EXHIBIT 1.1
4,000,000 Shares
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
__________, 2001
UNDERWRITING AGREEMENT
_________, 2001
Xxxxxxxxx & Company, Inc.
Xxxxxx Xxxxxx & Co., Inc.,
As representatives of the several underwriters
named in Schedule A hereto
c/o Jefferies & Company, Inc.
0000 Xxxxx Xxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
BAM! Entertainment, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule A annexed
hereto (the "Underwriters") an aggregate of 4,000,000 shares (the "Firm Shares")
of Common Stock, $0.001 par value (the "Common Stock"), of the Company. In
addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 600,000 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus which is
referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1, (File No. 333-62436)
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each thereof being herein called a "Preliminary
Prospectus") relating to the Shares. Except where the context otherwise
requires, the registration statement, as amended when it becomes effective,
including all documents filed as a part thereof, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430(A) under the Act and also
including any registration statement filed pursuant to Rule 462(b) under the
Act, is herein called the Registration Statement, and the prospectus, in the
form filed by the Company with the Commission pursuant to Rule 424(b) under the
Act on or before the second business day after the date hereof (or such earlier
time as may be required under the Act) or, if no such filing is required, the
form of final prospectus included in the Registration Statement at the time it
became effective, is herein called the Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
aggregate number of Firm Shares set forth opposite the name of such Underwriter
in Schedule A annexed hereto, in each case at a purchase price of $[______] per
Share. The time of the purchase is hereafter referred to as the "Time of
Purchase." The Company is advised by you that the Underwriters intend (i) to
make a public offering of their respective portions of the Firm Shares as soon
after the effective date of the Registration Statement as in your judgment is
advisable and (ii) initially to offer the Firm Shares upon the terms set forth
in the Prospectus. You may from time to time increase or decrease the public
offering price after the initial public offering to such extent as you may
determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as you shall determine to avoid fractional shares),
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised, in whole or in part, by you on
behalf of the several Underwriters at any time and from time to time on or
before the thirtieth day following the date hereof, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the "Additional Time of Purchase"); provided, however, that the Additional
Time of Purchase shall not be earlier than the Time of Purchase (as defined
below) nor earlier than the second business day(1) after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
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(1) As used herein "business day" shall mean a day on which the New York
Stock Exchange is open for trading.
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2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on [______________], 2001 (unless another time shall be agreed to by
you and the Company or unless postponed in accordance with the provisions of
Section 8 hereof). The time at which such payment and delivery are actually made
is hereinafter sometimes called the "Time of Purchase." Certificates for the
Firm Shares shall be delivered to you in definitive form in such names and in
such denominations as you shall specify no later than the second business day
preceding the Time of Purchase. For the purpose of expediting the checking of
the certificates for the Firm Shares by you, the Company agrees to make such
certificates available to you for such purpose at least two full business days
preceding the Time of Purchase.
Payment of the purchase price for the Additional Shares shall be made at
the Additional Time of Purchase in the same manner and at the same office as the
payment for the Firm Shares. Certificates for the Additional Shares shall be
delivered to you in definitive form in such names and in such denominations as
you shall specify no later than the second business day preceding the Additional
Time of Purchase. For the purpose of expediting the checking of the certificates
for the Additional Shares by you, the Company agrees to make such certificates
available to you for such purpose at least one full business day preceding the
Additional Time of Purchase.
3. Representations and Warranties of the Company. The Company represents
and warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice of, any order of the
Commission preventing or suspending the use of any Preliminary Prospectus, or
instituting or threatening proceedings for that purpose, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and when the Registration Statement
became effective, the Registration Statement, all amendments thereto or
modifications thereof, and the Prospectus fully complied in all material
respects with the provisions of the Act, and the Registration Statement and all
amendments thereto or modifications thereof do not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Prospectus and all amendments or supplements thereto, or modifications
thereof, if any, will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; any 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 have been so
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described or filed; provided, however, that the Company makes no warranty or
representation with respect to any statement contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus in reliance upon and in
conformity with information concerning the Underwriters and furnished in writing
by or on behalf of any Underwriter through you to the Company expressly for use
in the Registration Statement, the Preliminary Prospectus or the Prospectus; and
the Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus or the Prospectus;
(b) as of the date of this Agreement, the Company has the authorized and
outstanding capitalization as set forth in the section of the Registration
Statement, the Preliminary Prospectus and the Prospectus entitled
"Capitalization" and, as of the Time of Purchase and the Additional Time of
Purchase, as the case may be, the Company shall have the authorized
capitalization as set forth under the heading entitled "Pro Forma As Adjusted"
in the section of the Registration Statement and the Prospectus entitled
"Capitalization"; other than as described in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligation into shares of capital stock or
ownership interests in the Company are outstanding; all of the issued and
outstanding shares of capital stock including Common Stock and Preferred Stock
of the Company have been duly and validly authorized and issued and are fully
paid and non-assessable, have been issued in compliance with all federal and
state securities laws and were not issued in violation of any preemptive right,
resale right, co-sale right, right of first refusal or similar right;
(c) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement;
(d) the Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or leasing
of its properties or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business, properties, financial condition or results of operation of the
