Exhibit 1.1
6,000,000 SHARES
USINTERNETWORKING, INC.
COMMON STOCK, $.001 PAR VALUE
UNDERWRITING AGREEMENT
February , 2000
Credit Suisse First Boston Corporation
Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
X.X. Xxxxxx Securities Inc.
Xxxx Xxxxx Xxxx Xxxxxx Incorporated
E*Offering Corp.
X.X. Xxxxxxxxx, Towbin
Xxxxxxxxxxx Xxxxxxx Securities, Inc.
As Representatives of the Several Underwriters
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Dear Sirs:
1. INTRODUCTORY. USINTERNETWORKING, Inc., a Delaware corporation
("COMPANY") proposes to issue and sell 2,000,000 shares of its Common Stock,
$0.01 par value ("SECURITIES") and the stockholders listed in SCHEDULE A hereto
("SELLING STOCKHOLDERS") propose severally to sell an aggregate of 4,000,000
outstanding shares of the Securities (such 6,000,000 shares of Securities being
hereinafter referred to as the "FIRM SECURITIES"). Certain of the Selling
Stockholders also propose to sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than 900,000 additional outstanding
shares of the Company's Securities, as set forth below (such 900,000 additional
shares being hereinafter referred to as the "OPTIONAL SECURITIES"). The Firm
Securities and the Optional Securities are herein collectively called the
"OFFERED SECURITIES." The Company and the Selling Stockholders hereby agree with
the several Underwriters named in SCHEDULE B hereto ("UNDERWRITERS") as follows:
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS. (a) The Company and Xxxxxxxxxxx X. XxXxxxxx, Xxxxxxx X. XxXxxxx
and Xxxxxx X. Xxxxx (the "SENIOR MANAGEMENT STOCKHOLDERS") represent and warrant
to, and agree with, the several Underwriters that:
(i) A registration statement (No. 333-95543) relating to the
Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission ("COMMISSION") and either (A)
has been declared effective under the Securities Act of 1933 ("ACT")
and is not proposed to be amended or (B) is proposed to be amended by
amendment or post-effective amendment. If such registration statement
(the "INITIAL REGISTRATION STATEMENT") has been declared effective,
either (A) an additional registration statement (the "ADDITIONAL
REGISTRATION STATEMENT") relating to the Offered Securities may have
been filed with the Commission pursuant to Rule 462(b) ("RULE 462(b)")
under the Act and, if so filed, has become effective upon filing
pursuant to such Rule and the Offered Securities all have been duly
registered under the Act pursuant to the initial registration statement
and, if applicable, the additional registration statement or (B) such
an additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing the Offered
Securities will all have been duly registered under the Act pursuant to
the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has
been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("RULE 462(c)") under the
Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "EFFECTIVE TIME" with respect
to the initial registration statement or, if filed prior to the
execution and delivery of this Agreement, the additional registration
statement means (A) if the Company has advised the Representatives that
it does not propose to amend such registration statement, the date and
time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c),
or (B) if the Company has advised the Representatives that it proposes
to file an amendment or post-effective amendment to such registration
statement, the date and time as of which such registration statement,
as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "EFFECTIVE
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TIME" with respect to such additional registration statement means the
date and time as of which such registration statement is filed and
becomes effective pursuant to Rule 462(b). "EFFECTIVE DATE" with
respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its
Effective Time, including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the
Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the
Act, is hereinafter referred to as the "INITIAL REGISTRATION
STATEMENT". The additional registration statement, as amended at its
Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "ADDITIONAL REGISTRATION
STATEMENT". The Initial Registration Statement and the Additional
Registration are hereinafter referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT". The form of prospectus relating to the Offered Securities,
as first filed with the Commission pursuant to and in accordance with
Rule 424(b) ("RULE 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter
referred to as the "PROSPECTUS". No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act and the rules and regulations of the Commission
("RULES AND REGULATIONS") and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, (B)
on the Effective Date of the Additional Registration Statement (if
any), each Registration Statement conformed or will conform, in all
respects to the requirements of the Act and the Rules and Regulations
and did not include, or will not include, any untrue statement of a
material fact and did not omit, or will not omit, to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included,
each Registration Statement and the Prospectus will conform, in all
respects to the requirements of the Act
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and the Rules and Regulations, and neither of such documents includes,
or will include, any untrue statement of a material fact or omits, or
will omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will conform in all respects to the requirements of
the Act and the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do
not apply to statements in or omissions from a Registration Statement
or the Prospectus based upon written information furnished to the
Company by any Underwriter through the Representatives specifically
for use therein, it being understood and agreed that the only such
information is that described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and
the Company is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification except where the failure to be so qualified or in good
standing would not have, individually or in the aggregate, a material
adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries, taken as a whole ("MATERIAL ADVERSE EFFECT").
