OF EXPENSES. The Company and the Selling
Stockholders, jointly and severally, agree to pay in such proportions as they
may agree upon among themselves all costs, fees and expenses incurred in
connection with the performance of its their obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Shares to the Underwriters, (iv) all fees and expenses of the Company's
counsel, independent public or certified public accountants and other advisors,
(v) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement
(including financial statements, exhibits, schedules, consents and certificates
of experts), each preliminary prospectus and the Prospectus, and all amendments
and supplements thereto, and this Agreement, (vi) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Shares for offer and sale under the
state securities or blue sky laws or the provincial securities laws of Canada or
any other country, and, if requested by the Representatives, preparing and
printing a "Blue Sky Survey," an "International Blue Sky Survey" or other
memorandum, and any supplements thereto, advising the Underwriters of such
qualifications, registrations and exemptions, (vii) the filing fees incident to,
and the reasonable fees and expenses of counsel for the Underwriters in
connection with, the review and approval of the Underwriters' participation in
the offering and distribution of the Common Shares by the National Association
of Securities Dealers, Inc., (viii) the fees and expenses associated with
listing including the Common Shares on the Nasdaq National Market, (ix) all
costs and expenses incident to the travel and accommodation of the Company's
employees on the "roadshow," and (x) all other fees, costs and expenses referred
to in Item 13 of Part II of the Registration Statement. Except as provided in
this Section 5, Section 6, and Section 7 hereof, the Underwriters shall pay
their own expenses, including the fees and disbursements of their counsel.
The Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their obligations under this Agreement which are not otherwise specifically
provided for herein, including but not limited to (i) fees and expenses of
counsel and other advisors for such Selling Stockholders, (ii) fees and
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expenses of the Custodian and (iii) expenses and taxes incident to the sale and
delivery of the Common Shares to be sold by such Selling Stockholders to the
Underwriters hereunder (which taxes, if any, may be deducted by the Custodian
under the provisions of Section 2 of this Agreement).
This Section 5 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, on the other hand.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement
is terminated by the Representatives pursuant to Section 4, Section 9 or Section
15, or if the sale to the Underwriters of the Shares on the First Closing Date
is not consummated because of any refusal, inability or failure on the part of
the Company or the Selling Stockholders to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Representatives and the other Underwriters (or such Underwriters as have
terminated this Agreement with respect to themselves), severally, upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Representatives and the Underwriters in connection with the proposed purchase
and the offering and sale of the Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel and accommodation expenses,
postage, facsimile and telephone charges.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification of the Underwriters.
(i) The Company agrees to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if any,
who controls any Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject, under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; or (v) any untrue statement or
alleged untrue statement of any material fact contained in any audio or visual
materials provided by the Company or based upon written information furnished by
or on behalf of the Company including, without limitation, slides, videos, films
or tape recordings, used in connection with the marketing of the Shares,
including without limitation, statements communicated to securities analysts
employed by the Underwriters; or (vi) any act or failure to act or any alleged
act or failure to act by any Underwriter in connection with, or relating in any
manner to, the Shares or the offering
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contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (i), (ii), (iii), (iv) or (v) above, provided that the Company
shall not be liable under this clause (vi) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by Xxxxxxxxx Xxxxxxxx) as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and provided, further, that with respect to
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The indemnity agreement
set forth in this Section 7(a) shall be in addition to any liabilities that the
Company may otherwise have.
(ii) Subject to Section 7(j) hereof, each of
the Selling Stockholders, severally and not jointly, agrees to indemnify and
hold harmless each Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act and
the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A under the Securities Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) upon any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in the case of
subparagraphs (i) and (ii) of this Section 7(a)(2) to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or such Underwriter by such Selling
Stockholder directly or through such Selling Stockholder's representatives,
specifically for use in the preparation thereof; or (iii) in whole or in part
upon any inaccuracy in the representations and warranties of the Selling
Stockholders
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contained herein; or (iv) in whole or in part upon any failure of the Selling
Stockholders to perform their respective obligations hereunder or under law; or
(v) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon any
matter covered by clause (i), (ii), (iii) or (iv) above, provided that the
Selling Stockholders shall not be liable under this clause (v) to the extent
that a court of competent jurisdiction shall have determined by a final judgment
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its bad faith or willful misconduct; and to reimburse each
Underwriter and each such controlling person for any and all expenses (including
the fees and disbursements of counsel chosen by Xxxxxxxxx Xxxxxxxx) as such
expenses are reasonably incurred by such Underwriter or such controlling person
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided, however,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Selling Stockholders by the Representatives
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto); and provided, further,
that with respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased Shares, or any
person controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The indemnity
agreement set forth in this Section 7(a) shall be in addition to any liabilities
that the Selling Stockholders may otherwise have.