Company and its Subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect"). The Company has no subsidiaries (as defined in the
Act) other than (1) BAM Entertainment Limited and (2) Bam Studios (Europe)
Limited (collectively, the "Subsidiaries"); the Company owns 100% of the
outstanding capital stock of each of the Subsidiaries; other than the
Subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity; complete and correct copies of the charter documents, certificates
or articles of incorporation and of the bylaws of the Company and the
Subsidiaries and all amendments thereto have been delivered to you, and except
as set forth
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in the exhibits to the Registration Statement no changes therein will be made
subsequent to the date hereof and prior to the Time of Purchase or, if later,
the Additional Time of Purchase; each Subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement; each Subsidiary is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction where the
ownership or leasing of the properties or the conduct of its business requires
such qualification, except where the failure to so qualify would not have a
Material Adverse Effect; all of the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and (except as otherwise described in this Section 3(d)) are
owned by the Company subject to no security interest, other encumbrance or
adverse claims; no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligation into shares
of capital stock or ownership interests in the Subsidiaries are outstanding;
(e) the Company and each of its Subsidiaries are in compliance in all
material respects with the laws, orders, rules, licenses, authorizations,
approvals, regulations and directives issued or administered by each
jurisdiction applicable to it, except where non-compliance will not singly or in
the aggregate result in a Material Adverse Effect;
(f) each of the agreements (the "Reincorporation Agreements") entered
into by the Company in connection with the changing of its state of
incorporation from California to Delaware (the "Reincorporation") has been duly
and validly authorized, executed and delivered by the Company, are in full force
and effect, and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms and, to the
knowledge of the Company, is a valid and binding obligation of each other party
thereto, enforceable against each party in accordance with its terms. The
Reincorporation has been validly effected in accordance with the laws of the
states of California and Delaware;
(g) neither the Company nor any of its Subsidiaries is in breach of, or
in default under (nor has any event occurred which with notice, lapse of time,
or both would result in any breach of, or constitute a default under), its
respective charter or bylaws or, other than that would not have a material
adverse effect on the Company or its Subsidiaries, in the performance or
observance of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties is bound, and the execution,
delivery and performance of this Agreement, the issuance and sale of the Shares
and the consummation of the transactions contemplated hereby will not conflict
with, or result in any breach of or constitute a default under (nor constitute
any event which with notice, lapse of time, or both would result in any breach
of, or constitute a default under), any provisions of the charter or
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bylaws of the Company or any of its Subsidiaries or under any provision of any
license, indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Subsidiaries;
(h) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the rights of creditors generally or by general equitable principles;
(i) the capital stock of the Company, including the Shares, conforms in
all material respects to the description thereof contained in the Registration
Statement, the Preliminary Prospectus and Prospectus and the certificates for
the Shares are in due and proper form and the holders of the Shares will not be
subject to personal liability by reason of being such holders;
(j) the Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable;
(k) no approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board, body,
court, authority or agency is required in connection with the issuance and sale
of the Shares or the consummation by the Company of the transaction as
contemplated hereby other than registration of the Shares under the Act and any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters or under
the rules and regulations of the National Association of Securities Dealers,
Inc. ("NASD");
(l) no person has the right, contractual or otherwise, to cause the
Company to issue to it, or register pursuant to the Act, any shares of capital
stock of the Company upon the issue and sale of the Shares to the Underwriters
hereunder, nor does any person have preemptive rights, co-sale rights, rights of
first refusal or other rights to purchase any of the Shares other than those
that have been expressly waived prior to the dates hereof;
(m) Deloitte & Touche LLP, whose report on the consolidated financial
statements of the Company and its Subsidiaries is filed with the Commission as
part of the Registration
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Statement, the Preliminary Prospectus and Prospectus, are independent public
accountants as required by the Act;
(n) each of the Company and its Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, in order to conduct its respective business;
(o) all legal or governmental proceedings, contracts, leases or
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
have been so described or filed as required;
(p) there are no actions, suits, claims, investigations or proceedings
pending or threatened to which the Company or any of its Subsidiaries or any of
their respective officers is a party or of which any of their respective
properties is subject at law or in equity, or before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority
or agency which could result in a judgment, decree or order having a Material
Adverse Effect or prevent consummation of the transactions contemplated hereby,
and the Company knows of no facts which would form a reasonable basis for such
an action;
(q) the audited financial statements and summary consolidated financial
data included in the Registration Statement, the Preliminary Prospectus and the
Prospectus present fairly the consolidated financial position of the Company and
its Subsidiaries as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its Subsidiaries for the periods
specified; the financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved;
(r) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development which, in the Company's reasonable
judgment, is likely to cause a material adverse change, in the business,
properties or assets described or referred to in the Registration Statement, or
the results of operations, condition (financial or otherwise), business,
prospects or operations of the Company and its Subsidiaries taken as a whole,
(ii) any transaction which is material to the Company or its Subsidiaries taken
as a whole, except transactions in the ordinary course of business, (iii) any
obligation, direct or contingent, which is material to the Company and its
Subsidiaries taken as a whole, incurred by the Company or its Subsidiaries,
except obligations incurred in the ordinary course of business, (iv) except as
contemplated in the Prospectus, any change in the capital stock or outstanding