(iv) Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification in each case
except as would not have a Material Adverse Effect; all of the issued
and outstanding capital stock of each subsidiary of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable; and, except as described in the Prospectus, the capital
stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects.
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(v) The Offered Securities and all other outstanding shares
of capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with
this Agreement on each Closing Date (as defined below), such Offered
Securities will have been, and validly issued, fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; and the stockholders of the Company have no preemptive
rights with respect to the Securities.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(vii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(viii) The Securities are listed on Nasdaq Stock Market's
National Market.
(ix) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
to be obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the sale
of the Offered Securities, except such as have been obtained and made
under the Act and such as may be required under state securities laws.
(x) The execution, delivery and performance of this Agreement,
the issuance and sale of the Offered Securities to be issued and sold
by the Company, and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any agreement
or instrument to which the Company or any such subsidiary is a party or
by which the Company or any such subsidiary is bound or to which any of
the properties of the Company or any such subsidiary is subject, or the
charter or by-laws of the Company or any such subsidiary and the
Company has full power and authority to authorize, issue and sell the
Offered Securities to be issued and sold by the Company as contemplated
by this Agreement.
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(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) Except as disclosed in the Prospectus, the Company and
its subsidiaries have good and marketable title to all real properties
and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the
value thereof or materially interfere with the use made or to be made
thereof by them; and except as disclosed in the Prospectus, the Company
and its subsidiaries hold any leased real or personal property under
valid and enforceable leases with no exceptions that would materially
interfere with the use made or to be made thereof by them.
(xiii) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them (except when the failure to possess the same would not have a
Material Adverse Effect) and have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or
any subsidiary exists or, to the knowledge of the Company, is imminent
that might have a Material Adverse Effect.
(xv) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"INTELLECTUAL PROPERTY RIGHTS") necessary to conduct the business now
operated by them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or
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claim would individually or in the aggregate have a Material Adverse
Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.
(xvii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(xviii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied
on a consistent basis; and the assumptions used in preparing the pro
forma financial statements included in each Registration Statement and
the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect
the proper application of those adjustments to the corresponding
historical financial statement amounts.
(xix) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure to so file
would not have a Material Adverse Effect) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as described in or
contemplated by Prospectus.
(xx) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, and, except as
disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(xxi) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the
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Prospectus, will not be an "investment company" as defined in the
Investment Company Act of 1940.
(xxii) The Company carries insurance in such amounts and
covering such risks as is reasonable and customary for businesses of
the type conducted by the Company.
(xxiii) The Company does not have any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), to which the Company makes or ever
has made a contribution and in which any employee of the Company is or
has ever been a participant. With respect to such plans, the Company is
in compliance in all material respects with all applicable provisions
of ERISA.
(b) Each Selling Stockholder, severally and not jointly,
represents and warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder on such
Closing Date and full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver the Offered
Securities to be delivered by such Selling Stockholder on such Closing
Date hereunder; and upon the delivery of and payment for the Offered
Securities on each Closing Date hereunder the several Underwriters will
acquire valid and unencumbered title to the Offered Securities to be
delivered by such Selling Stockholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act and the Rules and Regulations and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all respects to the requirements of the
Act and the Rules and Regulations did not include, or will not include,
any untrue statement of a material fact and did not omit, or will not
omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b) or (if no such filing is required) at the
Effective
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Date of the Additional Registration Statement in which the Prospectus
is included, each Registration Statement and the Prospectus will
conform, in all respects to the requirements of the Act and the Rules
and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will conform in all respects to the requirements of
the Act and the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading. With respect to (A) the Senior
Management Stockholders, the two preceding sentences do not apply to
statements in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the Company by
any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information
is that described as such in Section 7(c); and (B) all Selling
Stockholders other than the Senior Management Stockholders, the two
preceding sentences apply only to the extent that any statements in or
omissions from a Registration Statement or the Prospectus are based on
written information furnished to the Company by such Selling
Stockholder specifically for use therein.