(b) Indemnification of the Company, its Directors,
Officers and Selling Stockholders. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who signed the Registration Statement, the Selling Stockholders
and each person, if any, who controls the Company or any Selling Stockholder
within the meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as incurred, to which the Company, or any
such director, officer, Selling Stockholder or controlling person may become
subject, under the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any preliminary prospectus, the Prospectus (or
any amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company and the Selling Stockholders by the
Representatives expressly for use therein; and to reimburse
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the Company, or any such director, officer, Selling Stockholder or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer, Selling Stockholder or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. The indemnity agreement
set forth in this Section 7(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) Information Provided by the Underwriters. Each of
the Company and each of the Selling Stockholders, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, hereby acknowledges that the only information that the Underwriters have
furnished to the Company expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) are the statements set forth under the caption "Underwriting" in the
Prospectus; and the Underwriters confirm that such statements are correct.
(d) Notifications and Other Indemnification
Procedures. Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 7 to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (Xxxxxxxxx Xxxxxxxx in the case of Section 7(b) and Section
8), representing the indemnified parties who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
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(e) Settlements. The indemnifying party under this
Section 7 shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
7(d) hereof, the indemnifying party 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 60 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes (i) an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(f) Contribution. If the indemnification provided for
in this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
then each indemnifying party shall contribute to the aggregate amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect the relative benefits received by such party on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the such
party on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The 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 the Company and the Selling
Stockholders on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company each Selling Stockholder and Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 7(f)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7(f). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 7(f) 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 subsection (f), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent
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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 in this Section 7(f)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) Timing of Any Payments of Indemnification. Any
losses, claims, damages, liabilities or expenses for which an indemnified party
is entitled to indemnification or contribution under this Section 7 shall be
paid by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred, but in all cases, no later than
45 days of invoice to the indemnifying party.
(h) Survival. The indemnity and contribution
agreements contained in this Section 7 shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or any persons controlling the Company, (ii) acceptance of
any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter, or to the Company, its directors or
officers, any Selling Stockholder or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
(i) Acknowledgements of Parties. The parties to this
Agreement hereby acknowledge that they are sophisticated business persons who
were represented by counsel during the negotiations regarding the provisions
hereof including, without limitation, the provisions of this Section 7, and are
fully informed regarding said provisions. They further acknowledge that the
provisions of this Section 7 fairly allocate the risks in light of the ability
of the parties to investigate the Company and its business in order to assure
that adequate disclosure is made in the Registration Statement and Prospectus as
required by the Securities Act and the Exchange Act.
(j) Liability Cap. The liability of each Selling
Stockholder under Section 7(a)(ii) (except in cases of fraud) will be limited to
the gross proceeds (less underwriting discount) received by such Selling
Stockholder from the sale of Shares by such Selling Stockholder hereunder.
SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Shares that
it or they have agreed to purchase hereunder on such date, and the aggregate
number of Common Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase does not exceed 10% of the aggregate number of
the Shares to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the number of Firm Common Shares
set forth opposite their respective names on Schedule A bears to the aggregate
number of Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as may be specified by the
Representatives with the consent of the non-defaulting Underwriters, to purchase
the Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date. If, on the First Closing Date or the Second
Closing Date, as the case may be, any one or more of the Underwriters shall fail
or refuse to purchase Shares and the aggregate number of Shares with respect to
which such default occurs exceeds 10% of the aggregate number of Shares to be
purchased on such date, and arrangements satisfactory to the Representatives and
the Company for the purchase of such Shares are not made within 48 hours after
such default, this Agreement shall terminate without
28.