indebtedness of the Company or its Subsidiaries or (v) any dividend or
distribution of any kind declared, paid or made on the capital
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stock of the Company. Neither the Company nor its Subsidiaries has any material
contingent obligation which is not disclosed in the Registration Statement;
(s) during the six months prior to the date hereof, neither the Company
nor any person acting on behalf of the Company has offered or sold to any person
any capital stock, or any securities of the same or a similar class as the
Shares, other than the Shares and other than under restrictions and other
circumstances so as to ensure that such offers or sales do not become integrated
into the offer and sale of the Shares;
(t) the Company has obtained the agreement (in the form approved by you)
of each of its directors, officers, stockholders, optionholders and other
securityholders not to sell, offer to sell, contract to sell, hypothecate, grant
any option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or warrants or other rights to purchase Common Stock for a period of 180 days
after the date of the Prospectus without the prior written consent of Jefferies
& Company, Inc.;
(u) the Company is not and, after giving effect to the offering and sale
of the Shares, will not be an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act");
(v) the Company and its Subsidiaries have good and marketable title to
all property (real and personal) described in the Prospectus as being owned by
them, free and clear of all liens, claims, security interests or other
encumbrances or defects except such as are described in the Registration
Statement and the Prospectus and except as would not individually or in the
aggregate have a Material Adverse Effect. All the property being held under
lease by the Company and its Subsidiaries is held thereby under valid and
enforceable leases;
(w) each of the Company and its Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amount as are customary in the business in which it is engaged. All policies of
insurance insuring the Company, the Subsidiaries or any of their businesses,
material assets, employees, officers and directors are in full force and effect,
and each of the Company and each of its Subsidiaries is in compliance with the
terms of such policies in all material respects. There are no claims by the
Company or any of its Subsidiaries under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause;
(x) the Company has received the written consent to the use of all
statistical and market-related data included in the Prospectus from appropriate
sources to the extent required;
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(y) neither the Company nor any of its affiliates has taken, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations thereunder,
or otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares;
(z) the Company owns or has obtained licenses (which licenses are
enforceable against the Company and, to the Company's best knowledge, the other
parties thereto) for the patents, patent applications, inventions, technology,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information systems or procedures), trademarks,
trademark registrations, service marks, service xxxx registrations, mask work
rights, trade names, copyrights, and other rights described in the Prospectus as
being owned or used by or licensed to the Company or its Subsidiaries or
necessary for the conduct of their respective businesses as currently conducted
(collectively, the "Intellectual Property"). Each employee of and consultant to
the Company has entered into a confidentiality and invention assignment
agreement in favor of the Company as a condition of his or her employment or
retention in service. Except as set forth in the Prospectus: (i) to the
Company's knowledge, there are no rights of third parties to any such
Intellectual Property inconsistent with the rights of the Company related to
such Intellectual Property; (ii) to the Company's knowledge, there is no
infringement by third parties of any such Intellectual Property owned or
exclusively licensed by the Company; (iii) there is no pending or threatened
action, suit, proceeding or claim by others challenging the Company's rights in
or to any Intellectual Property which would cause a Material Adverse Effect on
the Company; (iv) there is no pending or threatened action, suit, proceeding or
claim by others challenging the validity or scope of any Intellectual Property
which would cause a material adverse effect on the Company; (v) there is no
pending or threatened action, suit, proceeding or claim by others that the
Company or any of its Subsidiaries infringes or otherwise violates, or would
infringe or otherwise violate upon commercialization of its products and product
candidates described in the Prospectus, any patent, trademark, copyright, trade
secret or other proprietary rights of others which would cause a material
adverse effect on the Company; and (vi) to the Company's actual knowledge there
is no patent or patent application which contains claims that conflict or
interfere with or may conflict or interfere with any Intellectual Property
described in the Prospectus as being owned by or licensed to the Company or any
of its Subsidiaries or that is necessary for the conduct of their respective
businesses as currently or contemplated to be conducted;
(aa) neither the Company nor any of its Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any applicable
federal or state wages and hours laws, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, which
9
violation individually or in the aggregate could reasonably be expected to
result in a Material Adverse Effect;
(bb) the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) records (including sales contracts) are kept in accordance
with management's general or specific authorization and true and accurate copies
are provided to the Company's independent auditors; (iii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iv) access to assets is permitted only in accordance
with management's general or specific authorization; and (v) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(cc) each of the Company and its Subsidiaries has filed all federal,
state, local and foreign tax returns and tax forms required to be filed. Such
returns and forms are complete and correct in all material respects, and all
taxes shown by such returns or otherwise assessed that are due or payable have
been paid, except such taxes as are being contested in good faith and as to
which adequate reserves have been provided. All payroll withholdings required to
be made by the Company and each of its Subsidiaries with respect to employees
have been made. The charges, accruals and reserves on the books of the Company
and each of its Subsidiaries in respect of any tax liability for any year not
finally determined are, in management's determination, adequate to meet any
assessments or reassessments for additional taxes. There have been no tax
deficiencies asserted and, to the knowledge of the Company, no tax deficiency
might be reasonably asserted or threatened against the Company or any of its
Subsidiaries which individually or in the aggregate could have a Material
Adverse Effect; and
In addition, any certificate signed by any executive officer of the
Company delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Shares shall be deemed to be a
representation and warranty by the Company, as to matters covered thereby, to
each Underwriter.
