DEUTSCHE MORGAN GRENFELL INC.
EQUITY CAPITAL MARKETS
DATED MAY ___, 1997
AMAZON.COM, INC.
2,500,000 Shares
Common Stock
UNDERWRITING
AGREEMENT
AMAZON.COM, INC.
2,500,000 SHARES
PLUS AN OPTION TO PURCHASE FROM AMAZON.COM, INC.
UP TO 375,000 ADDITIONAL SHARES TO COVER OVER-ALLOTMENTS
COMMON STOCK
UNDERWRITING AGREEMENT
May __, 1997
DEUTSCHE MORGAN GRENFELL INC.
ALEX. BROWN & SONS INCORPORATED
HAMBRECHT & QUIST LLC
As Representatives of the several Underwriters
c/o Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
Dear Sirs:
Amazon.com, Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacity, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be references to the Underwriters.
Section 1. Underwriting. Subject to the terms and conditions contained herein:
(a) The Company proposes to issue and sell 2,500,000 shares of
common stock, par value $0.01 per share (the "Common Stock"), of the Company
("the Firm Shares") to the several Underwriters. The Company also proposes to
issue and sell to the several Underwriters not more than 375,000 additional
shares of Common Stock (the "Option Shares" and, together with the Firm Shares,
the "Shares") if requested by the Representatives as provided in Section 2(b)
hereof.
(b) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to make a public offering (the "Offering") of the Firm
Shares upon the
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terms set forth in the Prospectus (as defined below) as soon after the
Registration Statement (as defined below) and this Agreement have become
effective as in the Representatives' sole judgment is advisable. As used in this
Agreement, the term "Original Registration Statement" means the registration
statement (File No. 333-23795) initially filed with the Securities and Exchange
Commission (the "Commission") relating to the Shares, as amended at the time
when it was or is declared effective, including all financial schedules and
exhibits thereto and including any information omitted therefrom pursuant to
Rule 430A under the Securities Act of 1933, as amended (the "Securities Act"),
and included in the Prospectus; the term "Rule 462(b) Registration Statement"
means any registration statement filed with the Commission pursuant to Rule
462(b) under the Securities Act (including the Registration Statement and any
Preliminary Prospectus (as defined below) or Prospectus incorporated therein at
the time such Registration Statement becomes effective); the term "Registration
Statement" includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each prospectus
subject to completion filed with the Original Registration Statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Original Registration Statement or any amendment thereto at the
time it was or is declared effective); the term "Prospectus" means:
(i) if the Company relies on Rule 434 under the Securities Act,
the Term Sheet (as defined below) relating to the Shares that is
first filed pursuant to Rule 424(b)(7) under the Securities Act,
together with the Preliminary Prospectus identified therein that
such Term Sheet supplements;
(ii) if the Company does not rely on Rule 434 under the Securities
Act, the prospectus first filed with the Commission pursuant to Rule
424(b) under the Securities Act;
(iii) if the Company does not rely on Rule 434 under the Securities
Act and if no prospectus is required to be filed pursuant to Rule
424(b) under the Securities Act, the prospectus included in the
Registration Statement; or
(iv) for purposes of the representations and warranties in Section
5 hereof, if the Prospectus is not in existence, the most recent
Preliminary Prospectus;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Securities Act. Any reference herein to the "date" of a
Prospectus that includes a Term Sheet shall mean the date of such Term Sheet.
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Section 2. Purchase and Closing.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters, severally and not jointly, agrees to purchase from the
Company, at a purchase price of $___ per Share (the "Purchase Price"), the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule 1 hereto. Firm Shares shall be registered by Chase Mellon Shareholder
Services in the name of the nominee of the Depository Trust Company ("DTC"),
Cede & Co., and credited to the accounts of such of its participants as the
Representatives shall request, upon notice to the Company at least 48 hours
prior to the First Closing Date (as defined below), with any transfer taxes
payable in connection with the transfer of the Firm Shares to the Underwriters
duly paid, against payment by or on behalf of the Underwriters to the account of
the Company of the aggregate Purchase Price therefor by wire transfer in
immediately available funds. The Company will make the certificate or
certificates for the Firm Shares available for checking and packaging by the
Representatives at the offices in New York, New York of the Company's transfer
agent or registrar or of the Representatives at least 24 hours prior to the
First Closing Date. Delivery or registry of and payment for the Firm Shares
shall be made at the offices of Perkins Coie, 1201 Third Avenue, 40th Floor,
Seattle, Washington 98101-3099 at 9:30 A.M., New York City time, on the fourth
full business day following the date of this Agreement, or at such other place,
time or date as the Representatives and the Company may agree upon. Such time
and date of delivery against payment are herein referred to as the "First
Closing Date", and the implementation of all the actions described in this
Section 2(a) is herein referred to as the "First Closing".