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Stockholder and any person that would give rise to a valid claim
against such Selling Stockholder or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis
of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company and each
Selling Stockholder agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and each Selling Stockholder, at a purchase price
of $ per share, that number of Firm Securities (rounded up or down, as
determined by Credit Suisse First Boston Corporation ("CSFBC") in its
discretion, in order to avoid fractions) obtained by multiplying 2,000,000
Firm Securities in the case of the Company and the number of Firm Securities
set forth opposite the name of such Selling Stockholder in SCHEDULE A hereto,
in the case of a Selling Stockholder, in each case by a fraction the
numerator of which is the number of Firm Securities set forth opposite the
name of such Underwriter in SCHEDULE B hereto and the denominator of which is
the total number of Firm Securities.
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Certificates in negotiable form for the Offered Securities to be sold
by the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under custody agreements (the "CUSTODY AGREEMENTS") made
with the Company, as custodian ("CUSTODIAN"). Each Selling Stockholder agrees
that the shares represented by the certificates held in custody for the Selling
Stockholders under such Custody Agreements are subject to the interests of the
Underwriters hereunder, that the arrangements made by the Selling Stockholders
for such custody are to that extent irrevocable, and that the obligations of the
Selling Stockholders hereunder shall not be terminated by operation of law,
whether by the death of any individual Selling Stockholder or the occurrence of
any other event, or in the case of a trust, by the death of any trustee or
trustees or the termination of such trust. If any individual Selling Stockholder
or any such trustee or trustees should die, or if any other such event should
occur, or if any of such trusts should terminate, before the delivery of the
Offered Securities hereunder, certificates for such Offered Securities shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death or other event or termination had not occurred,
regardless of whether or not the Custodian shall have received notice of such
death or other event or termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to CSFBC drawn to the order of
the Company in the case of 2,000,000 shares of Firm Securities and to the
Custodian in the case of 4,000,000 shares of Firm Securities, at the office of
Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 , at 9:00 A.M., New
York time, on February , 2000, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "FIRST CLOSING DATE". The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CSFBC given to the Company and
the Selling Stockholders from time to time not more than 30 days subsequent to
the date of the Prospectus, the Underwriters may purchase all or less than all
of the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. The Selling Stockholders agree, severally and not jointly, to
sell to the Underwriters the respective numbers of Optional Securities obtained
by multiplying the number of Optional Securities specified in such notice by a
fraction the numerator of which is the number of shares set forth opposite the
names of such Selling Stockholders in SCHEDULE A hereto under the caption
"Number of Optional Securities to be Sold" in the case of the Selling
Stockholders and the denominator of which is the total number of Optional
Securities (subject to adjustment by CSFBC to eliminate fractions). Such
Optional Securities shall be purchased from each Selling Stockholder for the
account of each
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Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and the Selling Stockholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company and the Custodian
will deliver the Optional Securities being purchased on each Optional Closing
Date to the Representatives for the accounts of the several Underwriters,
against payment of the purchase price therefor in Federal (same day) funds by
official bank check or checks or wire transfer to an account at a bank
acceptable to CSFBC drawn to the order of the Custodian in the case of Optional
Securities, at the above office at Xxxxxx Xxxxxx & Xxxxxxx. The certificates
for the Optional Securities being purchased on each Optional Closing Date will
be in definitive form, in such denominations and registered in such names as
CSFBC requests upon reasonable notice prior to such Optional Closing Date and
will be made available for checking and packaging at the above office at a
reasonable time in advance of such Optional Closing Date.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the Company
will file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC, subparagraph
(4)) of Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration Statement. The
Company will advise CSFBC promptly of any such filing pursuant to Rule 424(b).