4. Certain Covenants of the Company. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as you may designate and to maintain such
qualifications in effect so long as required for the distribution of the Shares;
provided that the Company shall not be required to qualify as a foreign
corporation (unless it is already so qualified) or to consent to the service of
process under the laws of any such state (except service of process with respect
to the offering and sale of the
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Shares); and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;
(b) to make available to the Underwriters in New York City, as soon as
practicable after the Registration Statement becomes effective, and thereafter
from time to time to furnish to the Underwriters, as many copies of the
Prospectus (or of the Prospectus as amended or supplemented if the Company shall
have made any amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriters may request for the purposes
contemplated by the Act; in case any Underwriter is required to deliver a
prospectus within the nine-month period referred to in Section 10(a)(3) of the
Act in connection with the sale of the Shares, the Company will prepare promptly
upon request, but at the expense of such Underwriter, such amendment or
amendments to the Registration Statement and such prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective and
when any post-effective amendment thereto becomes effective and (ii) if Rule
430A under the Act is used, when the Prospectus is filed with the Commission
pursuant to Rule 424(b) under the Act (which the Company agrees to file in a
timely manner under such Rules);
(d) to advise you promptly, confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement, the Preliminary Prospectus or the Prospectus or for additional
information with respect thereto, or of notice of institution of proceedings
for, or the entry of a stop order suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to make every
reasonable effort to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement the
Registration Statement or Prospectus and to file no such amendment or supplement
to which you shall object in writing;
(e) to file promptly all reports and any definitive proxy or information
statement required to be filed by the Company with the Commission and otherwise
take all actions in order to comply with the Exchange Act subsequent to the date
of the Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the shares, and to promptly notify you
of such filing;
(f) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send to
its stockholders or shall from time to time publish or publicly disseminate,
(ii) copies of all annual, quarterly and current reports filed with the
Commission on
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Forms 10-K, 10-Q and 8-K, or such other similar form as may be designated by the
Commission, (iii) copies of documents or reports filed with any national
securities exchange or authorized quotation system on which any class of
securities of the Company is listed, and (iv) such other information as you may
reasonably request regarding the Company or its Subsidiaries, in each case as
soon as such communications, documents or information becomes available;
(h) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Act which, in the judgment of the
Company, would require the making of any change in the Prospectus then being
used so that the Prospectus would not include an untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they are made, not misleading and,
during such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as may
be necessary to reflect any such change and to furnish you a copy of such
proposed amendment or supplement before filing any such amendment or supplement
with the Commission;
(i) to make generally available to its security holders, and to deliver
to you, an earnings statement of the Company (which will satisfy the provisions
of Section 11(a) of the Act) covering a period of twelve months beginning after
the effective date of the Registration Statement (as defined in Rule 158(c) of
the Act) as soon as is reasonably practicable after the termination of such
twelve-month period but not later than eighteen months after such effective
date;
(j) to furnish to its stockholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements
of income, shareholders' equity and of cash flow of the Company for such fiscal
year), accompanied by a copy of the certificate or report thereon of nationally
recognized independent certified public accountants;
(k) to furnish to you five (5) signed copies of the Registration
Statement, as initially filed with the Commission, and of all amendments thereto
(including all exhibits thereto) and sufficient conformed copies of the
foregoing (other than exhibits) for distribution of a copy to each of the other
Underwriters;
(l) to furnish to you as early as practicable prior to the Time of
Purchase and the Additional Time of Purchase, as the case may be, but not later
than two business days prior thereto, a copy of the latest available unaudited
interim consolidated financial statements, if any, of the Company and its
Subsidiaries which have been reviewed by the Company's independent certified
public accountants, as stated in their letter to be furnished pursuant to
Section 6(b) hereof;
(m) to apply the net proceeds from the sale of the Shares in the manner
set forth under the caption "Use of Proceeds" in the Prospectus;
12
(n) to furnish to you, before filing with the Commission subsequent to
the effective date of the Registration Statement and during the period referred
to in paragraph (e) above, a copy of any document proposed to be filed pursuant
to Section 13, 14 or 15(d) of the Exchange Act;
(o) not to issue, sell, offer or agree to sell, contract to sell, grant
any option to sell or otherwise dispose of, directly or indirectly, any shares
of capital stock or securities convertible into or exchangeable or exercisable
for capital stock or warrants or other rights to purchase capital stock or any
other securities of the Company that are substantially similar to capital stock
or permit the registration under the Act of any shares of capital stock, except
for the registration of the Shares and the sales to the Underwriters pursuant to
this Agreement and except for issuances of options to purchase 713,225 shares of
Common Stock under employee stock option plans existing on the date of this
Agreement, an issuance to Transcap Associates, Inc. of a warrant to purchase an
additional 100,000 shares of Common Stock with an exercise price equal to the
initial public offering price, issuances of up to 500,000 shares of or
securities convertible into or exercisable for Common Stock in strategic