(b) For the purpose of covering any overallotments in connection
with the distribution and sale of the Firm Shares as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Shares. The purchase price to be
paid for any Option Shares shall be the same as the Purchase Price for the Firm
Shares set forth above in paragraph (a) of this Section 2. The option granted
hereby may be exercised as to all or any part of the Option Shares from time to
time within thirty days after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange and the Nasdaq Stock Market's National Market
(the "Nasdaq National Market") are open for trading). The Underwriters shall not
be under any obligation to purchase any of the Option Shares prior to the
exercise of such option. The Representatives may from time to time exercise the
option granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option Shares as
to which the several Underwriters are then exercising the option and the date
and time for delivery or registry of and payment for such Option Shares. Any
such date of delivery or registry shall be determined by the Representatives but
shall not be earlier than two business days or later than five business days
after such exercise of the option and, in any event, shall not be earlier than
the First Closing Date. The time and date set forth in such notice, or such
other time or date as the Representatives and the Company
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may agree upon or as the Representatives may determine pursuant to Section 2(a)
hereof, is herein called an "Option Closing Date" with respect to such Option
Shares, and the implementation of all the actions described in this Section 2(b)
is herein referred to as the "Option Closing". As used in this Agreement, the
term "Closing Date" means either the First Closing Date or any Option Closing
Date, as applicable, and the term "Closing" means either the First Closing or
any Option Closing, as applicable. If the option is exercised as to all or any
portion of the Option Shares, then either one or more certificates in definitive
form for such Option Shares shall be delivered or, if such Option Shares are to
be held through DTC, such Option Shares shall be registered and credited, on the
related Option Closing Date in the same manner, and upon the same terms and
conditions, set forth in paragraph (a) of this Section 2, except that reference
therein to the Firm Shares and the First Closing Date shall be deemed, for
purposes of this paragraph (b), to refer to such Option Shares and Option
Closing Date, respectively. Upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several Underwriters, and,
on the basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, each of the
Underwriters (severally and not jointly) shall become obligated to purchase from
the Company, the same percentage of the total number of the Option Shares as to
which the several Underwriters are then exercising the option as such
Underwriter is obligated to purchase of the aggregate number of Firm Shares, as
adjusted by the Representatives in such manner as they deem advisable to avoid
fractional shares.
(c) The Company hereby acknowledges that the payment of monies
pursuant to Section 2(a) hereof (a "Payment") by or on behalf of the
Underwriters of the aggregate Purchase Price for any Shares does not constitute
closing of a purchase and sale of the Shares. Only execution and delivery, by
facsimile or otherwise, of a receipt for Shares by Deutsche Morgan Grenfell Inc.
on behalf of the Underwriters indicates completion of the closing of a purchase
of the Shares from the Company. Furthermore, in the event that the Underwriters
make a Payment to the Company prior to the completion of the closing of a
purchase of Shares, the Company hereby acknowledges that until Deutsche Morgan
Grenfell Inc., on behalf of the Underwriters, executes and delivers such receipt
for the Shares the Company will not be entitled to the Payment and shall return
the Payment to the Underwriters as soon as practicable (by wire transfer of
same-day funds) upon demand. In the event that the closing of a purchase of
Shares is not completed and the Payment is not returned by the Company to the
Underwriters on the same day the Payment was received by the Company, the
Company agrees to pay to the Underwriters in respect of each day the Payment is
not returned by it, in same-day funds, interest on the amount of such Payment in
an amount representing the Underwriters' cost of financing as reasonably
determined by the Representatives.
(d) It is understood that any of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make Payment on behalf
of any Underwriter or Underwriters for any of the Shares to be purchased by such
Underwriter or Underwriters. No such Payment shall relieve such Underwriter or
Underwriters from any of its or their obligations hereunder.
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Section 3. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will:
(i) use its reasonable best efforts to cause the Registration
Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as
promptly as possible. If required, the Company will file the
Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and
424(b) under the Securities Act. During any time when a
prospectus relating to the Shares is required to be delivered
under the Securities Act, the Company (x) will comply with all
requirements imposed upon it by the Securities Act and the rules
and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in
the Shares in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (y) will not
file with the Commission the Prospectus, Term Sheet, any
amendment or supplement to such Prospectus or Term Sheet, any
amendment to the Registration Statement (including the amendment
referred to in the second sentence of Section 5(a)(i)) or any
Rule 462(b) Registration Statement unless the Representatives
previously have been advised of, and furnished with a copy
within a reasonable period of time prior to, the proposed filing
and the Representatives shall have given their consent to such
filing. The Company will prepare and file with the Commission,
in accordance with the rules and regulations of the Commission,
promptly upon request by the Representatives or counsel for the
Underwriters, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be
necessary or advisable in connection with the distribution of
the Shares by the several Underwriters. The Company will advise
the Representatives, promptly after receiving notice thereof, of
the time when the Registration Statement or any amendment
thereto has been filed or declared effective or the Prospectus
or Term Sheet or any amendment or supplement thereto has been
filed and will provide evidence satisfactory to the
Representatives of each such filing or effectiveness.
(ii) without charge, provide (x) to the Representatives and to
counsel for the Underwriters, an executed and a conformed copy
of the Original Registration Statement and each amendment
thereto or any Rule 462(b) Registration Statement (in each case
including exhibits thereto), (y) to each other Underwriter, a
conformed copy of the Original Registration
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Statement and each amendment thereto or any Rule 462(b)
Registration Statement (in each case without exhibits thereto),
and (z) so long as a prospectus relating to the Shares is
required to be delivered under the Securities Act, as many
copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Representatives may
reasonably request. Without limiting the application of clause
(z) of the preceding sentence, the Company, not later than (I)
9:00 A.M., New York City time, on the second business day
following the date of determination of the public offering
price, if such determination occurred at or prior to 12:00 noon,
New York City time, on such date or (II) 6:00 P.M., New York
City time, on the second business day following the date of
determination of the public offering price, if such
determination occurred after 12:00 noon, New York City time, on
such date, will deliver to the Underwriters, without charge, as
many copies of the Prospectus and any amendment or supplement
thereto as the Representatives may reasonably request for
purposes of confirming orders that are expected to settle on the
First Closing Date. The Company will provide or cause to be
provided to each of the Representatives, and to each Underwriter
that so requests in writing, a copy of each report on Form SR
filed by the Company as required by Rule 463 under the
Securities Act.
(iii) advise the Representatives, promptly after receiving
notice or obtaining knowledge thereof, of (w) the issuance by
the Commission of any stop order suspending the effectiveness of
the Original Registration Statement or any amendment thereto or
any Rule 462(b) Registration Statement or any order preventing
or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, (x) the
suspension of the qualification of the Shares for offering or
sale in any jurisdiction, (y) the institution, threatening or
contemplation of any proceeding for any such purpose, or (z) any
request made by the Commission for amending the Original
Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its reasonable best
efforts to prevent the issuance of any such stop order and, if
any such stop order is issued, to obtain the withdrawal thereof
as promptly as possible.