29
liability of any party to any other party except that the provisions of Section
5, and Section 7 shall at all times be effective and shall survive such
termination. In any such case either the Representatives or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date, as
the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 9. TERMINATION OF THIS AGREEMENT. This Agreement may be
terminated by the Representatives by notice given to the Company if (a) at any
time after the execution and delivery of this Agreement and prior to the First
Closing Date (i) trading or quotation in any of the Company's securities shall
have been suspended or limited by the Commission or by the Nasdaq Stock Market,
or trading in securities generally on either the Nasdaq Stock Market or the New
York Stock Exchange shall have been suspended or limited, or minimum or maximum
prices shall have been generally established on any of such stock exchanges by
the Commission or the National Association of Securities Dealers, Inc.; (ii) a
general banking moratorium shall have been declared by any of federal, New York
or California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any substantial change in the United States or international financial
markets, or any substantial change or development involving a prospective change
in United States' or international political, financial or economic conditions,
as in the judgment of the Representatives is material and adverse and makes it
impracticable or inadvisable to market the Common Shares in the manner and on
the terms contemplated in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured or (b) in the case of any of
the events specified 9(a)(i)-(v), such event singly or together with any other
event, makes it, in your judgement, impracticable or inadvisable to market the
Common Shares in the manner and on the terms contemplated in the Prospectus. Any
termination pursuant to this Section 9 shall be without liability on the part of
(x) the Company or the Selling Stockholders to any Underwriter, except that the
Company and the Selling Stockholders shall be obligated to reimburse the
expenses of the Representatives and the Underwriters pursuant to Sections 5 and
6 hereof, (y) any Underwriter to the Company or any person controlling the
Company or the Selling Stockholders, or (z) of any party hereto to any other
party except that the provisions of Section 7 shall at all times be effective
and shall survive such termination.
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the company, of its
officers, of the Selling Stockholders and of the several Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or any of its or their partners, officers or directors or any
controlling person, or the Selling Stockholders, as the case may be, and will
survive delivery of and payment for the Shares sold hereunder and any
termination of this Agreement.
29.
30
SECTION 11. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
If to the Company:
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
If to the Selling Stockholders:
Xxxxxx Xxxxxxxx
c/o Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 12. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 8 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7, and to their
respective successors, and personal representatives, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares as such from any of the Underwriters merely by
reason of such purchase.
SECTION 13. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 14. GOVERNING LAW PROVISIONS.
(a) Governing Law. This agreement shall be governed
by and construed in accordance with the internal laws of the state of New York
applicable to agreements made and to be performed in such state.
30.
31
(b) Consent to Jurisdiction. Any legal suit, action
or proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby ("Related Proceedings") 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 (a "Related Judgment"), 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. Each party
not located in the United States irrevocably appoints CT Corporation System,
which currently maintains a San Francisco office at 00 Xxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America, as its agent to receive
service of process or other legal summons for purposes of any such suit, action
or proceeding that may be instituted in any state or federal court in the City
and County of San Francisco.
SECTION 15. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO SELL
AND DELIVER COMMON SHARES. If one or more of the Selling Stockholders shall fail
to sell and deliver to the Underwriters the Shares to be sold and delivered by
such Selling Stockholders at the First Closing Date pursuant to this Agreement,
then the Underwriters may at their option, by written notice from the
Representatives to the Company and the Selling Stockholders, either (i)
terminate this Agreement without any liability on the part of any Underwriter
or, except as provided in Sections 5, 6, and 7 hereof, the Company or the
Selling Stockholders, or (ii) purchase the shares which the Company and other
Selling Stockholders have agreed to sell and deliver in accordance with the
terms hereof. If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Shares to be sold and delivered by such Selling
Stockholders pursuant to this Agreement at the First Closing Date or the Second
Closing Date, then the Underwriters shall have the right, by written notice from
the Representatives to the Company and the Selling Stockholders, to postpone the
First Closing Date or the Second Closing Date, as the case may be, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
SECTION 16. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
Section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
[The remainder of this page has been intentionally left blank.]
31.
32
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Custodian the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
NET PERCEPTIONS, INC.
By:
--------------------------------------
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
SELLING STOCKHOLDERS
By:
--------------------------------------
Attorney-in-fact for the Selling
Stockholders named in Schedule B
hereto
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives as of the date first above written.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXXX SECURITIES INC.
U.S. BANCORP XXXXX XXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
XXXXX, XXXXXXXX & XXXX, INC.
On their behalf and on behalf of each of the several underwriters named in
Schedule A hereto.
By FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
By:
----------------------------------------------
G. Xxxxxxxx Xxxxxxxxx
Managing Director
32.