partnering transactions or other transactions, the primary purpose thereof is
not to raise capital, issuances of Common Stock upon the exercise of outstanding
options, warrants and debentures described in the Registration Statement or
Prospectus, for a period of 180 days after the date hereof, without the prior
written consent of Xxxxxxxxx & Company, Inc.;
(p) to use its best efforts to cause the Common Stock to be included,
and thereafter have such inclusion maintained, for quotation on the Nasdaq
National Market;
(q) to pay all costs, expenses, fees and taxes (other than any transfer
taxes), including the fees and expenses of counsel to the Underwriters and
certain travel costs, in the maximum aggregate amount of $300,000, in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (ii) the
registration, issuance, sale and delivery of the Shares, (iii) the word
processing and/or printing of this Agreement, any Agreement Among Underwriters,
any dealer agreements, any Statements of Information, any Powers of Attorney and
any closing documents (including compilations thereof) and the reproduction
and/or printing and furnishing of copies of each thereof to the Underwriters and
to dealers (including costs of mailing and shipment), (iv) the qualification of
the Shares for offering and sale under state laws and the determination of their
eligibility for investment under state law as aforesaid (including the legal
fees and filing fees and other disbursements of counsel to the Underwriters) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any listing of the
Shares on any securities exchange or qualification of the Shares for quotation
on the Nasdaq Stock Market and any registration thereof under the Exchange Act,
(vi) the filing for review of the public offering of the Shares by the NASD,
including attorneys' fees related thereto, and (vii) the performance of the
Company's other obligations hereunder; and
13
(r) to use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Time of Purchase or the Additional Time of Purchase, as the case may be, and
to satisfy all conditions precedent to the delivery of the Shares.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
shall, in addition to paying the amounts described in Section 4(q) hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the Time of
Purchase (and the several obligations of the Underwriters at the Additional Time
of Purchase are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof and at the Time of Purchase (unless
previously waived) and at the Additional Time of Purchase, as the case may be),
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to you at the Time of Purchase and at the
Additional Time of Purchase, as the case may be, a written opinion of
Xxxxxxxxxxx & Xxxxxxxx LLP, counsel for the Company, or, with respect to the
opinions in subsections (i), (ii), (iii), (v), (vi), (viii), (ix), (x), (xii),
(xvii), (xviii), (xix), (xxiv) and (xxv), of Xxxx, Xxxxxxxx & Xxxxxxx; provided
that the opinion with respect to subsection (v) shall also be given by
Xxxxxxxxxxx & Xxxxxxxx LLP, which opinion shall be made to their knowledge,
addressed to the Underwriters, and dated the Time of Purchase or the Additional
Time of Purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form satisfactory to Xxxxxxx, Phleger & Xxxxxxxx LLP,
counsel for the Underwriters, stating that:
(i) the Company is duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
to execute and deliver the Underwriting Agreement and to issue, sell and
deliver the Shares as therein contemplated;
(ii) each of the Subsidiaries has been duly organized and is
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and
authority to own, lease and operate its respective properties and to
conduct its respective business;
14
(iii) the Company and its Subsidiaries are duly qualified in or
licensed by each jurisdiction in which they conduct their respective
businesses and in which the failure, individually or in the aggregate,
to be so licensed or qualified could have a Material Adverse Effect and
the Company and its Subsidiaries are duly qualified, and are in good
standing, in each jurisdiction in which they own or lease real property
or maintain an office and in which such qualification is necessary;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable by you in accordance with its
terms;
(v) the authorized, issued and outstanding capital stock as of
_________, 2001 is as set forth under the heading "Capitalization" in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and to our
knowledge are fully paid and non-assessable;
(vi) the outstanding shares of capital stock of the Company are
free of statutory and contractual preemptive rights and have been issued
in compliance with all state, federal and foreign securities laws; to
the best of such counsel's knowledge, except as described in the
Prospectus, there are no outstanding securities of the Company
convertible or exchangeable into, or evidencing the right to purchase or
subscribe for, any shares of capital stock of the Company and there are
no outstanding or authorized options, warrants or rights of a similar
character obligating the Company to issue any shares of its capital
stock or any securities convertible or exchangeable into, or evidencing
the right to purchase or subscribe for, any shares of such stock;
(vii) the Shares to be sold by the Company have been duly
authorized, and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable;
(viii) the Shares, when issued, will be free of statutory and,
to the knowledge of such counsel, contractual preemptive rights, resale
rights, rights of first refusal and similar rights; the certificates for
the Shares are in due and proper form and the holders of the Shares will
not be subject to personal liability by reason of being such holders;
(ix) other than as set forth in the Prospectus and to our
knowledge, there are no legal or governmental proceedings pending to
which the Company or any of the Subsidiaries is a party or of which any
property of the Company or the Subsidiaries is the subject which are
required to be described in the Registration Statement that are not so
described; and no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
15
(x) other than the Subsidiaries, the Company does not own or
control, directly or indirectly, any corporation, association or other
entity; all of the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and, except as otherwise stated in the
Registration Statement, are owned by the Company, in each case subject
to no security interest, other encumbrance or adverse claim; to the best
of such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding;
(xi) the statements set forth under the caption "Description of
Capital Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company,