(b) The Company will arrange for the qualification of the Shares for
offering and sale in each jurisdiction as the Representatives shall designate
including, but not limited to, pursuant to applicable state securities ("Blue
Sky") laws of certain states of the United States of America or other U.S.
jurisdictions, and the Company shall maintain such qualifications in effect for
so long as may be necessary in order to complete the placement of the Shares;
provided, however, that the Company shall not be obliged to file any general
consent to service of process
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or to qualify as a foreign corporation or as a securities dealer in any
jurisdiction or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject.
(c) If, at any time prior to the final date when a prospectus
relating to the Shares is required to be delivered under the Securities Act, any
event occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
for any other reason it shall be necessary at any time to amend or supplement
the Registration Statement or the Prospectus to comply with the Securities Act
or the rules or regulations of the Commission thereunder or applicable law, the
Company will promptly notify the Representatives thereof and will promptly, at
its own expense, but subject to the second full sentence of Section 3(a)(i)
hereof: (x) prepare and file with the Commission an amendment or supplement to
the Registration Statement or Prospectus which will correct such statement or
omission or effect such compliance; and (y) supply any amended or supplemented
Prospectus to the Underwriters in such quantities as the Underwriters may
reasonably request.
(d) The Company will make generally available to the Company's
securityholders and to the Representatives as soon as practicable an earnings
statement that satisfies the provisions of Section 11(a) of the Securities Act,
including Rule 158 thereunder.
(e) The Company will apply the net proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(f) The Company will not, and will not allow any subsidiary to,
publicly announce any intention to, and will not itself, and will not allow any
subsidiary to, without the prior written consent of Deutsche Morgan Grenfell
Inc., on behalf of the Underwriters, (i) offer, pledge, sell, offer to sell,
contract to sell, sell any option or contract to purchase, purchase any option
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, Common Stock,
or (ii) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the shares of Common
Stock or securities convertible into, or exercisable or exchangeable for, shares
of Common Stock (whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise), for a period beginning from the date hereof
and continuing to and including the date 180 days after the date hereof, except
pursuant to this Agreement and other than with respect to (x) shares of Common
Stock to be issued upon the exercise of warrants to purchase shares of Common
Stock, or upon conversion or exchange of securities convertible or exchangeable
into shares of Common Stock, in each case, which are outstanding on the date
hereof and disclosed in the Prospectus, (y) shares of Common Stock (or any
securities convertible into or exchangeable or exercisable for shares of Common
Stock) issued pursuant to any employee benefit plans, stock option plans
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or other employee compensation plans which are disclosed in the Prospectus, and
(z) shares of Common Stock (or any securities convertible into or exchangeable
for shares of Common Stock) issued by the Company in connection with an
acquisition, joint venture, strategic partnership or similar strategic
arrangement, provided that the recipient of such shares or convertible
securities, at or prior to such issuance, has executed and delivered to the
Underwriters a Lock-Up Agreement (as defined in Section 7(e)) with respect to
such shares of Common Stock or convertible securities.
(g) Neither the Company nor any of its affiliates, nor any person
acting on behalf of any of them will, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or (ii) (x) sell, bid for, purchase, or pay anyone any compensation for
soliciting purchases of, the Shares or (y) pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(h) The Company will obtain the agreements described in Section 7(f)
hereof prior to the First Closing Date.
(i) If at any time during the 25-day period after the Registration
Statement becomes effective or during the period prior to any Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in the Representatives' sole judgment the market price of the
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 notice from the Representatives
advising the Company to the effect set forth above, forthwith prepare, consult
with the Representatives concerning the substance of, and disseminate a press
release or other public statement reasonably satisfactory to the
Representatives, responding to or commenting on such rumor, publication or
event.
(j) If the Company elects to rely on Rule 462(b), the Company shall
both file the Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 promulgated under the Securities Act by the earlier of (i) 10:00 P.M. New
York City time on the date of this Agreement and (ii) the time confirmations are
sent or given, as specified by Rule 462(b)(2) under the Securities Act.
(k) The Company will cause the Shares to be duly included for
quotation on the Nasdaq National Market prior to the First Closing Date. The
Company will ensure that the Shares remain included for quotation on the Nasdaq
National Market following the First Closing Date.
Section 4. Expenses. The Company shall bear and pay all costs and expenses
incurred incident to the performance of its obligations under this Agreement,
whether or not the transactions contemplated herein are consummated or this
Agreement is terminated pursuant to Section 9 hereof, including: (i) the fees
and expenses of its counsel, accountants and any other
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experts or advisors retained by the Company; (ii) fees and expenses incurred in
connection with the registration of the Shares under the Securities Act and the
preparation and filing of the Registration Statement, the Prospectus and all
amendments and supplements thereto; (iii) the printing and distribution of the
Prospectus and any Preliminary Prospectus and the printing and production of all
other documents connected with the Offering (including this Agreement and any
other related agreements); (iv) expenses related to the qualification of the
Shares under the state securities or Blue Sky laws, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of any Blue Sky
memoranda; (v) the filing fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc.; (vi) all
expenses arising from the quoting of the Shares on the Nasdaq National Market;
(vii) all arrangements relating to the preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Shares, including transfers
agent's and registrar's fees; (viii) the costs and expenses of travel, lodging
and meals of the Company's employees incurred in connection with the "roadshow"
and any other meetings with prospective investors in the Shares (other than as
shall have been specifically approved by the Representatives to be paid for by
the Underwriters); and (ix) the costs and expenses of advertising relating to
the Offering (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters). Subject to the provisions
of Section 10, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the performance of obligations under this Agreement not
payable by the Company pursuant to the preceding sentence, including, without
limitation, all costs associated with the "road show," other than those payable
by the Company pursuant to the preceding sentence, and the fees and
disbursements of counsel for the Underwriters.
