[Execution Copy]
[Conformed Copy]
______________________________________________________________________________
______________________________________________________________________________
uBID, INC.
(a Delaware corporation)
1,580,000 Shares of Common Stock
PURCHASE AGREEMENT
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November , 1998
______________________________________________________________________________
______________________________________________________________________________
Table of Contents
PAGE
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PURCHASE AGREEMENT........................................................................................ 1
SECTION 1. Representations and Warranties............................................................... 3
(a) Representations and Warranties by the Company and Creative......................................... 3
(i) Compliance with Registration Requirements....................................................... 3
(ii) Independent Accountants........................................................................ 4
(iii) Financial Statements.......................................................................... 4
(iv) No Material Adverse Change in Business........................................................ 4
(v) Good Standing of the Company.................................................................... 4
(vi) Subsidiaries................................................................................... 4
(vii) Capitalization................................................................................ 4
(viii) Authorization of Agreements.................................................................. 5
(ix) Authorization and Description of Securities.................................................... 5
(x) Absence of Defaults and Conflicts............................................................... 5
(xi) Absence of Labor Dispute....................................................................... 5
(xii) Absence of Proceedings........................................................................ 6
(xiii) Accuracy of Exhibits......................................................................... 6
(xiv) Possession of Intellectual Property........................................................... 6
(xv) Absence of Further Requirements................................................................ 6
(xvi) Possession of Licenses and Permits............................................................ 6
(xvii) Title to Property............................................................................ 7
(xviii) Compliance with Cuba Act.................................................................... 7
(xix) Investment Company Act........................................................................ 7
(xx) Environmental Laws............................................................................. 7
(xxi) Registration Rights........................................................................... 8
(xxii) Tax Matters.................................................................................. 8
(xxiii) Internal Accounting Controls................................................................ 8
(xxiv) Adequacy of Insurance........................................................................ 8
(xxv) ERISA Compliance.............................................................................. 8
(b) Officer's Certificates............................................................................. 8
SECTION 2. Sale and Delivery to Underwriters; Closing..................................................... 9
(a) Initial Securities................................................................................. 9
(b) Option Securities.................................................................................. 9
(c) Payment............................................................................................ 9
(d) Denominations; Registration........................................................................ 10
SECTION 3. Covenants of the Company and Creative.......................................................... 10
(a) Compliance with Securities Regulations and Commission Requests..................................... 10
(b) Filing of Amendments............................................................................... 10
(c) Delivery of Registration Statements................................................................ 11
(d) Delivery of Prospectuses........................................................................... 11
(e) Continued Compliance with Securities Laws.......................................................... 11
(f) Blue Sky Qualifications............................................................................ 11
(g) Rule 158........................................................................................... 12
(h) Use of Proceeds.................................................................................... 12
(i) Listing............................................................................................ 12
i
(j) Restriction on Sale of Securities...................................................... 12
(k) Reporting Requirements................................................................. 13
(l) Compliance with NASD Rules............................................................. 13
(m) Compliance with Rule 463............................................................... 13
(n) Separation and Distribution Agreement; Noncompete Provisions........................... 13
SECTION 4. Payment of Expenses................................................................ 13
(a) Expenses............................................................................... 13
(b) Termination of Agreement............................................................... 14
SECTION 5. Conditions of Underwriters' Obligations............................................ 14
(a) Effectiveness of Registration Statement................................................ 14
(b) Opinion of Counsel for Company......................................................... 14
(c) Opinion of PricewaterhouseCoopers LLP.................................................. 14
(d) Opinion of Counsel for Underwriters.................................................... 14
(e) Officers' Certificate.................................................................. 15
(f) Accountants' Comfort Letter............................................................ 15
(g) Bring-down Comfort Letter.............................................................. 15
(h) Approval of Listing.................................................................... 15
(i) No Objection........................................................................... 16
(j) Lock-up Agreements..................................................................... 16
(k) Conditions to Purchase of Option Securities............................................ 16
(l) Additional Documents................................................................... 16
(m) Termination of Agreement............................................................... 17
SECTION 6. Indemnification.................................................................... 17
(a) Indemnification of Underwriters........................................................ 17
(b) Indemnification of Company and Creative, Directors and Officers........................ 19
(c) Actions against Parties; Notification.................................................. 19
(d) Settlement without Consent if Failure to Reimburse..................................... 20
(e) Indemnification for Reserved Securities................................................ 20
SECTION 7. Contribution....................................................................... 20
SECTION 8. Representations, Warranties and Agreements to Survive Delivery..................... 21
SECTION 9. Termination of Agreement........................................................... 22
(a) Termination; General................................................................... 22
(b) Liabilities............................................................................ 22
SECTION 10. Default by One or More of the Underwriters........................................ 22
SECTION 11. Notices........................................................................... 23
SECTION 12. Parties........................................................................... 23
SECTION 13. Governing Law and Time............................................................ 23
SECTION 14. Effect of Headings................................................................ 23
SECTION 15. Miscellaneous..................................................................... 23
SCHEDULES
Schedule A - List of Underwriters................................................... Sch A-1
Schedule B - Pricing Information.................................................... Sch B-1
Schedule C - List of Persons Subject to Lock-up..................................... Sch C-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel................................... A-1
Exhibit B - Form of Lock-up Letter................................................. B-1
ii
uBID, INC.