provide a fair summary of such provisions in all material respects; the
statements set forth under the captions "Risk Factors--Risks Relating to
this Offering -- Anti-takeover provisions in our charter documents and
in Delaware law could prevent or delay a change in control and, as a
result, negatively impact our stockholders;" "Legal Proceedings;"
"Business -- Strategic Relationships;" "Management--2000 Stock Incentive
Plan," ["--Employee Stock Purchase Plan,"] "--401(k) Retirement Plan"
and "--Indemnification of Directors and Officers"; "Certain
Transactions" and "Underwriters" (to the extent it is a description of
this Agreement) in the Prospectus and in the Registration Statement in
Item 15 and in the Registration Statement on Form 8-A relating to the
Common Stock filed under the Exchange Act, in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, have been reviewed by us, are correct
in all material respects and fairly summarize the matters referred to
therein to the extent required by the Act or the Exchange Act;
(xii) other than as set forth in the Prospectus, such counsel
has no knowledge of any persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement who have not waived such rights;
(xiii) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial data
contained or incorporated by reference therein, as to which such counsel
need express no opinion) comply as to form in all material respects with
the requirements of the Act and no amendment to the Registration
Statement is required to be filed which has not been filed;
(xiv) the Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to such
counsel's knowledge, no stop order proceedings with respect thereto are
pending or threatened under the Act and any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424 under the Act
has been made in the manner and within the time period required by such
Rule 424;
16
(xv) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory commission,
board, body, court, authority or agency is required in connection with
the issuance and sale of the Shares and consummation by the Company of
the transactions contemplated hereby other than registration of the
Shares under the Act (except such counsel need express no opinion as to
any necessary qualification under the state securities or blue sky laws
of the various jurisdictions in which the Shares are being offered by
the Underwriters);
(xvi) the execution, delivery and performance of the
Underwriting Agreement by the Company and the consummation by the
Company of the transactions contemplated thereby do not and will not
conflict with, or result in any breach of, or constitute a default under
(nor constitute any event which with notice, lapse of time, or both,
would result in any breach of or constitute a default under), any
provisions of the charter or bylaws of the Company or any of its
Subsidiaries or under any provision of any license, indenture, mortgage,
deed of trust, bank loan, credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any
of them or their respective properties may be bound or affected and
which would have a material adverse effect on the Company or any of its
Subsidiaries, or under any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the
Company or any of its Subsidiaries;
(xvii) to such counsel's knowledge, neither the Company nor any
of its Subsidiaries is in violation of its charter or bylaws or is in
breach of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would result in any breach of, or
constitute a default under), any license, indenture, mortgage, deed of
trust, bank loan or any other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or
their respective properties may be bound or affected or under any
federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of its Subsidiaries;
(xviii) to such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement or to be
summarized or described in the Prospectus which have not been so filed,
summarized or described;
(xix) to the best of such counsel's knowledge, there are no
actions, suits, claims, investigations or proceedings pending,
threatened or contemplated to which the Company or any of its
Subsidiaries is subject or of which any of their respective properties,
is subject at law or in equity or before or by any federal, state, local
or foreign governmental or regulatory commission, board, body, authority
or agency which are required to be described in the Prospectus but are
not so described;
17
(xx) the Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act;
(xxi) the Shares have been approved for quotation on the Nasdaq
National Market upon issuance as contemplated by the Underwriting
Agreement;
(xxii) nothing has come to the attention of such counsel that
causes them to believe that the Registration Statement or any amendment
thereto at the time such Registration Statement or amendment became
effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus or any
supplement thereto at the date of such Prospectus or such supplement,
and at all times up to and including the Time of Purchase or Additional
Time of Purchase, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial data included in
the Registration Statement or Prospectus);
(xxiii) the execution and delivery of the Agreement and Plan of
Merger (the "Merger Agreement"), dated ______________, 2001 between the
Company and Bay Area Multimedia, Inc., a California corporation (the
"California Corporation"), effecting the reincorporation of the
California Corporation under the laws of the State of Delaware, was duly
authorized by all necessary corporate action on the part of each of the
California Corporation and the Company;
(xxiv) each of the California Corporation and the Company had
all corporate power and authority necessary to execute and file the
[Certificate of Ownership and Merger] with the Secretary of State of the
State of California and the Secretary of State of the State of Delaware
and to consummate the reincorporation contemplated by the Merger
Agreement, and the Merger Agreement at the time of execution and
immediately prior to the effectiveness of the Merger constituted a valid
and binding obligation of each of the California Corporation and the
Company, subject to the effect of (x) bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or other
similar federal or state laws affecting the rights of creditors and (y)
general principles of equity; and
(xxv) the [Certificate of Ownership and Merger] has been filed
with the Secretary of State of the State of California and the State of
Delaware, and is in effect without amendment thereto on the date hereof
and all other actions necessary to effect the reincorporation have been
taken such that the California Corporation is reincorporated in Delaware
as of the date hereof.