If the Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement and an additional registration
statement is necessary to register a portion of the Offered Securities
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under the Act but the Effective Time thereof has not occurred as of such
execution and delivery, the Company will file the additional registration
statement or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior to 10:00
P.M., New York time, on the date of this Agreement or, if earlier, on or prior
to the time the Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been consented to by
CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration statement as
filed or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not effect
such amendment or supplementation without CSFBC's consent; and the Company will
also advise CSFBC promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration Statement
or the Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best efforts
to prevent the issuance of any such stop order and to obtain as soon as possible
its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with sales by
any Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally available
to its securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration Statement
(or, if later, the Effective Date of the Additional Registration Statement)
which will satisfy the provisions of Section 11(a) of the Act. For the purpose
of the preceding sentence, "AVAILABILITY DATE" means the 45th day after the end
of the fourth fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last quarter
of the Company's fiscal year, "AVAILABILITY DATE" means the 90th day after the
end of such fourth fiscal quarter.
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(e) The Company will furnish to the Representatives copies of
each Registration Statement of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectus shall be so furnished on or prior to 3:00 P.M.,
New York time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial Registration
Statement. All other such documents shall be so furnished as soon as available.
The Company and the Selling Stockholders will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as required
for the distribution.
(g) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a copy
of its annual report to stockholders for such year; and the Company will furnish
to the Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as CSFBC may reasonably
request.
(h) For a period of 90 days after the date of the initial
public offering of the Offered Securities (the "LOCK-UP PERIOD"), the Company
will not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, or file with the Commission a registration statement under the
Act relating to, any additional shares of its Securities or securities
convertible into or exchangeable or exercisable for any shares of its
Securities, or publicly disclose the intention to make any such offer, sale,
pledge, disposition or filing, without the prior written consent of CSFBC,
except (i) issuances of Securities pursuant to the conversion of the Company's
7% Convertible Subordinated Notes due 2004; (ii) the exercise of warrants or
options, in each case outstanding on the date hereof; (iii) grants of employee
or director stock options pursuant to the terms of a plan in effect on the date
hereof and the issuance of Securities upon the exercise of such options; (iv)
issuances of Securities pursuant to the Company's employee stock purchase plan
in effect on the date hereof or pursuant tot he Company's 401(k) plan; and (v)
the issuance of warrants in connection with an acquisition by the Company or the
obtaining of financing by the Company, provided that such warrants shall not be
exercisable during the Lock-up Period.
(i) The Company agrees with the several Underwriters that the
Company will pay all expenses incident to the performance of the obligations of
the Company and the Selling
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Stockholders under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel) in connection with qualification
of the Offered Securities for sale under the laws of such jurisdictions as CSFBC
designates and the printing of memoranda relating thereto, for the filing fee
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. of the Offered Securities, for any travel expenses of
the Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers of the
Offered Securities and for expenses incurred in distributing preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto) to the Underwriters; provided the Selling Stockholders will pay all
expenses incident to any transfer taxes on the sale by the Selling Stockholders
of the Offered Securities to the Underwriters.
(j) Each Selling Stockholder agrees to deliver to CSFBC,
attention: Transactions Advisory Group on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(k) Each Selling Stockholder agrees to enter into a lock-up
agreement (each, a "LOCK-UP AGREEMENT") which provides that, for a period
beginning the date of such Lock-up Agreement and ending 90 days after the date
of the initial public offering of the Offered Securities, such Selling
Stockholder will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or request the Company to file a registration
statement with respect to, any additional shares of the Securities of the
Company or securities convertible into or exchangeable or exercisable for any
shares of Securities, enter into a transaction which would have the same effect,
or enter into any swap, hedge or other arrangement that transfers, in whole or
in part, any of the economic consequences of ownership of the Securities,
whether any such aforementioned transaction is to be settled by delivery of the
Securities or such other securities, in cash or otherwise, or publicly disclose
the intention to make any such offer, sale, pledge or disposition, without the
prior written consent of CSFBC.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the
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execution and delivery of this Agreement, shall be on or prior to the date of
this Agreement or, if the Effective Time of the Initial Registration Statement
is subsequent to the execution and delivery of this Agreement, shall be prior to
the filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time), of Ernst & Young
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating to the effect that:
(i) in their opinion the financial statements and schedules
and summary of earnings examined by them and included in the
Registration Statements comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) on the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company who have responsibility for financial and accounting matters
and other specified procedures, nothing came to their attention that
caused them to believe that:
(A) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of this
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of
the latest available balance sheet read by such accountants,
there was any decrease in consolidated net current assets or
net assets, as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(B) for the period from the closing date of the
latest income statement included in the Prospectus to the
closing date of the latest available income statement read by
such accountants there were any decreases, as compared with
the corresponding period of the previous year, in consolidated
net sales or increases, as compared with the corresponding
period of the previous year, in net operating loss or in the
total or per share amounts of consolidated loss before
extraordinary items or net loss;