(a Delaware corporation)
1,580,000 SHARES OF COMMON STOCK
(PAR VALUE $.001 PER SHARE)
PURCHASE AGREEMENT
------------------
November , 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx Xxxxx & Company, L.L.C.
as Representatives of the several Underwriters
c/x Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
uBid, Inc., a Delaware corporation (the "Company") and a wholly-owned
subsidiary of Creative Computers, Inc., a Delaware corporation ("Creative"), and
Creative confirm their agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Xxxxxx, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Xxxxxxx Xxxxx and Xxxxxxx Xxxxx & Company, L.L.C.
are acting as representatives (in such capacity, the "Representatives"), with
respect to the issue and sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
shares of Common Stock, par value $.001 per share, of the Company ("Common
Stock") set forth in said Schedule A, and with respect to the grant by the
Company to the Underwriters, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 237,000
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 1,580,000 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 237,000 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
1
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 110,000 shares of the
Initial Securities to be purchased by the Underwriters (the "Reserved
Securities") shall be reserved for sale by the Underwriters to certain eligible
employees and persons having business relationships with the Company, as part of
the distribution of the Securities by the Underwriters, subject to the terms of
this Agreement, the applicable rules, regulations and interpretations of the
National Association of Securities Dealers, Inc. (the "NASD") and all other
applicable laws, rules and regulations. To the extent that such Reserved
Securities are not orally confirmed for purchase by such eligible employees and
persons having business relationships with the Company by the end of the first
business day after the date of this Agreement, such Reserved Securities may be
offered to the public as part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-58447) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the
Securities Act (the "Securities Act Regulations") and paragraph (b) of Rule 424
("Rule 424(b)") of the Securities Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the Securities Act Regulations,
prepare and file a term sheet (a "Term Sheet") in accordance with the provisions
of Rule 434 and Rule 424(b). The information included in any such prospectus or
in any such Term Sheet, as the case may be, that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective (a) pursuant
to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information".
Each prospectus used before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus". Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement". Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is herein referred to as the "Rule
462(b) Registration Statement", and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the Securities is herein called the "Prospectus". If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated November , 1998 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
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SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company and Creative. The
Company and Creative jointly and severally represent and warrant to each
Underwriter as of the date hereof, as of the Closing Time referred to in Section
2(c) hereof, and as of each Date of Delivery (if any) referred to in Section
2(b) hereof, and agree jointly and severally with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
-----------------------------------------
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the Securities Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the Securities Act and the Securities Act Regulations and did not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, any preliminary
prospectus and any supplement thereto or prospectus wrapper prepared in
connection therewith, at their respective times of issuance and at the
Closing Time, complied and will comply in all material respects with any
applicable laws or regulations of foreign jurisdictions in which the
Prospectus and such preliminary prospectus, as amended or supplemented, if
applicable, are distributed in connection with the offer and sale of
Reserved Securities. Neither the Prospectus nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If Rule 434 is used, the Company will comply
with the requirements of Rule 434 and the Prospectus shall not be
"materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective. The representations and warranties in this Subsection shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through Xxxxxxx
Xxxxx expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement 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 Regulations
and each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to the
electronically
3
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
-----------------------
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the Securities
Act and the Securities Act Regulations.
(iii) Financial Statements. The financial statements included in
--------------------
the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
at the dates indicated and the statement of operations, changes in
stockholders' deficit and cash flows of the Company for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules included
in the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Registration
Statement.
(iv) No Material Adverse Change in Business. Since the
--------------------------------------
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A) there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered
into by the Company, other than those in the ordinary course of business,
which are material with respect to the Company, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vi) Subsidiaries. The Company has no subsidiaries.
------------
(vii) Capitalization. The authorized, issued and outstanding
--------------
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or options
referred to in the Prospectus). The shares of issued and outstanding
capital stock of the Company have been duly authorized
4
and validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company.
(viii) Authorization of Agreements. This Agreement and each of the
---------------------------
Ancillary Agreements (as defined in the Prospectus) have been duly
authorized, executed and delivered by each of the Company and Creative.
(ix) Authorization and Description of Securities. The Securities
-------------------------------------------
have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set forth
herein, will be validly issued and fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company (including, without limitation,
Creative).
(x) Absence of Defaults and Conflicts. The Company is not in
---------------------------------
violation of its charter or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company is a
party or by which it may be bound, or to which any of the property or
assets of the Company is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or bylaws of the Company or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.
(xi) Absence of Labor Dispute. No labor dispute with the employees
------------------------
of the Company exists or, to the knowledge of the Company, is imminent, and
the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal
5
suppliers, manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
----------------------
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company,
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of
all pending legal or governmental proceedings to which the Company is a
party or of which any of its property or assets is the subject which are
not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
--------------------
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. The Company owns or
-----------------------------------
possesses, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names
or other intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by the Company, and the
Company has not received any notice nor is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(xv) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except (i) such as have been already
obtained or as may be required under the Securities Act or the Securities
Act Regulations or state securities laws and (ii) such as have been
obtained under the laws and regulations of jurisdictions outside the United
States in which the Reserved Securities are offered.