33
SCHEDULE A
NUMBER OF FIRM COMMON
UNDERWRITERS SHARES TO BE PURCHASED
------------ ----------------------
FLEETBOSTON XXXXXXXXX XXXXXXXX INC..................................... [___]
CHASE SECURITIES INC................................................... [___]
U.S. BANCORP XXXXX XXXXXXX INC......................................... [___]
XXXX XXXXXXXX INCORPORATED............................................. [___]
XXXXX, XXXXXXXX & XXXX, INC............................................ [___]
Total............................................................. [___]
X-X
00
XXXXXXXX X
MAXIMUM NUMBER
NUMBER OF FIRM OF OPTION SHARES
SELLING STOCKHOLDER SHARES TO BE SOLD TO BE SOLD
------------------- ----------------- -----------------
Xxxxx Xxxxxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 7,225 1,083
Xxxx Xxxxxxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 16,000 2,400
Xxxxxx Xxxxxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 18,417 2,762
Xxxxxxx Xxxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 10,000 0
Xxxxxxx Xxxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 139,118 20,867
Xxxxxx Xxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 28,511 4,276
Xxxxxx Xxxxx
Net Perceptions, Inc.
000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 10018-7606...................................... 4,500 0
Xxxx Xxxxx
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 55108..................................... 100,170 15,025
Xxxxxx Xxxxxx
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 190,294 28,544
Xxxxxx Van Tassel
Net Perceptions, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 55344....................................... 4,125 0
S-B1.
35
MAXIMUM NUMBER
NUMBER OF FIRM OF OPTION SHARES
SELLING STOCKHOLDER SHARES TO BE SOLD TO BE SOLD
------------------- ----------------- -----------------
Xxxx Xxxxxx
000 Xxxxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxx
X0X 0X0
Canada........................................................ 300 0
Xxxxx Xxxxx
0000 Xxxxx Xxxx Xxxx
Xxxxxx, XX 78750............................................. 800 0
Xxxx Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 78746............................................. 25,000 0
Xxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 78703............................................. 10,000 0
Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxxx Xxxx
Xxxxxx, XX 78730............................................. 2,400 0
Xxxxx Xxxxx
0 Xxxxxx Xxxx
Xxxxxxxxxx, XX 10708......................................... 235 0
Xxxx Xxxx
0000 X. Xxxxxxx xx Xxxxx Xxxxxxx
X0, Xxxxx 000
Xxxxxx, XX 78731............................................. 1,402 0
Xxxxx Xxxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxx, XX 78746............................................. 7,800 0
Xxxxx Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxx, XX 78746............................................. 4,490 0
Xxx Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 78746............................................. 406 0
Xxxx XxXxxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxx, XX 78757............................................. 350 0
S-B2.
36
MAXIMUM NUMBER
NUMBER OF FIRM OF OPTION SHARES
SELLING STOCKHOLDER SHARES TO BE SOLD TO BE SOLD
------------------- ----------------- -----------------
Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxx Xxxxxxx
Xxxxxx, XX 78731............................................. 301 0
Xxxxxxxx Rock
0000 X. Xxxxx Xxxx
Xxxxxxxxxxx, XX 76226........................................ 800 0
Xxxxx Xxxxxx
0 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 31411........................................... 4,400 0
Xxxxx Xxxxxxxx
0000 Xxxxxx Xxxx Xxxxxx
Xxxxxx, XX 78753............................................. 3,300 0
Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 48324.................................... 1,000 0
Xxxxxxxx-Xxxxx Specialty Retail Group III
0000 Xxxxxxxx Xxxxx
Xxxxx 000X
Xxxxxxx, XX 75001............................................ 30,000 0
RHO Management Trust I
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 10019........................................... 14,127 0
Total:............................................... 625,471 74,957
====== ======
S-B3.
37
EXHIBIT A
LOCK-UP AGREEMENT
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxx Xxxxxxxx Incorporated
Xxxxx, Xxxxxxxx & Xxxx, Inc.
As Representatives of the Several Underwriters
c/o FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Net Perceptions, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock of the Company ("Common Stock") or securities convertible into
or exchangeable or exercisable for Common Stock. The Company proposes to carry
out a public offering of Common Stock (the "Offering") for which you will act as
the representatives (the "Representatives") of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) as a distribution to partners or stockholders of such
person, provided that the distributees thereof agree in writing to be bound by
the terms of this restriction, (iii) with respect to sales or purchases of
Common Stock acquired on the open market or (iv) with the prior written consent
of FleetBoston Xxxxxxxxx Xxxxxxxx Inc. The foregoing restrictions will terminate
after the close of trading of the Common Stock on the Nasdaq National Market on
the 90th day following the effective date of the Company's Registration
Statement on Form S-1 (No. 333-3123) (the "Lock-Up" Period). The foregoing
restriction has been expressly agreed to preclude the holder of the Securities
from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a Disposition of Securities during
the Lock-up Period, even if such Securities would be disposed of by someone
other than such holder. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any put
or call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that included, relates to or
derives any significant part of its value from
A-1.