except in all cases set forth in clauses A) and B) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described
in such letter; and
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company
-16-
and its subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection (a), (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "REGISTRATION STATEMENTS" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statements is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
is subsequent to such execution and delivery, "REGISTRATION STATEMENTS" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective Time, and
(iii) "PROSPECTUS" shall mean the prospectus included in the Registration
Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York time, on
the date of this Agreement or such later date as shall have been consented to by
CSFBC. If the Effective Time of the Additional Registration Statement (if any)
is not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the date
of this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later date as
shall have been consented to by CSFBC. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development or
event involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a majority in
interest of the Underwriters including the Representatives, is material and
adverse and makes it impractical or inadvisable to proceed with completion of
the public offering or the sale of and payment for the Offered Securities; (ii)
any downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for purposes
of
-17-
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
of the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any material suspension or material limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market;
(iv) any banking moratorium declared by U.S. Federal or New York authorities; or
(v) any outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the judgment of a
majority in interest of the Underwriters including the Representatives, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date, of Xxxxxx & Xxxxxxx, counsel of the Company, to the effect
that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus. Based solely on
certificates from public officials, we confirm that the Company is
qualified to do business in the following States: Maryland, California
and New York.
(ii) The Offered Securities delivered on such Closing Date
have been duly authorized and, when issued to and paid for by you and
the other Underwriters in accordance with the terms of this Agreement
will be, validly issued, fully paid and nonassessable and conform to
the description thereof contained in the Prospectus; and, to the best
of such counsel's knowledge, the stockholders of the Company have no
preemptive rights with respect to the Securities;
(iii) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940.
(iv) No consent, approval, authorization or order of, or
filing with, any federal governmental agency or body, any New York
State court or as required pursuant to the Delaware General Corporation
Law is required for the consummation of the transactions contemplated
by this Agreement or the Custody Agreement in connection with the
issuance and sale of the Offered Securities by the Company, except such
as have been obtained and made under the Act and such as may be
required under state
-18-
securities laws in connection with the purchase and distribution of the
Offered Securities by the Underwriters;
(v) The execution, delivery and issuance and sale of the
Offered Securities by the Company pursuant to this Agreement and the
execution and delivery by the Company of the Custody Agreement will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any federal or New York State statute,
any rule, regulation or order of any federal governmental agency or
body or any New York State court having jurisdiction over the Company
or any subsidiary of the Company or any of its properties known to such
counsel to be applicable to the Company or any of its subsidiaries or
under the Delaware General Corporation Law, or the charter or by-laws
of the Company, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by
this Agreement;
(vi) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed and
became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was included
in the Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending under
the Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations and, in passing
on the compliance as to the form of the Registration Statement and
Prospectus, may assume that the statements made therein are correct and
complete;
(vii) Such counsel has no reason to believe that any part of a
Registration Statement or any amendment thereto, as of its effective
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained any
untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statements or the Prospectus; and
-19-
(viii) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by the Company.
(e) The Representatives shall have received an opinion, dated
such Closing Date, of Xxxxxxx X. Xxxxx, General Counsel for the Company, to the
effect that:
(i) The Company and each of its subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws of
its jurisdiction of incorporation or organization with corporate power
and authority to own its properties and conduct its business as
described in the Prospectus and has been duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions in
which its ownership, lease of properties, or conduct of its business
requires such qualification, other than where the failure to be so
qualified and in good standing would not have a Material Adverse
Effect; all of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly and validly authorized and
issued, are fully paid and non-assessable, and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(ii) All outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and conform to the description thereof contained in
the Prospectus; and, to the best of such counsel's knowledge, except as
set forth in the Prospectus, the stockholders of the Company have no
preemptive rights with respect to the Securities;
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Act;
(iv) The execution, delivery and issuance and sale of the
Offered Securities by the Company pursuant to this Agreement and the
execution and delivery by the Company of the Custody Agreement will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or by-laws of
the Company or any such subsidiary;
-20-
(v) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed and
became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was included
in the Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending under
the Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; and, in passing
on the compliance as to form of the Registration Statement and
Prospectus, may assume that the statements made therein are correct and
complete;
(vi) Such counsel has no reason to believe that any part of a
Registration Statement or any amendment thereto, as of its effective
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained any
untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statements or the Prospectus; and
(vii) The descriptions in the Registration Statements and
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel do not know of any
legal or governmental proceedings required to be described in a
Registration Statement or the Prospectus which are not described as
required or of any contracts or documents of a character required to be
described in a Registration Statement or the Prospectus or to be filed
as exhibits to a Registration Statement which are not described and
filed as required.