Section 5. Representations And Warranties.
(a) As a condition of the obligation of the Underwriters to
underwrite and pay for the Shares, the Company represents and warrants to, and
agrees with, each of the several Underwriters as follows:
Registration Statement and Prospectus
(i) The Original Registration Statement, including the
Preliminary Prospectus, has been filed by the Company with the
Commission under the Securities Act, and one or more amendments to
such Registration Statement may have been so filed. After the
execution of this Agreement, the Company will file with the
Commission either (x) if such Registration Statement, as it may have
been amended, has been declared by the Commission to be effective
under the Securities Act, either (I) if the Company relies on Rule
434 under the Securities Act, a Term Sheet relating to the Shares
that shall identify the Preliminary Prospectus that it supplements
containing such information as is required or permitted by Rules
434, 430A and 424(b) under the Securities Act or (II) if the
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Company does not rely on Rule 434 under the Securities Act, a
prospectus in the form most recently included in an amendment to
such Registration Statement (or, if no such amendment shall have
been filed, in such Registration Statement), with such changes or
insertions as are required by Rule 430A under the Securities Act or
permitted by Rule 424(b) under the Securities Act, and in the case
of either clause (I) or (II) of this sentence, as have been provided
to and approved by the Representatives prior to the execution of
this Agreement, or (y) if such Registration Statement, as it may
have been amended, has not been declared by the Commission to be
effective under the Securities Act, an amendment to such
Registration Statement, including a form of prospectus, a copy of
which amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement. The
Company may also file a Rule 462(b) Registration Statement with the
Commission for the purpose of registering certain additional Shares,
which registration shall be effective upon filing with the
Commission.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any
Preliminary Prospectus was filed with the Commission, it (x)
contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements
of, the Securities Act and the rules and regulations of the
Commission thereunder and (y) with regard to the Registration
Statement, did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, not misleading;
and, with regard to the Preliminary Prospectus, did not include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. When
the Registration Statement or any amendment thereto was or is
declared effective, it (I) contained or will contain all statements
required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the
Securities Act and the rules and regulations of the Commission
thereunder and (II) did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. When the Prospectus or any Term Sheet that is a part
thereof or any amendment or supplement to the Prospectus is filed
with the Commission pursuant to Rule 424(b) (or, if the Prospectus
or such amendment or supplement is not required to be so filed, when
the Registration Statement or the amendment thereto containing the
Prospectus or such amendment or supplement to the Prospectus was or
is declared effective) and on the Closing Date, the Prospectus, as
amended or supplemented at any such time, (A) contained or will
contain all statements required to be stated therein in accordance
with, and complied or will comply in all material respects with the
requirements of, the Securities Act and the rules and
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regulations of the Commission thereunder and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (ii) do not
apply to statements or omissions made in any Preliminary Prospectus,
the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company
by any Underwriter through the Representatives specifically for use
therein.
(iii) If the Company has elected to rely on Rule 462(b) and the
Rule 462(b) Registration Statement is not effective, (x) the Company
will file a Rule 462(b) Registration Statement in compliance with,
and that is effective upon filing pursuant to, Rule 462(b) and (y)
the Company has given irrevocable instructions for transmission of
the applicable filing fee in connection with the filing of the Rule
462(b) Registration Statement, in compliance with Rule 111 under the
Securities Act, or the Commission has received payment of such
filing fee.
(iv) If the Company has elected to rely on Rule 434 under the
Securities Act, the Prospectus is not "materially different", as
such term is used in Rule 434, from the prospectus included in the
Registration Statement at the time of its effectiveness or an
effective post-effective amendment thereto (including such
information that is permitted to be omitted pursuant to Rule 430A
under the Securities Act);
(v) The Company has not distributed and, prior to the later of
(x) any Closing Date and (y) the completion of the distribution of
the Shares, will not distribute any offering material in connection
with the Offering other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto.
(vi) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus (x) the
Company has not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (y) the Company has not
purchased any of its outstanding capital stock, nor declared, paid
or otherwise made any dividend or distribution of any kind on its
capital stock; and (z) there has not been any material change in the
capital stock, short-term or long-term debt of the Company, except
in each case as described in or contemplated by the Prospectus.
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The Shares
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable, have been
issued in compliance with all applicable federal and state
securities laws and were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
such securities. The Shares have been duly authorized by all
necessary corporate action of the Company and, after payment
therefor in accordance herewith, will be validly issued, fully paid
and nonassessable at the Closing Date. No holders of outstanding
shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Shares, and
no holder of securities of the Company has any right which has not
been fully exercised or waived to require the Company to register
the offer or sale of any securities owned by such holder under the
Securities Act in the Offering contemplated by this Agreement.
(viii) Except as disclosed in the Prospectus, there are no
outstanding (x) securities or obligations of the Company convertible
into or exchangeable for any capital stock of the Company (y)
warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (z) obligations of the
Company to issue any shares of capital stock, any such convertible
or exchangeable securities or obligations, or any such warrants,
rights or options.
(ix) The Company does not own any shares of stock or any other
equity securities of any corporation or have any equity interest in
any firm, partnership, association or other entity.
Listing
(x) All of the Shares have been duly authorized and accepted
for quotation on the Nasdaq National Market, subject to official
notice of issuance.