38
Securities. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or Securities held by the undersigned
except in compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned. In the event the Offering has not occurred on or before May 31,
2000, this Lock-Up Agreement shall be of no further force or effect.
Dated
-----------------------------------
----------------------------------------
Printed Name of Holder
By:
-----------------------------------
Signature
---------------------------------------
Printed Name of Person Signing
(and indicate capacity of person
signing if signing as custodian,
trustee, or on behalf of an entity)
A-2.
39
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF COMPANY COUNSEL
(i) Each of the Company and KD One has been duly incorporated, and is
validly existing and in good standing as a corporation under the laws of the
State of Delaware. The Company is qualified to do business and in good standing
as a foreign corporation under the laws of the States of New York, California
and Minnesota. KD One is qualified to do business and in good standing as a
foreign corporation under the laws of the States of Michigan, Minnesota and
Texas.
(ii) Each of the Company and KD One has the corporate power and
corporate authority to own its properties and to conduct its business, in each
case as described in the Prospectus.
(iii) The ______ shares of Common Stock of the Company shown by the
Company's stock records as being issued and outstanding immediately prior to the
issuance of the Shares have been duly authorized and validly issued and are
fully paid and nonassessable.
(iv) The one issued and outstanding share of common stock of KD One has
been duly authorized and validly issued and is fully paid and nonassessable.
(v) The Primary Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters in accordance with the terms of
the Underwriting Agreement, such shares will be validly issued, fully paid and
nonassessable, and, to such counsel's knowledge, were not issued in violation
of, or subject to, any preemptive rights arising under the Delaware General
Corporation Law, the Company's Certificate of Incorporation or any Applicable
Contract (as defined in such counsel's opinion).
(vi) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and delivery
by you, the Underwriting Agreement is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that (A) enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and the discretion of the court before which any
proceeding therefor is brought and (B) rights to indemnification and
contribution contained therein may be limited by state or federal securities
laws or the public policy underlying such laws.
(vii) The execution and delivery by the Company of the Underwriting
Agreement and the issuance and sale of the Primary Shares by the Company
pursuant thereto do not violate, or conflict with, or to such counsel's
knowledge, constitute a material default under (i) the Certificate of
Incorporation or the By-laws; (ii) any Applicable Law; (iii) any Applicable
Contract; or (iv) any Applicable Order. Such counsel need not express any
opinion, however, as to whether such execution, delivery, issuance or sale will
violate, conflict with or contravene or result in a default under any covenant,
restriction or provision with respect to financial ratios or tests or any aspect
of the financial condition or results of operations of the Company or any of its
subsidiaries.
B-1
40
(viii) The Registration Statement, and the Prospectus, as of their
respective effective or issue dates, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Act and the Rules
and Regulations, except that in each case such counsel need express no opinion
as to the financial statements, financial statements schedules or other
financial and statistical data included therein or excluded therefrom or the
exhibits thereto, and, except to the extent expressly stated in the last
paragraph, such counsel need not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or either Prospectus.
(ix) No Governmental Approval (as defined in such counsel's opinion) is
required for the execution and delivery by the Company of the Underwriting
Agreement or the issuance and sale of the Primary Shares by the Company pursuant
to the Underwriting Agreement, except such as have been obtained and except
those which are not required to be obtained, made or taken prior to the date
hereof.
(x) The information in the Prospectus under the caption "Description of
Capital Stock," to the extent that it constitutes a summary of legal matters,
has been reviewed by such counsel and fairly summarizes such legal matters in
all material respects.
(xi) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required to
be filed as an exhibit to the Registration Statement that are not filed as
required.
(xii) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or KD One of a character
required to be disclosed in the Registration Statement or the Prospectus by the
Act or the Exchange Act or the applicable rules and regulations, other than
those described therein.
(xiii) The Company is not required to be registered or regulated as an
"investment company" as such term is defined under the Investment Company Act of
1940, as amended.