(f) The Representatives shall have received the opinion
contemplated in the Power of Attorney executed and delivered by each Selling
Stockholder and an opinion, dated such Closing Date, of such counsel named in
such Power of Attorney for each Selling Stockholder, to the effect that:
-21-
(i) Such Selling Stockholder had valid and
unencumbered title to the Offered Securities delivered by such
Selling Stockholder on such Closing Date and had full right,
power and authority to sell, assign, transfer and deliver the
Offered Securities delivered by such Selling Stockholder on
such Closing Date hereunder; and the several Underwriters have
acquired valid and unencumbered title to the Offered
Securities purchased by them from such Selling Stockholder on
such Closing Date hereunder;
(ii) To the best of such counsel's knowledge, no
consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required to be
obtained or made by such Selling Stockholder for the
consummation of the transactions contemplated by the Custody
Agreement or this Agreement in connection with the sale of the
Offered Securities sold by such Selling Stockholder, except
such as have been obtained and made under the Act and such as
may be required under state securities laws;
(iii) To the best of such counsel's knowledge, the
execution, delivery and performance of the Custody Agreement
and this Agreement and the consummation of the transactions
therein and herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of
any governmental agency or body or any court having
jurisdiction over such Selling Stockholder or any of his, her,
its or their properties or any agreement or instrument to
which such Selling Stockholder is a party or by which such
Selling Stockholder is bound or to which any of the properties
of such Selling Stockholder is subject, or the charter or
by-laws of such Selling Stockholder which is a corporation;
(iv) The Power of Attorney and related Custody
Agreement with respect to such Selling Stockholder has been
duly authorized, executed and delivered by such Selling
Stockholder and constitute valid and legally binding
obligations of each such Selling Stockholder enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
and
(v) This Agreement has been duly authorized, executed
and delivered by such Selling Stockholder.
(g) The Representatives shall have received from Xxxxxx Xxxxxx
& Xxxxxxx, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the validity of
the Offered Securities delivered on such
-22-
Closing Date, the Registration Statements, the Prospectus and other related
matters as the Representatives may require, and the Selling Stockholders and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(h) The Representatives shall have received a certificate,
dated such Closing Date, of the Chief Executive Officer or President or any Vice
President and a principal financial or accounting officer of the Company in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of the
Company in this Agreement are true and correct; the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date; no stop order suspending
the effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by the
Commission; the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to
Rule 462(b), including payment of the applicable filing fee in accordance with
Rule 111(a) or (b) under the Act, prior to the time the Prospectus was printed
and distributed to any Underwriter; and, subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as described in such
certificate.
(i) The Representatives shall have received a letter, dated
such Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to in
such subsection will be a date not more than three days prior to such Closing
Date for the purposes of this subsection.
(j) The Lock-up Agreements shall be in full force and effect
on such Closing Date. In addition, on or prior to the date of this Agreement,
the Representatives shall have received lockup agreements from each of the
executive officers and directors of the Company who are not Selling Stockholders
and from the other parties as previously requested by the Representatives.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and each Senior
Management Stockholder, jointly and severally, will indemnify and hold harmless
each
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Underwriter, its partners, directors and officers and each person, if any who
controls such Underwriter within the meaning of Section 15 of the Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that none of the Company or such
Senior Management Stockholder will be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; provided, that the
liability of such Senior Management Stockholder pursuant to this subsection (a)
shall be limited to an amount equal to the aggregate net proceeds (before
deducting expenses) to such Senior Management Stockholder from the sale of
Securities by such Senior Management Stockholder.