18
(b) You shall have received from Deloitte & Touche LLP, letters
dated, respectively, the date of this Agreement and the Time of Purchase and
Additional Time of Purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by Xxxxxxxxx & Company, Inc.
(c) The Company shall have complied with the provisions of
Section 4(b) hereof with respect to the furnishing of copies of the Prospectus
as soon as practicable after the Registration Statement becomes effective.
(d) You shall have received at the Time of Purchase and at the
Additional Time of Purchase, as the case may be, the favorable opinion of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, dated the Time of
Purchase or the Additional Time of Purchase, as the case may be, as to the
matters referred to in subparagraphs (iv), (vii), and (xiv) of paragraph (a) of
this Section 6.
In addition, such counsel shall state that such counsel have
participated in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the
contents of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus, on the basis of the
foregoing (relying as to materiality to a large extent upon the opinions of
officers and other representatives of the Company), no facts have come to the
attention of such counsel which lead them to believe that the Registration
Statement or any amendment thereto at the time such Registration Statement or
amendment became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of its date
or any supplement thereto as of its date contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no comment with respect to the financial statements and schedules and
other financial and statistical data derived therefrom included in the
Registration Statement or Prospectus).
(e) No amendment or supplement to the Registration Statement or
Prospectus shall be filed prior to the time the Registration Statement becomes
effective to which you object in writing.
(f) The Registration Statement shall become effective, or if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:00 P.M., New
York City time, on the date of this Agreement, unless a later time (but not
later than 5:00 P.M., New York City time, on the second full business day after
the date of this Agreement) shall be agreed to by the Company and you in writing
or by telephone, confirmed in writing; provided, however, that the Company and
you and any group of
19
Underwriters, including you, who have agreed hereunder to purchase in the
aggregate at least 50% of the Firm Shares may from time to time agree on a later
date.
(g) Prior to the Time of Purchase or the Additional Time of
Purchase, as the case may be, no stop order with respect to the effectiveness of
the Registration Statement shall have been issued under the Act or proceedings
initiated under Section 8(d) or 8(e) of the Act.
(h) Between the time of execution of this Agreement and the Time
of Purchase or the Additional Time of Purchase, as the case may be, no material
and unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the business, condition or prospects
of the Company and its Subsidiaries taken as a whole shall occur or become
known.
(i) The Company will, at the Time of Purchase or Additional Time
of Purchase, as the case may be, deliver to you a certificate of two of its
executive officers to the effect that the representations and warranties of the
Company as set forth in this Agreement are true and correct as of each such
date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the Time of Purchase and at or
before the Additional Time of Purchase, as the case may be, and the conditions
set forth in paragraphs (f) and (g) of this Section 6 have been met.
(j) The Company shall have furnished to you such other documents
and certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the Time of Purchase and the
Additional Time of Purchase, as the case may be, as you may reasonably request.
(k) The Shares shall have been approved for listing for quotation
on the Nasdaq National Market, subject only to notice of issuance at or prior to
the Time of Purchase or the Additional Time of Purchase, as the case may be.
7. Effective Date of Agreement; Termination. This Agreement shall become
effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has agreed to purchase in the aggregate at least
50% of the Firm Shares, if, since the time of execution of this Agreement or the
respective dates as of which information is given in the Registration Statement
and Prospectus, (i) there has been any material adverse and unfavorable change,
financial or otherwise (other than as referred to in the Registration Statement
and Prospectus), in the operations, business, condition or prospects of the
Company and its Subsidiaries taken as a whole, which would, in your judgment or
in the judgment of such group of Underwriters, make it impracticable to market
the Shares; or (ii) there shall have occurred any
20
downgrading, or any notice shall have been given of (x) any intended or
potential downgrading or (y) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or guaranteed
by the Company or any of its Subsidiaries by any "nationally recognized
statistical rating organization" as that term is defined in Rule 436(g)(2) under
the Act; or (iii) if, at any time prior to the Time of Purchase or, with respect
to the purchase of any Additional Shares, the Additional Time of Purchase, as
the case may be, trading in securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market shall have been suspended or
limitations or minimum prices shall have been established on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq Stock Market, or if a
banking moratorium shall have been declared either by the United States or New
York State authorities; or (iv) if the United States shall have declared war in
accordance with its constitutional processes or there shall have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in your judgment or in the judgment
of such group of Underwriters, to make it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 7, the Company and each other Underwriter shall be
notified promptly by letter, facsimile or email.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(q), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7,
if any Underwriter shall default in its obligation to take up and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriter or
Underwriters in such amount or amounts as you may designate with the consent of
each Underwriter so designated or, in the event no such designation is made,
such Shares shall be taken up and paid for by all non-defaulting Underwriters
pro rata in proportion to the aggregate number of Firm Shares set opposite the
names of such non-defaulting Underwriters in Schedule A.
