DRAFT OF FEBRUARY 3, 2000
XXXXXXX.XXX INC.
10,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
FEBRUARY __, 2000
February __, 2000
X.X. Xxxxxx Securities Inc.
CIBC World Markets Corp.
PaineWebber Incorporated
U.S. Bancorp Xxxxx Xxxxxxx
As representatives (the
"REPRESENTATIVES") of the
several Underwriters listed in
Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxx.xxx Inc., a Washington corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), an aggregate of 8,500,000 shares and the shareholders of the
company named in Schedule II hereto (the "SELLING SHAREHOLDERS") propose to sell
the Underwriters an aggregate of 1,500,000 shares (together with the shares to
be sold by the Issuer, the "UNDERWRITTEN SHARES") and, at the election of the
Underwriters, the Company agrees to issue and sell to the Underwriters up to
1,500,000 additional shares (the "OPTION SHARES") of common stock, par value
$0.001 per share (the "COMMON STOCK"), of the Company. The Underwritten Shares
and the Option Shares are herein referred to as the "SHARES".
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective, including
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act, is referred to
in this
Agreement as the "REGISTRATION STATEMENT", and the prospectus in the form
first used to confirm sales of Shares is referred to in this Agreement as the
"PROSPECTUS". If the Company has filed an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement.
The Company and the Selling Shareholders hereby agree with the
Underwriters as follows:
1. Subject to the terms and conditions set forth herein, the Company
and each of the Selling Shareholders, severally and not jointly, agree to sell
the Underwritten Shares to the several Underwriters as hereinafter provided, and
each Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase,
severally and not jointly, from the Company and each of the Selling Shareholders
at a purchase price per share of $____ (the "PURCHASE PRICE") the number of
Underwritten Shares set forth opposite such Underwriter's name on Schedule I
hereto.
In addition, the Company agrees to sell the Option Shares to the
several Underwriters and the Underwriters shall have the option to purchase at
their election up to 1,500,000 Option Shares for the sole purpose of covering
over-allotments in the sale of the Underwritten Shares. Each Underwriter, on the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company at the Purchase Price that portion of the number
of Option Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction the numerator of which is the number
of Underwritten Shares set forth opposite such Underwriter's name on Schedule I
hereto and the denominator of which is the total number of Underwritten Shares
set forth in Schedule I hereto.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice to the Company from X.X. Xxxxxx
Securities Inc. on behalf of the several Underwriters. Such notice shall set
forth the aggregate number of Option Shares as to which the option is being
exercised and the date and time when the Option Shares are to be delivered and
paid for which may be the same date and time as the Closing Date (as hereinafter
defined) but shall not be earlier than the Closing Date nor later than the tenth
full Business Day (as hereinafter defined) after the date of such notice (unless
such time and
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date are postponed in accordance with the provisions of Section 10 hereof). Any
such notice shall be given at least two Business Days prior to the date and time
of delivery specified therein.
The Company and each of the Selling Shareholders hereby agree that for
a period of 90 days after the date of the initial public offering of the Shares
not to (A) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract 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 (B) enter into any swap or other agreement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(A) or (B) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of X.X.
Xxxxxx Securities Inc., other than (i) the Shares to be sold by the Company and
the Selling Shareholders hereunder, (ii) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the
completion of the public offering of the Shares, (iii) any shares of Common
Stock issued upon the exercise of options granted under existing employee stock
option plans and (iv) any shares of Common Stock or other securities issued to
Xxxxxxx.xxx, Inc. pursuant to the Agreement and Plan of Merger dated as of
January 20, 2000 between the Company, Xxxxxxx.xxx, Inc. and Shamu
Acquisition, Inc.
2. The Company and each of the Selling Shareholders understand that
the Underwriters intend (i) to make a public offering of the Shares as soon
after (A) the Registration Statement has become effective and (B) the parties
hereto have executed and delivered this Agreement, as in the judgment of the
Representatives is advisable and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the accounts specified to the Representatives by
the Company and the Selling Shareholders, in the case of the Underwritten
Shares, on February __, 2000, or at such other time on the same or such other
date, not later than the fifth Business Day thereafter, as the Representatives
and the Company may agree upon in writing or, in the case of the Option Shares,
on the date and time specified by the Representatives in the written notice of
the Underwriters' election to purchase such Option Shares. The time and date of
such payment for the Underwritten Shares is referred to herein as the "CLOSING
DATE" and the time and date for such payment for the Option Shares, if other
than the Closing Date, is herein referred to as the "ADDITIONAL CLOSING DATE".