Market manipulation
(xi) Neither the Company nor any of its affiliates, nor any
person acting on behalf of any of them has, directly or indirectly,
(x) taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares, or (y) since
the filing of the Original Registration Statement (I) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases
of, the Shares or (II) paid
-13-
or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
Corporate power and authority
(xii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the law of its
jurisdiction of incorporation with full power and authority to own,
lease and operate its properties and assets and conduct its business
as described in the Prospectus, is duly qualified to transact
business and is in good standing in each jurisdiction in which its
ownership, leasing or operation of its properties or assets or the
conduct of its business requires such qualification, except where
the failure to be so qualified does not amount to a material
liability or disability to the Company, and has full power and
authority to execute and perform its obligations under this
Agreement.
(xiii) The execution and delivery of this Agreement and the
issuance and sale of the Shares have been duly authorized by all
necessary corporate action of the Company, and this Agreement has
been duly executed and delivered by the Company and is the valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except (x) as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (y) except to the
extent that rights to indemnity or contribution under this Agreement
may be limited by federal and state securities laws or the public
policy underlying such laws.
(xiv) The issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (x) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except (1) if the Company has elected to
rely on Rule 462(b) and the Rule 462(b) Registration Statement is
not effective, the registration of certain Shares pursuant to the
Rule 462(b) Registration Statement that will be effective upon
filing in compliance with Rule 462(b) and (2) such as have been
obtained or made or such as may be required by the state securities
or Blue Sky laws of the various states of the United States of
America or other U.S. jurisdictions or by the National Association
of Securities Dealers, Inc. ("NASD") in connection with the offer
and sale of the Shares by the Underwriters, or (y) conflict with or
result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company
is a party or by which the Company or its properties are bound, or
the charter documents or by-laws of the Company, or any statute or
any
-14-
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Company.
(xv) The Company is not, and will conduct its operations in a
manner so that it continues not to be, an "investment company" and,
after giving effect to the Offering and the application of the
proceeds therefrom, will not be an "investment company", as such
term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act").
Title, licenses and consents
(xvi) The Company has good and marketable title in fee simple
to all items of real property and marketable title to all personal
property owned by it, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of
such property and do not interfere with the use made or proposed to
be made of such property by the Company, and any real property and
buildings held under lease by the Company, are held under valid,
subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company, in each case
except as described in or contemplated by the Prospectus.
(xvii) The Company owns or possesses, or can acquire on
reasonable terms, all material patents, patent applications,
trademarks, service marks, trade names, licenses, know-how,
copyrights, trade secrets and proprietary or other confidential
information necessary to operate the business now operated by it,
and the Company has not received any notice of infringement of or
conflict with asserted rights of any third party with respect to any
of the foregoing which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a
materially adverse effect on or constitute a materially adverse
change in the condition (financial or otherwise), properties,
business affairs or business prospects, stockholders' equity, net
worth or results of operations of the Company, except as described
in or contemplated by the Prospectus.
(xviii) The Company possesses all consents, licenses,
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and the Company has not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect
on or constitute a materially adverse change in the condition
(financial or otherwise), properties, business affairs or business
-15-
prospects, net worth or results of operations of the Company, except
as described in or contemplated by the Prospectus.
Financial statements
(xix) Ernst & Young LLP, who have certified certain financial
statements of the Company and delivered their report with respect to
the audited financial statements and schedules included in the
Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the applicable
rules and regulations thereunder.
(xx) The financial statements and schedules of the Company
included in the Registration Statement and the Prospectus were
prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved
(except as otherwise noted therein) and they present fairly the
financial condition of the Company as of the dates at which they
were prepared and the results of operations of the Company in
respect of the periods for which they were prepared.
Internal Accounting Controls
(xxi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (w)
transactions are executed in accordance with management's general or
specific authorizations; (x) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability; (y) access to assets is
permitted only in accordance with management's general or specific
authorization; and (z) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
Litigation; Disclosure
(xxii) There are no legal or governmental proceedings pending or
threatened to which the Company is a party or to which the property
of the Company is subject that are required to be described in the
Registration Statement or the Prospectus and are not described
therein; and there are no statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described therein or filed as
required.
-16-
Dividends and Distributions
(xxiii) The Company is not currently prohibited under any
contract or agreement from paying any dividends, making any other
distribution on its capital stock, in each case except (x) as
described in or contemplated by the Prospectus and (y) the
restrictions imposed by the right of first offer pursuant to the
Investors Rights Agreement, dated June 21, 1996, by and among the
Company, Kleiner Perkins Caufield & Byers VIII and KPCB Information
Sciences Zaibatsu Fund II, which right does not apply to or after
consummation of the Offering.
Taxes
(xxiv) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to
file would not have a materially adverse effect on the Company) and
has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by the Prospectus.
Insurance
(xxv) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it
is engaged; the Company has not been refused any insurance coverage
sought or applied for; and the Company has no reason to believe that
it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the condition
(financial or otherwise), earnings, properties, business affairs or
business prospects, net worth or results of operations of the
Company, except as described in or contemplated by the Prospectus.
Pension and Labor
(xxvi) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not expect
to incur liability under (i) Title IV of ERISA with respect to
termination of, or
-17-
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(xxvii) No labor dispute with the employees of the Company
exists or is threatened or imminent that could have a materially
adverse effect on or constitute a materially adverse change in the
condition (financial or otherwise), properties, management, business
affairs or business prospects, net worth or results of operations of
the Company, except as described in or contemplated by the
Prospectus.
Environmental
(xxviii) The Company is not in violation of any federal or state
law or regulation relating to occupational safety and health or to
the storage, handling or transportation of hazardous or toxic
materials and the Company has received all permits, licenses or
other approvals required of it under applicable federal and state
occupational safety and health and environmental laws and
regulations to conduct its business, and the Company is in
compliance with all terms and conditions of any such permit, license
or approval, except any such violation of law or regulation, failure
to receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, have a
materially adverse effect on or constitute a materially adverse
change in the condition (financial or otherwise), earnings,
properties, business affairs or business prospects, net worth or
results of operations of the Company, except as described in or
contemplated by the Prospectus.