(xiv) The Underwriting Agreement has been duly authorized, executed and
delivered by each of the Selling Stockholders and, assuming due authorization,
execution and delivery by the Representatives, is a valid and binding agreement
of each of the Selling Stockholders, enforceable against the Selling
Stockholders in accordance with its terms, except that (A) enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity) and
the discretion of the court before which any proceeding therefor is brought and
(B) rights to indemnification and contribution contained therein may be limited
by state or federal securities laws or the public policy underlying such laws.
(xv) Such counsel has been orally advised by the Commission that the
Registration Statement was declared effective under the Act at 12:00 p.m.
Eastern Standard time on March 23, 2000 and that no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the best of
such counsel's knowledge, no proceedings for that purpose have been instituted
or are pending or threatened by the Commission.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent certified public accountants of the
Company, counsel to the Representatives and
B-2
41
the Representatives at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and has made no independent check or verification
thereof (except to the extent expressly stated above), on the basis of the
foregoing, no facts have come to the attention of such counsel that have led
such counsel to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and as
of the date hereof, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that such counsel need not express any opinion or belief
with respect to the financial statements, schedules and other financial and
statistical data included therein or excluded therefrom or the exhibits to the
Registration Statement.
B-3
42
EXHIBIT C
MATTERS TO BE COVERED IN THE OPINION OF UNDERWRITERS' COUNSEL
(i) The Shares to be issued by the Company have been duly authorized
and, upon issuance and delivery and payment therefor in accordance with the
terms of the Underwriting Agreement, will be validly issued, fully paid and
non-assessable.
(ii) The Registration Statement complied as to form in all material
respects with the requirements of the Act; the Registration Statement has become
effective under the Act and, to such counsel's knowledge, no stop order
proceedings with respect thereto have been instituted or threatened or are
pending under the Securities Act.
(iii) The Shares have been validly registered under the Securities Act
and the applicable rules and regulations of the Commission thereunder;
(iv) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
Such counsel shall state that such counsel has reviewed the opinions
addressed to the Representatives from Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx LLP,
each dated the date hereof, and furnished to you in accordance with the
provisions of the Underwriting Agreement. Such opinions appear on their face to
be appropriately responsive to the requirements of the Underwriting Agreement.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus, no
facts have come to the attention of such counsel that lead them to believe that,
at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the First Closing Date or Second Closing Date,
as the case may be, the Registration Statement and any amendment or supplement
thereto (other than the financial statements including supporting schedules and
other financial and statistical information derived therefrom, as to which such
counsel need express no comment) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or at the First Closing
Date or the Second Closing Date, as the case may be, the Registration Statement,
the Prospectus and any amendment or supplement thereto (except as aforesaid)
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
C-1.
43
EXHIBIT D
MATTERS TO BE COVERED IN THE OPINION OF SELLING STOCKHOLDER COUNSEL
(i) The execution and delivery by each of the Selling Stockholders of,
and the performance by such Selling Stockholder of its obligations under, the
Underwriting Agreement do not violate, or conflict with, to such counsel's
knowledge, constitute a material default under (i) the partnership agreement, if
applicable, of such Selling Stockholder, (ii) any Applicable Law (as defined in
such counsel's opinion); or (iii) any Applicable Order (as defined in such
counsel's opinion). Such counsel need not express any opinion, however, as to
whether such execution, delivery, or performance will violate, conflict, or
contravene or result in a default under any covenant, restriction or provision
with respect to financial ratios or tests or any aspect of the financial
condition or results of operations of any Selling Stockholder or any of its
subsidiaries.
(ii) Each of the Irrevocable Power of Attorney and Custody Agreement
(each as defined in such counsel's opinion) has been duly authorized, executed
and delivered by each Selling Stockholder and is a valid and binding agreement
of each of the Selling Stockholders, enforceable against each of the Selling
Stockholders in accordance with its terms, except that (A) enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity) and
the discretion of the court before which any proceeding therefor is brought and
(B) rights to indemnification and contribution contained therein may be limited
by state or federal securities laws or the public policy underlying such laws.
(iii) Assuming that neither the Representatives nor any Underwriter has
notice of any adverse claims with respect to certificate number ___ registered
in the name ________ and evidencing ___ shares of Common Stock of the Company
(the "Purchased Shares") then, upon delivery to the Representative of such
certificate indorsed to the Representative or indorsed in blank by an effective
indorsement, the Representatives will acquire such certificate (and the shares
represented thereby) free of any adverse claims under Section 8-303 of the
Uniform Commercial Code as in effect on the date hereof in the State of New York
(the "New York UCC").
D-1.