As used herein, the term "BUSINESS DAY" means any day other than a day on which
banks are permitted or required to be closed in New York City.
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Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company and the Selling
Shareholders, respectively. The certificates for the Shares will be made
available for inspection and packaging by the Representatives at the office of
X.X. Xxxxxx Securities Inc. set forth above not later than 1:00 P.M., New York
City time, on the Business Day prior to the Closing Date or the Additional
Closing Date, as the case may be.
4. (a) The Company represents and warrants to each Underwriter that:
(i) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and
each preliminary prospectus filed as part of the Registration
Statement on Form S-1 (No. 333-95085) as originally filed or
as part of any amendment thereto, or filed pursuant to Rule
424 under the Securities Act, complied when so filed in all
material respects with the Securities Act, and did not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; PROVIDED that this
representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with
information furnished to the Company in writing by or on
behalf of such Underwriter through the Representatives
expressly for use therein;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for
that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements
thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will
not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
date of the Prospectus and any amendment or supplement
thereto, contain any untrue statement of a material fact
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or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and the Prospectus, as amended or supplemented, if
applicable, at the Closing Date or Additional Closing Date, as
the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; PROVIDED that the
foregoing representations and warranties shall not apply to
statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by or on
behalf of such Underwriter through the Representatives
expressly for use therein;
(iii) the financial statements, and the related notes
thereto, included in the Registration Statement and the
Prospectus present fairly the consolidated financial position
of the Company and its consolidated subsidiaries as of the
dates indicated and the results of their operations and
changes in their consolidated cash flows for the periods
specified; said financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis, except as indicated in the
Prospectus with respect to pro forma adjustments, and the
supporting schedules, if any, included in the Registration
Statement present fairly the information required to be stated
therein; and the pro forma financial information, and the
related notes thereto, included in the Registration Statement
and the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act and is based
upon good faith estimates and assumptions believed by the
Company to be reasonable;
(iv) there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or
any material adverse change in or affecting the business,
prospects, condition (financial or other), shareholders'
equity or results of operations of the Company and its
subsidiaries, taken as a whole (a "MATERIAL ADVERSE CHANGE"),
from that set forth or contemplated in the Prospectus (as it
stood at the time of execution and delivery of this
Agreement); and except as set forth or contemplated in the
Prospectus (as it stood at the time of execution and delivery
of this Agreement) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement
(whether or not in the ordinary course of business) material
to the Company and its subsidiaries taken as a whole;
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(v) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, with the corporate power
and authority to own its properties and conduct its business
as described in the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have
a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(vi) each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation under
the laws of its jurisdiction of incorporation, with the
corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification,
other than where the failure to be so qualified or in good
standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole; and all the
outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are
fully-paid and non-assessable, and (except as otherwise set
forth in the Prospectus) are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances,
security interests and claims;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Company has an authorized capitalization as set
forth in the Prospectus and such authorized capital stock
conforms as to legal matters to the description thereof set
forth in the Prospectus, and all of the outstanding shares of
capital stock of the Company have been duly authorized and
validly issued, are fully-paid and non-assessable and are not
subject to any pre-emptive or similar rights; and, except as
described in or expressly contemplated by the Prospectus,
there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for,
any shares of capital stock or other equity interest in the
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Company or any of its subsidiaries, or any contract,
commitment, agreement, understanding or arrangement of any
kind relating to the issuance of any capital stock of the
Company or any such subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or
options;
(ix) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and, when issued and
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, will be duly issued and will
be fully paid and non-assessable and will conform to the
descriptions thereof in the Prospectus; and the issuance of
the Shares is not subject to any preemptive or similar rights;