Other Agreements
(xxix) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in
the due performance and observance of any material term, covenant or
condition of any indenture, mortgage, deed of trust, lease or other
material agreement or instrument to which the Company is a party or
by which the Company is bound.
Absence of Materially Adverse Change
(xxx) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, the Company has not
-18-
sustained any material loss or interference with its business or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding, and there has been no
materially adverse change (including, without limitation, a change
in management resulting from the loss of Jeff Bezos, Joy Covey or
Sheldon Kaphan ("Senior Management")) in the condition (financial or
otherwise), management, property, business affairs or business
prospects, stockholders' equity, net worth or results of operations
of the Company other than as described in or contemplated by the
Prospectus (exclusive of any amendments or supplements thereto).
(xxxi) No receiver or liquidator (or similar person) has been
appointed in respect of the Company or in respect of any part of the
assets of the Company; no resolution, order of any court, regulatory
body, governmental body or otherwise, or petition or application for
an order, has been passed, made or presented for the winding up of
the Company or for the protection of the Company from its creditors;
and the Company has not stopped or suspended payments of its debts,
become unable to pay its debts or otherwise become insolvent.
(b) The above representations and warranties shall be deemed to be
repeated at each Closing, and all references therein to the Shares and the
Closing Date shall be deemed to refer to the Firm Shares or the Option Shares
and the First Closing Date or the applicable Option Closing Date, each as
applicable.
Section 6. Indemnity.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any and all
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company in Section 5 hereof,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or
-19-
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or the omission or alleged
omission to state in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they
were made, not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other costs or expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein; and provided further,
that the Company will not be liable to any Underwriter or any person controlling
such Underwriter with respect to any such untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary Prospectus that
is corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Shares from
such Underwriter but was not sent or given a copy of the Prospectus (as amended
or supplemented) in any case where such delivery of the Prospectus (as amended
or supplemented) was required by the Securities Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 3 hereof. The indemnity provided for
in this Section 6 shall be in addition to any liability which the Company may
otherwise have. The Company will not, without the prior written consent of the
Representatives, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Representatives
or any person who controls any such Representatives is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto,
-20-
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto a material fact required to be stated therein
or necessary to make the statements therein not misleading, or the omission or
alleged omission to state in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, 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 reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating, defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or any action in respect thereof. The indemnity
provided in this Section 6 will be in addition to any liability which any
Underwriter may otherwise have. No Underwriter will, without the prior written
consent of the Company, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not the
Company, any of its officers or directors, or any person who controls the
Company, is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Company and such directors, officers and controlling persons from all liability
arising out of such claim, action, suit or proceeding. The remedies provided for
in this Section 6 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a) or (b) of this Section 6, such
person (for purposes of this paragraph (c), the "indemnified party") shall,
promptly after receipt by such party of notice of the commencement of such
action, notify the person against whom such indemnity may be sought (for
purposes of this paragraph (c), the "indemnifying party"), but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 6. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
-21-
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense of any such action and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses, other than reasonable costs of
investigation, 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 in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel in any one action or separate but substantially similar actions
in the same jurisdiction arising out of the same general allegations or
circumstances, designated in writing by the Representatives in the case of
paragraph (a) of this Section 6, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions), or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party, or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
All fees and expenses reimbursed pursuant to this paragraph (c) shall be
reimbursed as they are incurred. After such notice from the indemnifying party
to such indemnified party, the indemnifying party will not be liable for the
costs and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 6 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the Offering or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the indemnifying
party or parties on the one hand and the indemnified party on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total proceeds
from the Offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters, the parties' relative
intents, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the
-22-
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations
referred to above in this paragraph (d). Notwithstanding any other provision of
this paragraph (d), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total public offering price of the
Shares purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages that such Underwriter has otherwise been required to pay
in respect of the same or any substantially similar claim, and no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Deutsche Morgan Grenfell Inc. Master Agreement
Among Underwriters. For purposes of this paragraph (d), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, shall have the same rights to contribution as the Company.
Section 7. Conditions Precedent. The obligations of the several Underwriters to
purchase and pay for the Shares shall be subject, in the sole discretion of the
Representatives (exercising such discretion and acting on behalf of all the
Underwriters), to the accuracy of the representations and warranties of the
Company contained herein as of the date hereof and as of each Closing Date, as
if made on and as of each Closing Date, to the performance by the Company of its
covenants and agreements hereunder to be performed prior to the applicable
Closing Date and to the following additional conditions:
(a) (i) If the Original Registration Statement or any amendment
thereto filed prior to the First Closing Date has not been declared effective as
of the time of execution hereof, the Original Registration Statement or such
amendment shall have been declared effective not later than 6:00 P.M. New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 4:30 P.M. New York City time on such date,
or 12:00 Noon New York City time on the business day following the day on which
the public offering price was determined, if such determination occurred after
4:30 P.M. New York City time on such date, and (ii) if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have been
declared effective not later than the time confirmations are sent or given as
specified by Rule 462(b)(2), or such later time and date as shall have been
consented to by the Representatives; if required, the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement thereto
shall have been filed with the Commission in the manner and within the time
period required by Rules 434 and 424(b) under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or the
-23-
Representatives, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall have received a legal opinion from
Perkins Coie, counsel for the Company, dated the Closing Date, with respect to
the matters set forth in Exhibit A hereto.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the States of Washington and
Delaware, or the United States, on the opinion of other counsel.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion. The opinions of issuer's counsel described herein shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.