(b) Each of the Selling Stockholders (other than the Senior
Management Stockholders), jointly and severally, will indemnify and hold
harmless each Underwriter, its partners, directors and officers and each person
who controls such Underwriter within the meaning of Section 15 of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder (other than
Senior Management Stockholders) expressly for use therein; and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
further, that such Selling
-24-
Stockholder will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; and provided, further,
that the liability of such Selling Stockholder pursuant to this subsection (b)
shall be limited to an amount equal to the aggregate net proceeds (before
deducting expenses) to such Selling Stockholder from the sale of Securities by
such Selling Stockholder.
(c) Each Underwriter will severally and not jointly indemnify
and hold harmless the Company, its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the Act, and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company and
each Selling Stockholder in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished on
behalf of each Underwriter: the concession and reallowance figures appearing in
the fourth paragraph under the caption "Underwriting" and the information
contained in the ninth, tenth and eleventh paragraphs under the caption
"Underwriting".
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above except to the extent
actually prejudiced thereby. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
-25-
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action 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 (i) settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a), (b) or (c)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Securities 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 Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds
-26-
the amount of any damages which 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 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling
Stockholders under this Section shall be in addition to any liability which the
Company and the Selling Stockholders may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter (as hereinafter defined) within the meaning of the Act; and the
obligations of the Underwriters under this Section shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.
8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
-27-
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c), the Company and the Selling
Stockholders will, jointly and severally, reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group, or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at Xxx XXx Xxxxx, Xxxxx
000, Xxxxxxxxx, XX 00000-0000, Attention: Xxxxxxx X. Xxxxx, Esq., or, if sent to
the Selling Stockholders or any of them, will be mailed, delivered or
telegraphed and confirmed to the Company at Xxx XXx Xxxxx, Xxxxx 000, Xxxxxxxxx,
XX 00000-0000, Attention: Xxxxxxx X. Xxxxx, Esq.; provided, however, that any
notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective, personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
12. REPRESENTATION. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters. Xxxxxxx X. Xxxxx and Xxxxx
Xxxxxx, as attorneys-in-fact (the "ATTORNEYS-IN-FACT")
-28-
will act for the Selling Stockholders in connection with such transactions, and
any action under or in respect of this Agreement taken by the Attorneys-in-Fact
be binding upon all the Selling Stockholders.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
-29-
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
USINTERNETWORKING, INC.
By:______________________________
Name:
Title:
THE SELLING STOCKHOLDERS
By:______________________________
Name:
As Attorney-in-Fact acting on
behalf of each of the Selling
Stockholders named in Schedule
A hereto
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
X.X. XXXXXX SECURITIES INC.
XXXX XXXXX XXXX XXXXXX INCORPORATED
E*OFFERING CORP.
X.X. XXXXXXXXX, TOWBIN
XXXXXXXXXXX XXXXXXX SECURITIES, INC.
Acting on behalf of themselves
and as the Representatives of
the several Underwriters.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:______________________________
Name:
Title:
SCHEDULE A
Number of
Number of Optional
Firm Securities Securities to
Selling Stockholder to be Sold be Sold
------------------- ---------- -------
Xxxxxxxxxxx X. XxXxxxxx..................................... 256,300 57,668
Xxxxxx X. Xxxxx............................................. 95,770 21,548
Xxxxxxx X. XxXxxxx.......................................... 76,616 17,239
R. Xxxx Xxxxxxx............................................. 7,570 1,703
Xxxxxxxx Xxxxxxxx........................................... 6,590 1,483
Blue Chip Group............................................. 523,362 117,756
Grotech Capital Group....................................... 1,152,438 259,299
Whitney Group............................................... 866,494 194,961
U S West Communications, Inc................................ 472,468 106,305
Xxxxxx-Xxxxxx Media Partners, L.P........................... 339,632 76,417
Xxxxxx Xxxxx Group.......................................... 202,760 45,621
--------- -------
Total...................................... 4,000,000 900,000
--------- -------
--------- -------
SCHEDULE B
Number of
Firm Securities
Underwriter to be Purchased
----------- ---------------
Credit Suisse First Boston Corporation.....................................
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.........................
X.X. Xxxxxx Securities, Inc................................................
Xxxx Xxxxx Xxxx Xxxxxx Incorporated........................................
E*Offering Corp............................................................
X.X. Xxxxxxxxx, Towbin.....................................................
Xxxxxxxxxxx Xxxxxxx Securities, Inc........................................
--------------
Total........................................... 6,000,000
==============