(x) neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both would
be, in violation of or in default under, its Articles of
Incorporation or Bylaws or any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by
which it or any of them or any of their respective properties
is bound, except for violations and defaults which
individually and in the aggregate are not material to the
Company and its subsidiaries taken as a whole; the issue and
sale of the Shares to be sold by the Company hereunder and the
performance by the Company of its obligations under this
Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its
subsidiaries is subject, nor will any such action result in
any violation of the provisions of the Articles of
Incorporation or the Bylaws of the Company or any applicable
law or statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective
properties; and no consent, approval, authorization, order,
license, registration or qualification of or with any such
court or governmental agency or body is required for the issue
and sale of the Shares to be sold by the Company hereunder or
the consummation by the Company of the transactions
contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as
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have been obtained under the Securities Act, and as may be
required under state securities or Blue Sky Laws or under the
rules and regulations of the National Association of
Securities Dealers, Inc. in connection with the purchase and
distribution of the Shares by the Underwriters;
(xi) other than as set forth or contemplated in the
Prospectus, there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against or affecting the Company or
any of its subsidiaries or any of their respective properties
or to which the Company or any of its subsidiaries is or may
be a party or to which any property of the Company or any of
its subsidiaries is or may be the subject which, if determined
adversely to the Company or any of its subsidiaries, could
individually or in the aggregate reasonably be expected to
result in a Material Adverse Change, and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others; and there are no statutes, regulations, contracts or
other documents that are required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(xii) the Company and its subsidiaries have good and
marketable title in fee simple to all items of real property
and good and marketable title to all personal property owned
by them, in each case free and clear of all liens,
encumbrances and defects except such as are described or
referred to in the Prospectus or such as do not materially
affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the
Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries
are held by them under valid, existing and enforceable leases
with such exceptions set forth in the Prospectus or 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 or its
subsidiaries;
(xiii) no relationship, direct or indirect, exists between
or among the Company or any or its subsidiaries on the one
hand, and the directors, officers, shareholders, customers or
suppliers of the Company or any of its subsidiaries on the
other hand, which is
8
required by the Securities Act to be described in the
Registration Statement and the Prospectus which is not so
described;
(xiv) no person has the right to require the Company to
register any securities for offering and sale under the
Securities Act by reason of the filing of the Registration
Statement with the Commission or the issue and sale of the
Shares to be sold by the Company hereunder, except such rights
which have been validly waived or satisfied;
(xv) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment
company", as such term is defined in the Investment Company
Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(xvi) the Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida) relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba;
(xvii) Xxxxxx Xxxxxxxx LLP, KPMG LLP, Xxxx Xxxxx LLP and
Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are
independent public accountants as required by the Securities
Act;
(xviii) the Company and its subsidiaries have filed all
federal, state, local and foreign tax returns which have been
required to be filed and have paid all taxes shown thereon and
all assessments received by them or any of them to the extent
that such taxes have become due and are not being contested in
good faith;
(xix) the Company has not taken nor will it take, directly
or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Common Stock of the Company;
(xx) each of the Company and its subsidiaries owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and
has made all declarations and filings with, all federal,
state, local and other governmental authorities (including
foreign regulatory agencies), all self-regulatory
organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the
9
case may be, and to operate its properties and to carry on its
business as conducted as of the date hereof, except such as
would not result in a Material Adverse Change, and neither the
Company nor any such subsidiary has received any actual notice
of any proceeding relating to revocation or modification of
any such license, permit, certificate, consent, order,
approval or other authorization which, if determined adversely
to the Company or any of its subsidiaries could result in a
Material Adverse Change; and each of the Company and its
subsidiaries is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of the
date hereof, except where the failure to so comply would not,
singly or in the aggregate, result in a Material Adverse
Change;
(xxi) there are no existing or, to the best knowledge of
the Company, threatened labor disputes with the employees of
the Company or any of its subsidiaries which are likely to
have a material adverse effect on the Company and its
subsidiaries taken as a whole;
(xxii) the Company and its subsidiaries (A) are in
compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (B) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and
(C) are in compliance with all terms and conditions of any
such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries
taken as a whole, and except as disclosed in the Registration
Statement and the Prospectus; and
(xxiii) the Company and each if its subsidiaries owns or
possesses adequate licenses or other rights to use all
patents, patent applications, copyrights, licenses,
inventions, trademarks, trade dress, service marks, trade
names, technology, trade secrets, know-how, Internet domain
names (including, without limitation, the trademarks,
"ShopNow", "XxxxXxx.xxx" and "x0xXxx.xxx", and the domain
names XxxxXxx.xxx and x0xXxx.xxx and
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similar rights (the "INTELLECTUAL PROPERTY") necessary to
conduct its business in the manner described in the Prospectus
and the Company has not received any notice of infringement or
conflict with (and the Company is not aware of any
infringement or conflict with) asserted rights of others with
respect to any patents, patent applications, copyrights,
licenses, inventions, trademarks, trade dress, service marks,
trade names, technology, Internet domain names or know-how
which could result in any material adverse effect upon the
Company and its subsidiaries taken as a whole; and the
discoveries, inventions, products or processes of the Company
necessary to conduct its business in the manner described in
the Prospects do not, to the best knowledge of the Company,
infringe or conflict with any right or patent of any third
party, or any discovery, invention, product or process which
is the subject of a patent application filed by any third
party, known to the Company which could have a material
adverse effect on the Company and its subsidiaries taken as a
whole;
(xxiv) the Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's
general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (C) access to
assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences;
(xxv) The Company and its subsidiaries maintain insurance
with insurers of recognized financial responsibility of the
types and in the amounts generally deemed adequate for their
respective businesses and consistent with insurance coverage
maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and
personal property owned or leased by the Company or its
subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all
of which insurance is in full force and effect; neither the
Company nor any such subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company nor
any such subsidiary has any 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
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insurers as may be necessary to continue its business as a
cost that will not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(xxvi) Neither the Company nor any of its subsidiaries (nor
any person representing the Company or any if its
subsidiaries) has at any time during the last five (5) years
(A) made any payment in violation of the Foreign Corrupt
Practices Act, or (B) made any payment to any federal or state
governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any
jurisdiction thereof.
The terms "knowledge" and "to the best knowledge of the
Company" and similar references in this Section 4 shall mean actual knowledge of
the executive officers of the Company.
5. (a) Each of the Selling Shareholders represents and warrants
to and agrees with each of the Underwriters that:
(i) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder.
(ii) The execution and delivery by such Selling
Shareholder of, and the performance by such Selling
Shareholder of its obligations under, this Agreement, the
Custody Agreement signed by such Selling Shareholder and
Continental Stock Transfer & Trust Company, as Custodian,
relating to the deposit of the Shares to be sold by such
Selling Shareholder (the "CUSTODY AGREEMENT") and the Power of
Attorney appointing certain individuals as such Selling
Shareholder's attorneys-in-fact to the extent set forth
therein, relating to the transactions contemplated hereby and
by the Registration Statement (the "POWER OF ATTORNEY") will
not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or
any agreement or other instrument binding upon such Selling
Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
such Selling Shareholder, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
such Selling Shareholder of its obligations under this
Agreement or the Custody Agreement or Power of
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Attorney of such Selling Shareholder, except such as may be
required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(iii) Such Selling Shareholder has, and on the Closing Date
will have, valid title to the Shares to be sold by such
Selling Shareholder and the legal right and power, and all
authorization and approval required by law, to enter into this
Agreement, the Custody Agreement and the Power of Attorney and
to sell, transfer and deliver the Shares to be sold by such
Selling Shareholder.
(iv) The Shares to be sold by such Selling Shareholder
pursuant to this Agreement have been duly authorized and are
validly issued, fully paid and non-assessable.
(v) The Custody Agreement and the Power of Attorney have
been duly authorized, executed and delivered by such Selling
Shareholder and are valid and binding agreements of such
Selling Shareholder.
(vi) Assuming that the Underwriters purchase the Shares to
be sold by each Selling Shareholder for value, in good faith
and without notice of any adverse claim within the meaning of
Article 8 of the Uniform Commercial Code, delivery of the
Shares to be sold by such Selling Shareholder pursuant to this
Agreement will pass title to such Shares free and clear of any
security interests, claims, liens, equities and other
encumbrances.