(c) The Representatives shall have received a legal opinion from
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters, dated the Closing Date, covering the issuance and sale of the
Shares, the Registration Statement and the Prospectus, and such other related
matters as the Representatives may reasonably require, and the Company shall
have furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(d) The Representatives shall have received from Ernst & Young LLP a
letter or letters dated, respectively, the date hereof and the Closing Date, in
form and substance satisfactory to the Representatives, to the effect that:
(i) they are independent accountants with respect to the
Company within the meaning of the Securities Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited financial statements and
schedules examined by them and included in the Registration
Statement and the Prospectus comply in form in all material
respects with the applicable accounting requirements of the
Securities Act and the related published rules and regulations;
(iii) on the basis of a reading of the latest available interim
unaudited condensed financial statements of the Company and of
the unaudited financial statements of the Company, carrying out
certain specified procedures (which do not constitute an
examination made in accordance with generally accepted auditing
standards) that would not necessarily
-24-
reveal matters of significance with respect to the comments set
forth in this paragraph (iii), a reading of the minute books of
the stockholders, the board of directors and any committees
thereof of the Company, and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters, nothing came to their attention that caused them to
believe that:
(x) the unaudited financial statements of the Company
included in the Registration Statement and the Prospectus do
not comply in form in all material respects with the
applicable accounting requirements of the Securities Act and
the related published rules and regulations thereunder or
are not in conformity with GAAP applied on a basis
substantially consistent with that of the audited financial
statements included in the Registration Statement and the
Prospectus;
(y) the unaudited amounts for net sales and total and per
share amounts of net income included in the Registration
Statement and the Prospectus do not agree with the amounts
set forth in any unaudited financial statements for those
same periods or are not in conformity with GAAP accounting
principles applied; and
(z) at a specific date not more than five business days
prior to the date of such letter, there were any changes in
the capital stock or long-term debt of the Company or any
decreases in net current assets or stockholders' equity of
the Company, in each case compared with amounts shown on the
March 31, 1997 unaudited balance sheet included in the
Registration Statement and the Prospectus, or for the period
from April 1, 1997 to April __, 1997, there were any
decreases, as compared with January 1, 1997 to January __,
1997, in net sales, net income (loss) or total or per share
amounts of net income (loss) of the Company, except in all
instances for changes, decreases or increases set forth in
such letter.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company and are included in
the Registration Statement and the Prospectus and in Exhibit 11
to the Registration Statement, and have compared such amounts,
percentages and financial information with such records of the
Company and with information derived from such records
-25-
and have found them to be in agreement, excluding any questions
of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (I) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (II) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof. References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(e) The Company shall have furnished or caused to be furnished to
the Underwriters at the Closing a certificate of its Chairman of the Board, its
President or its Chief Executive Officer and its Chief Financial Officer
satisfactory to the Underwriters to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the
Closing Date; the Registration Statement, as amended as of the
Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein not misleading, and the Prospectus,
as amended or supplemented as of the Closing Date, does not
include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and the Company has performed all
covenants and agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued,
and no proceedings for that purpose have been instituted or
threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the
Company has not sustained any material loss or interference with
its business or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding, and
there has not been any materially adverse change (including,
without limitation, a loss of any Senior Management), in the
condition (financial or otherwise), management, properties,
business
-26-
affairs or business prospects, stockholders' equity, net worth
or results of operations of the Company, except in each case as
described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto).
(f) The Representatives shall have received from each person who is
a director or officer of the Company and holders of an aggregate of
approximately 20,600,000 shares of the outstanding shares of Common Stock an
agreement (a "Lock-Up Agreement") dated on or before the date of this Agreement
to the effect that such person will not publicly announce any intention to and
will not, without the prior written consent of Deutsche Morgan Grenfell Inc. on
behalf of the Underwriters, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any of the shares of Common Stock or any securities convertible
into, or exercisable or exchangeable for, Common Stock, or (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of (A) shares of Common Stock or securities
convertible into, or exercisable or exchangeable for, Common Stock, (B) in cash,
or (C) otherwise, for a period beginning from the date of the Final Prospectus
relating to the Offering (the "Final Prospectus") and continuing to and
including the date 180 days after the date of the Final Prospectus; provided,
however, that such person, if a natural person, may, without the prior written
consent of the Representatives on behalf of the Underwriters, transfer shares of
Common Stock or such other securities to members of such person's immediate
family or to trusts for the benefit of members of such person's immediate family
or in connection with bona fide gifts, and such person, if a corporation or
partnership, may transfer shares of Common Stock or such other securities (i) in
connection with the sale or other bona fide transfer in a single transaction of
all or substantially all of such person's assets not undertaken for the purpose
of avoiding the restrictions imposed by the Lock-Up Agreement; (ii) to another
corporation or partnership if the transferee and such person are direct or
indirect affiliates or otherwise related; or (iii) as a part of a distribution
without consideration from such person to its equity holders on a pro rata
basis; provided that any transferee agrees to the transfer restrictions
described above.
(g) Prior to the commencement of the Offering, the Company shall
have made an application for the quotation of the Shares on the Nasdaq National
Market and the Shares shall have been included for trading on the Nasdaq
National Market, subject to official notice of issuance.
(h) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
-27-
securities by any "nationally recognized statistical rating organization", as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(i) On or before the Closing Date, the Representatives and counsel
for the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
satisfactory in all material respects to the Representatives and counsel for the
Underwriters acting reasonably. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase
and pay for any Shares shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Shares, except that all references therein
to the Shares and the Closing Date shall be deemed to refer to the Firm Shares
or the Option Shares and the First Closing Date or the related Option Closing
Date, each as applicable.