21
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Firm Shares hereunder unless all of the Firm Shares are
purchased by the Underwriters (or by substituted Underwriters selected by you
with the approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the Underwriters
or by the Company for a defaulting Underwriter or Underwriters in accordance
with the foregoing provision, the Company or you shall have the right to
postpone the Time of Purchase for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any non-defaulting Underwriter except for the expenses to be
borne by the Company pursuant to Section 4 (q) above and without any liability
on the part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or any such person may incur under the Act, the Exchange Act, common
law or otherwise, insofar as such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus (the term Prospectus for the purpose of this Section
9 being deemed to include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), or arises out of or is
based upon any omission or alleged omission to state a material fact required to
be stated in either such Registration Statement or Prospectus or necessary to
make the statements made therein not
22
misleading, except insofar as any such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Company expressly
for use with reference to such Underwriter in such Registration Statement or
such Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in such Registration Statement or such Prospectus or necessary to
make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to any Underwriter or any such person or otherwise. Such
Underwriter or such controlling person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company and paid as incurred (it being understood, however, that the
Company shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The Company shall not be liable for any
settlement of any such Proceeding effected without its written consent but if
settled with the written consent of the Company, the Company agrees to indemnify
and hold harmless any Underwriter and any such person from and against any loss
or liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 10 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding
23
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding and does
not include an admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
(b) Each Underwriter, severally and not jointly, agrees to indemnify,
defend and hold harmless the Company, its directors and officers who have signed
the registration statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any loss, damage, expense, liability or claim (including the reasonable
cost of investigation) which, the Company or any such person may incur under the
Act, the Exchange Act, common law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use with reference to such Underwriter
in the Registration Statement (or in the Registration Statement as amended by or
on behalf of any post-effective amendment thereof by the Company) or in the
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated in such Registration Statement or Prospectus or necessary to make such
information not misleading.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses, provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the
24
written consent of such Underwriter but if settled with the written consent of
such Underwriter, such Underwriter agrees to indemnify and hold harmless the
Company and any such person from and against any loss or liability by reason of
such settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 10 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damage, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, 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 respective proportion as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any claim or Proceeding.
25
(d) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by such Underwriter and distributed to
the public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any Underwriter, its partners,
directors or officers or any person (including each partner, officer or director
of such person) who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors or officers or any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the issuance and delivery of the
Shares. The Company and each Underwriter agree promptly to notify each other
commencement of any Proceeding against it and, in the case of the Company,
against any of the Company's officers or directors in connection with the
issuance and sale of the Shares, or in connection with the Registration
Statement or Prospectus.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
Xxxxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000,
Attention: Syndicate Department and, if to the Company, shall be sufficient in
all respects if delivered or sent to the Company at the offices of the Company
at 000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx: Chief Financial Officer.
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such
26
matters, and the Company consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out of
or in any way relating to this Agreement is brought by any third party against
Xxxxxxxxx & Company, Inc. or any indemnified party. Each of Xxxxxxxxx & Company,
Inc. and the Company (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) waives all right to trial by
jury in any action, proceeding or counterclaim (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this Agreement. The
Company agrees that a final judgment in any such action, proceeding or
counterclaim brought in any such court shall be conclusive and binding upon the
Company and may be enforced in any other courts in the jurisdiction of which the
Company is or may be subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Company and to the
extent provided in Section 9 hereof the controlling persons, directors and
officers referred to in such section, and their respective successors, assigns,
heirs, pursuant representatives and executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
27
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
BAM! ENTERTAINMENT, INC.
By:
---------------------------------
Name:
Title:
Accepted and agreed to as of the date first
above written, on behalf of themselves and the
other several Underwriters named in Schedule A
XXXXXXXXX & COMPANY, INC.
XXXXXX XXXXXX & CO., INC.
By: XXXXXXXXX & COMPANY, INC.
By:
-------------------------------
Title:
By:
-------------------------------
Title:
28
SCHEDULE A
Underwriter Number of Firm Shares
----------- ---------------------
XXXXXXXXX & COMPANY, INC. [___________]
XXXXXX XXXXXX & CO., INC. [___________]
-----------
Total..................... 4,000,000
===========