(vii) All information furnished by or on behalf of such
Selling Shareholder for use in the Registration Statement and
Prospectus is, and on the Closing Date will be, true, correct,
and complete, and does not, and on the Closing Date will not,
contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not
misleading.
(viii) the Selling Shareholders have not taken nor will they
take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Common Stock
of the Company.
6. (a) The Company covenants and agrees with each of the several
Underwriters as follows:
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(i) to use its best efforts to cause the Registration
Statement to become effective at the earliest possible time
and, if required, to file the final Prospectus with the
Commission within the time periods specified by Rule 424(b)
and Rule 430A under the Securities Act, and to furnish copies
of the Prospectus to the Underwriters in New York City prior
to 10:00 a.m., New York City time, on the Business Day next
succeeding the date of this Agreement in such quantities as
the Representatives may reasonably request;
(ii) to deliver, at the expense of the Company, to the
Representatives two signed copies of the Registration
Statement (as originally filed) and each amendment thereto, in
each case including exhibits, and to each other Underwriter a
conformed copy of the Registration Statement (as originally
filed) and each amendment thereto, in each case without
exhibits and, during the period mentioned in Section 6(a)(v)
below, to each of the Underwriters as many copies of the
Prospectus (including all amendments and supplements thereto)
as the Representatives may reasonably request;
(iii) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or
after the time the Registration Statement becomes effective,
to furnish to the Representatives a copy of the proposed
amendment or supplement for review and not to file any such
proposed amendment or supplement to which the Representatives
reasonably object;
(iv) to advise the Representatives promptly, and to
confirm such advice in writing (A) when the Registration
Statement has become effective, (B) when any amendment to the
Registration Statement has been filed or becomes effective,
(C) when any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives
with copies thereof, (D) of any request by the Commission for
any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for any additional
information, (E) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of
any preliminary prospectus or the Prospectus or the initiation
or threatening of any proceeding for that purpose, (F) of the
occurrence of any event, within the period referenced in
Section 6(a)(v) below, as a result of which the
14
Prospectus as then amended or supplemented would include an
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 when the Prospectus
is delivered to a purchaser, not misleading, and (G) of the
receipt by the Company of any notifica tion with respect to
any suspension of the qualification of the Shares for offer
and sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and to use its best
efforts to prevent the issuance of any such stop order, or of
any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any order suspending any
such qualification of the Shares, or notification of any such
order thereof and, if issued, to obtain as soon as possible
the withdrawal thereof;
(v) if, during such period of time after the first date
of the public offering of the Shares as in the opinion of
counsel for the Underwriters a prospectus relating to the
Shares is required by law to be delivered in connection with
sales by the Underwriters or any dealer, any event shall occur
as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in
light of the circumstances when the Prospec tus is delivered
to a purchaser, not misleading, or if it is necessary to amend
or supplement the Prospectus to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the
Underwriters and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Shares
may have been sold by the Representatives on behalf of the
Underwriters and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be
necessary so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
(vi) to endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as
the Representatives shall reasonably request and to continue
such qualification in effect so long as reasonably required
for distribution of the Shares; PROVIDED that the Company
shall not be required to (x) file a general consent to service
of process, (y) subject itself to taxation or (z) qualify as a
foreign corporation in any jurisdiction in which it is not
otherwise required to do so;
15
(vii) to make generally available to its security holders
and to the Representatives as soon as practicable an earnings
statement covering a period of at least twelve months
beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 of the Commission
promulgated thereunder;
(viii) for a period of three years, to furnish to the
Representatives copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and
copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange;
(ix) to use the net proceeds received by the Company from
the sale of the Shares pursuant to this Agreement in the
manner specified in the Prospectus under the caption "Use of
Proceeds";