Section 8. Default of Underwriters. If, at any Closing, any one or more of the
Underwriters shall fail or refuse to purchase Shares that it has or they have
agreed to purchase hereunder on such date, and the aggregate number of Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is ten percent or less of the aggregate number of the Shares to be
purchased on such date, the other Underwriters may make arrangements
satisfactory to the Representatives for the purchase of such Shares by other
persons (who may include one or more of the non-defaulting Underwriters,
including the Representatives), but if no such arrangements are made by the
First Closing Date or the related Option Closing Date, as the case may be, the
other Underwriters shall be obligated severally in the proportions that the
number of Firm Shares set forth opposite their respective names in Schedule 1
hereto 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 the
Representatives may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, at the First Closing, any Underwriter or Underwriters shall fail or
refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than ten per cent of the aggregate
number of Firm Shares to be purchased, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Firm Shares are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either the Representatives or the Company shall have the right to
postpone the Closing, but in no event for longer than seven days, in order that
the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, at any
Option Closing, any Underwriter or
-28-
Underwriters shall fail or refuse to purchase Option Shares, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase Option Shares or (ii) purchase not less than the number of Option
Shares that such non-defaulting Underwriters would have been obligated to
purchase in the absence of such default. As used in this Agreement, the term
"Underwriter" includes any person substituted for an 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. This Agreement shall be subject to termination with
respect to the Shares to be purchased on a Closing Date in the sole discretion
of the Representatives by notice to the Company given prior to such Closing Date
in the event that the Company shall have failed, refused or been unable to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder at or prior thereto or, if at or prior to such Closing
Date, (a) trading in securities generally on the New York Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited or
minimum or maximum prices shall have been established by or on, as the case may
be, the Commission or the New York Stock Exchange or the Nasdaq National Market;
(b) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market; (c) a general moratorium on
commercial banking activities shall have been declared by either Federal or New
York State authorities; (d) there shall have occurred (i) an outbreak or
escalation of hostilities between the United States and any foreign power, (ii)
an outbreak or escalation of any other insurrection or armed conflict involving
the United States, or (iii) any other calamity or crisis or materially adverse
change in general economic, political or financial conditions having an effect
on the U.S. financial markets that, in the sole judgment of the Representatives,
makes it impractical or inadvisable to proceed with the public offering or the
delivery of the Shares as contemplated by the Registration Statement, as amended
as of the date hereof; or (e) the Company shall have, in the sole judgment of
the Representatives, sustained any material loss or interference with its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, or there shall have been any materially
adverse change (including, without limitation, any loss of Senior Management)
in the condition (financial or otherwise), management, properties, business
affairs or business prospects, stockholders' equity, net worth or results of
operations of the Company, except in each case as described in or contemplated
by the Prospectus (exclusive of any amendment or supplement thereto), and such
event singly or together with any other event makes it, in the sole judgment of
the Representatives, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus. Termination of this Agreement pursuant to
this Section 9 shall be without liability of any party to any other party except
for the liability of the Company in relation to expenses as provided in Sections
4 and 10 hereof, the indemnity provided in Section 6 hereof and any liability
arising before or in relation to such termination.
Section 10. Reimbursement of Expenses. If the sale of the Shares provided for
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 7
-29-
hereof is not satisfied (other than by reason of a default by any of the
Underwriters), the Company shall reimburse the Underwriters, severally upon
demand, for all out-of-pocket expenses (including fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Shares.
Section 11. Information Supplied by Underwriters. The statements set forth in
[the last paragraph on the front cover page and under the heading "Underwriting"
in any Preliminary Prospectus or the Prospectus] (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Section 5(a)(ii) and Section 6 hereof. The Underwriters confirm that such
statements (to such extent) are correct.
Section 12. Notices. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly by the Representatives. Any notice or notification
in any form to be given under this Agreement may be delivered in person or sent
by telex, facsimile or telephone (subject in the case of a communication by
telephone to confirmation by telex or facsimile) addressed to:
in the case of the Company:
Amazon.com, Inc.
1516 Second Avenue, 4th Floor
Seattle, Washington 98101
Facsimile: 206/346-2082
Telephone: 206/622-2335
Attention: Joy D. Covey
in the case of the Underwriters:
Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
Facsimile: 415/614-5030
Telephone: 415/614-5006
Attention: William J. Brady
Any such notice shall take effect, in the case of delivery, at the time of
delivery and, in the case of telex or facsimile, at the time of dispatch.
-30-
Section 13. Miscellaneous.
(a) Time shall be of the essence of this Agreement.
(b) The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect, the meaning or
interpretation of this Agreement.
(c) For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange is open for trading, and (b) "subsidiary"
has the meaning set forth in Rule 405 under the Securities Act.
(d) This Agreement may be executed in any number of counterparts,
all of which, taken together, shall constitute one and the same Agreement, and
any party may enter into this Agreement by executing a counterpart.
(e) This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that (i)
the indemnities of the Company contained in Section 6 hereof shall also be for
the benefit of any person or persons who control any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 6 hereof shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act. No purchaser of Shares from any Underwriter
shall be deemed a successor because of such purchase.
(f) The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 6 hereof and (ii) delivery of and payment for the Shares.
The respective agreements, covenants, indemnities and other statements set forth
in Sections 4, 6 and 10 hereof shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement.
Section 14. Severability. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for
-31-
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Governing Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
-32-
If the foregoing is in accordance with your understanding, please
sign and return to us six counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in the Deutsche
Morgan Grenfell Inc. Master Agreement Among Underwriters, the form of which
shall be submitted to the Company for examination upon request, but without
warranty on your part as to the authority of the signers thereof.
Very truly yours,
Amazon.com, Inc.
By ____________________________________
Name: Joy D. Covey
Title: Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
DEUTSCHE MORGAN GRENFELL INC.
Alex. Brown & Sons Incorporated
Hambrecht & Quist LLC
By: DEUTSCHE MORGAN GRENFELL INC.
By ___________________________
Name: ________________________
Title:________________________
[For itself and on behalf of the Representatives]
-33-
SCHEDULE 1
The Underwriters
Underwriter Underwriting commitment
----------- -----------------------
[name]....................................... [number of Firm Shares]
--------------------
Total........................................ [aggregate number of Firm Shares]