(x) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to
pay or cause to be paid (directly or by reimbursement) all
costs and expenses incident to the performance of its
obligations and the obligations of the Selling Shareholders
hereunder, including without limiting the generality of the
foregoing, all costs and expenses (A) incident to the
preparation, registration, transfer, execution and delivery of
the Shares, including any transfer or other taxes payable
thereon, (B) incident to the preparation, printing and filing
under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each
case all exhibits, amendments and supplements thereto), (C)
incurred in connection with the registration or qualification
of the Shares under the laws of such jurisdictions as the
Representatives may designate (including fees of counsel for
the Underwriters and their disbursements), (D) in connection
with the listing of the Shares on the Nasdaq National Market,
(E) related to the filing with, and clearance of the offering
by, the NASD (including fees of counsel for the Underwriters
and their disbursements), (F) in connection with the printing
(including word processing and duplication costs) and delivery
of this Agreement, the Preliminary and Supplemental Blue Sky
Memoranda and the furnishing to the Underwriters and dealers
of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided, (G) any
expenses
16
incurred by the Company in connection with a "road show"
presentation to potential investors, (H) the cost of preparing
stock certificates, (I) the cost and charges of any transfer
agent and any registrar and (J) relating to accountants' fees
of the Company; PROVIDED that the Selling Shareholders will
pay the fees and expenses of any separate counsel (other than
Xxxxxxx Coie LLP) retained by them in connection with the
transactions contemplated hereby. Except as set forth in this
Section 6(x) and except as set forth in Section 11 of this
Agreement, the Company and the Selling Shareholders shall not
be required to pay any of the Underwriters' expenses in
connection with the purchase of the Shares hereunder.
7. The several obligations of the Underwriters hereunder to purchase
the Shares on the Closing Date or the Additional Closing Date, as the case may
be, are subject to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) the Registration Statement shall have become effective (or
if a post-effective amendment is required to be filed under the
Securities Act, such post-effective amendment shall have become
effective) not later than 5:00 P.M., New York City time, on the date
hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with Section 6(a)(i) hereof; and
all requests for additional information shall have been complied with
to the satisfaction of the Representatives;
(b) the representations and warranties of the Company and of
each of the Selling Shareholders contained herein are true and correct
on and as of the Closing Date or the Additional Closing Date, as the
case may be, as if made on and as of the Closing Date or the Additional
Closing Date, as the case may be, and the Company shall have complied
in all material respects with all agreements and all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date or the Additional Closing Date, as the case may be;
(c) subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Additional Closing Date, as the
case may be, there shall not have occurred any downgrading, nor shall
any notice have been given of (i) any downgrading, (ii) any intended or
potential downgrading or (iii) any review or possible change that does
not
17
indicate an improvement, in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(d) there shall not have been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries or any
Material Adverse Change from that set forth or contemplated in the
Prospectus (as it stood at the time of execution and delivery of this
Agreement), the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the
manner contemplated in the Prospectus (as it stood at the time of
execution and delivery of this Agreement);
(e) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of the Company, with specific
knowledge about the Company's financial matters, satisfactory to the
Representatives to the effect set forth in Sections 7(a), 7(b), 7(c)
and 7(d) and to the further effect that there has not occurred any
Material Adverse Change from that set forth or contemplated in the
Prospectus (as it stood at the time of execution and delivery of this
Agreement);
(f) Xxxxxxx Coie LLP, outside counsel for the Company and
counsel for the Selling Shareholders for the purpose of giving the
Opinion referred to in this Section, shall have furnished to the
Representatives their written opinion, dated the Closing Date or the
Additional Closing Date, as the case may be, substantially in the form
of Exhibit B hereto. In rendering the opinions described above, Xxxxxxx
Coie LLP may rely, as to matters of fact with respect to those Selling
Shareholders who are natural persons, upon the representations of such
Selling Shareholder contained in this Agreement and the Power of
Attorney and Custody Agreement.
(g) Xxxx X. Xxxxxx, General Counsel for the Company, shall
have furnished to the Representatives his written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be,
substantially in the form of Exhibit C hereto.
(h) on the effective date of the Registration Statement and
the effective date of the most recently filed post-effective amendment
to the Registration Statement and also on the Closing Date or
Additional Closing Date, as the case may be, Xxxxxx Xxxxxxxx LLP, KPMG
LLP, Xxxx Xxxxx, LLP and Ernst & Young LLP each shall have furnished to
you letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to you, containing statements and
information of the type customarily included in accountants' "comfort
letters" to
18
Underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus;
(i) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion
of Xxxxx Xxxx & Xxxxxxxx, counsel to the Underwriters, with respect to
the due authorization and valid issuance of the Shares to be issued and
sold by the Company, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably request,
and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(j) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company shall have furnished to the
Representatives such further certificates and documents as the
Representatives shall reasonably request; and
(k) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and Selling Shareholders relating to
sales and certain other dispositions of shares of Common Stock or
certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date or
Additional Closing Date, as the case may be.
8. The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished to the Company in
writing by such Underwriter through the Representatives expressly for use
therein; PROVIDED that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended
19
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 6(a)(ii) hereof.
Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act and each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either such section, from and against any and all losses,
claims, damages and liabilities (including, without limitation, the legal and
other expenses incurred in connection with any suit, action or proceeding or any
claim asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Shareholder furnished in
writing by or on behalf of such Selling Shareholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto; PROVIDED that with respect to any amount due
an indemnified person under this paragraph, each Selling Shareholder shall be
liable only to the extent of the net proceeds received by such Selling
Shareholder from the sale of such Selling Shareholder's Shares.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Selling Shareholders and the Company, its directors, its
officers who sign the Registration Statement and each person who controls the
Company within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal and other expenses
incurred in connection with any suit, action or proceeding or claim asserted)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information furnished to the Company in writing by such Underwriter through
the
20
Representatives expressly for use in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any preliminary prospectus. For purposes
of Sections 4(a)(i) and 4(a)(ii) hereof and this Section 8, the Company, each of
the Selling Shareholders and the Underwriters agree that the sole information
furnished to the Company by the Underwriters is the information relating to the
Underwriters on the cover page of the Prospectus and the statements in the
Prospectus under "Underwriting."
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to
the preceding paragraphs of this Section 8, such person (the "INDEMNIFIED
PERSON") shall promptly notify the person or persons against whom such
indemnity may be sought (each an "INDEMNIFYING PERSON") in writing, and such
Indemnifying Persons, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Persons may designate in
such proceeding and shall pay the fees and expenses of such counsel related
to such proceeding. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person and not the
Indemnifying Persons unless (i) the Indemnifying Persons and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying
Persons has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both an Indemnifying
Person and the Indemnified Person and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that no Indemnifying Person shall,
in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by X.X. Xxxxxx Securities Inc. and any such
separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company shall be
designated in writing by the Company. Any such separate firm for the Selling
Shareholders and such control persons of the Selling Shareholders shall be
designated in writing by the Selling Shareholders. No Indemnifying Person
shall be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, each Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an Indemnified Person shall have requested an Indemnifying Person to
reimburse the Indemnified
21
Person for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, such Indemnifying Person agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in this Section 8 is unavailable to
an Indemnified Person or insufficient in respect of any losses, claims, damages
or liabilities referred to therein, then each Indemnifying Person, in lieu of
indemnifying such Indemnified Person, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other hand from the offering of the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Shareholders and the total underwriting discounts and the commissions received
by the Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company and the Selling Shareholders on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
22
The Company, each of the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by PRO RATA allocation (even if the Underwriters were
treated as one entity for such purposes) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 8 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.
The indemnity and contribution agreements contained in this Section 8,
and the representations and warranties of the Company and the Selling
Shareholders set forth in this Agreement or made by or on behalf of them,
respectively, shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, or by or on
behalf of the Company, its officers or directors or any other person controlling
the Company, or by or on behalf of any of the Selling Shareholders or any person
controlling any Selling Shareholder and (iii) acceptance of and payment for any
of the Shares.
9. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or
23
by, as the case may be, any of the New York Stock Exchange, the American Stock
Exchange or the Nasdaq System, (ii) trading of any securities of or guaranteed
by the Company shall have been suspended on any of the New York Stock Exchange,
the American Stock Exchange or the Nasdaq System, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the Representatives, is material and
adverse and which, in the judgment of the Representatives, makes it
impracticable to market the Shares being delivered at the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the manner
contemplated in the Prospectus.
10. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of 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; PROVIDED that in no event shall
the number of Shares that any Underwriter has agreed to purchase pursuant to
Section 1 be increased pursuant to this Section 10 by an amount in excess of
one-tenth of such number of Shares without the written consent of such
Underwriter. If on the Closing Date or the Additional Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date,
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares are not made within 36 hours after such default, this
Agreement (or the obligations of the several Underwriters to purchase the Option
Shares, as the case may be) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date (or, in the case of
the Option Shares, the Additional Closing Date), but in no
24
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. For purposes of this paragraph, the term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
11. If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of its counsel)
reasonably incurred by the Underwriters in connection with this Agreement and
the offering contemplated hereunder.
12. This Agreement shall inure to the benefit of and be binding upon
the Company, the Selling Shareholders, the Underwriters, each affiliate of any
Underwriter which assists such Underwriter in the distribution of the Shares,
any controlling persons referred to herein and their respective successors,
assigns, executors, administrators and heirs. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person, firm
or corporation any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. No purchaser of Shares from
any Underwriter shall be deemed to be a successor merely by reason of such
purchase.
13. Any action by the Underwriters or the Representatives hereunder
may be taken by the Representatives jointly or by X.X. Xxxxxx Securities Inc. on
behalf of the Underwriters or the Representatives, and any such action taken by
the Representatives jointly or by X.X. Xxxxxx Securities Inc. shall be binding
upon the Underwriters. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Underwriters shall be
given to the Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (telefax: (000) 000-0000); Attention: Syndicate
Department. Notices to the Company shall be given to it at XxxxXxx.xxx Inc., 000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000X, Xxxxxxx, Xxxxxxxxxx 00000 (telefax: (206)
223-2324); Attention: Xxxxxx X. Xxxxxx. Notices to the Selling Shareholders
shall be given to XxxxXxx.xxx Inc., 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000X, Xxxxxxx,
Xxxxxxxxxx 00000 (telefax: (000) 000-0000); Attention: Xxxx Xxxxxx, General
Counsel.
25
14. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
26
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
XXXXXXX.XXX INC.
By:
--------------------------------------
Name:
Title:
The Selling Shareholders named in Schedule
II hereto, acting severally
By:
--------------------------------------
Xxxx Xxxxxx
Attorney-in-Fact
By:
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
Attorney-in-Fact
Accepted: February __, 2000
X.X. XXXXXX SECURITIES INC.
CIBC WORLD MARKETS CORP.
PAINEWEBBER INCORPORATED
U.S. BANCORP XXXXX XXXXXXX
Acting severally on behalf of themselves
and the several Underwriters listed
in Schedule I hereto.
By: X.X. XXXXXX SECURITIES INC.
By:
--------------------------------------
Name:
Title:
SCHEDULE I
NUMBER OF SHARES
UNDERWRITER TO BE PURCHASED
----------- ----------------
X.X. Xxxxxx Securities Inc.............................................
CIBC World Markets Corp................................................
PaineWebber Incorporated...............................................
U.S. Bancorp Xxxxx Xxxxxxx ............................................
----------
Total 10,000,000
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2
SCHEDULE II
NUMBER OF SHARES
SELLING SHAREHOLDER TO BE SOLD
------------------- ----------------
24/7 Media, Inc. 500,000
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx 262,000
c/o XxxxXxx.xxx, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Environmental Private Equity Fund II, L.P. 125,000
c/o Xxxx Xxxxxxx
c/o First Analysis Corporation
The Sears Tower
Suite 950
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
The Productivity Fund III, L.P. 125,000
c/o Xxxx Xxxxxxx
c/o First Analysis Corporation
The Sears Tower
Suite 950
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxxx 75,000
c/o Madison Securities
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxxxx Xxxxxxxx, Ph.D. 75,000
c/o XxxxXxx.xxx, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 75,000
c/o XxxxXxx.xxx, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx 75,000
c/o XxxxXxx.xxx, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Qwest Communications Corporation 70,000
Xxxxx Xxxxx, 00xx Xxxxx
000 00xx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Senior Vice President Corporate Development
Xxxx X. XxXxxxx 43,000
c/o XxxxXxx.xxx, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Xxxx X. Xxxxxx 25,000
c/o XxxxXxx.xxx, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