(xvi) Possession of Licenses and Permits. The Company possesses
----------------------------------
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by the Company; the Company is in compliance with
the terms and conditions of all such Governmental Licenses, except where
6
the failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and in
full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and the Company has
not received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xvii) Title to Property. The Company has good and marketable
-----------------
title to all real property owned by the Company and good title to all other
properties owned by the Company, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the Prospectus
or (b) do not, singly or in the aggregate, materially adversely affect the
value of such property as currently used or intended to be used and do not
interfere with the use made and proposed to be made of such property by the
Company; and all of the leases and subleases material to the business of
the Company, and under which the Company holds properties described in the
Prospectus, are in full force and effect, and the Company does not have any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company to
the continued possession of the leased or subleased premises under any such
lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied with,
------------------------
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xix) Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the Registration
------------------
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) the Company is not in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
has all permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance with their requirements, (C) there
are no pending or, to the best of the Company's
7
knowledge, threatened, administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company and (D) to the best of the Company's knowledge, there
are no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company relating to Hazardous Materials or any Environmental
Laws.
(xxi) Registration Rights. Except as disclosed in the Prospectus,
-------------------
there are no persons with registration rights or other similar rights to
have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act.
(xxii) Tax Matters. The Company has filed all federal, state, local
-----------
and foreign income tax returns which have been required by law to be filed
and has paid all taxes indicated by said returns and all assessments
received by them to the extent that such taxes have become due. All tax
liabilities have been adequately provided for in the financial statements
of the Company.
(xxiii) Internal Accounting Controls. The Company maintains a system
----------------------------
of internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorization, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(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 existing assets at reasonable intervals and
appropriate action is taken with respect to any differences to the extent
necessary under GAAP.
(xxiv) Adequacy of Insurance. The Company is covered by, or is
---------------------
entitled to the benefits of, insurance in such amounts and of the types
generally deemed adequate for the conduct of its business and the value of
its properties and as is consistent with insurance maintained by companies
engaged in similar businesses.
(xxv) ERISA Compliance. The Company is to the best of its knowledge,
----------------
in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"). The Company does not have and has never had any "defined
benefit plan" as defined under XXXXX.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or Creative delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
8
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 237,000 shares of Common Stock
at the price per share set forth in Schedule B, less an amount per share equal
to any dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Representatives to the Company setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Xxxxxxxx & Xxxxxxxx LLP, 00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000, or at such other place as shall be agreed upon by the
Representatives and the Company, at 7:00 A.M. (Pacific time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
(such time and date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective
9
accounts of the Underwriters of certificates for the Securities to be purchased
by them. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company and Creative. The Company and
-------------------------------------
Creative, where applicable in subsection (j) below only, jointly and severally
covenant with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) 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 of the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the
Representatives notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), any
Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, will furnish the Representatives with
copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use
10
any such document to which the Representatives or counsel for the
Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the Securities Act. The
Company will furnish to each Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the Securities Act or
the Securities Exchange Act of 1934 (the "Exchange Act"), such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter
may reasonably request. The Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the Securities Act and the Securities Act Regulations so as to permit
the completion of the distribution of the Securities as contemplated in
this Agreement and in the Prospectus. If at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of
the Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the Underwriters or
for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the Securities Act or the
Securities Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and
the Company will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the
11
Representatives may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective date
of the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to
the Exchange Act as are necessary in order to make generally available to
its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the Securities Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Common Stock (including the Securities) on the Nasdaq
National Market. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and
will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities
that are traded in the over-the-counter market and quotations for which are
reported by the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectus, neither the Company nor Creative
will, without the prior written consent of Xxxxxxx Xxxxx, (i) directly or
indirectly, 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 for the sale of or otherwise dispose of or
transfer any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock, whether now owned or
thereafter acquired by the person executing the agreement or with respect
to which the person executing the agreement thereafter acquires the power
of disposition, or file any registration statement under the Securities Act
with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to
(A) the Securities to be sold hereunder, (B) any shares of Common Stock
issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in
the Prospectus, (C) any shares of Common Stock issued or options to
purchase Common Stock granted by the Company pursuant to existing employee
benefit plans of the Company referred to in the Prospectus or (D) any
shares of Common Stock issued by the Company pursuant to any non-employee
director stock plan or dividend reinvestment plan.
12
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the Securities Act or the
Exchange Act, will file all documents required to be filed with the
Commission pursuant to the Exchange Act within the time periods required by
the Exchange Act and the rules and regulations of the Commission
thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by
the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer restriction
upon such securities for such period of time. Should the Company release,
or seek to release, from such restrictions any of the Reserved Securities,
the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(m) Compliance with Rule 463. The Company will file with the
Commission such reports on Form 10-Q as may be required pursuant to Rule
463 of the Securities Act Regulations.
(n) Separation and Distribution Agreement; Noncompete Provisions.
Neither the Company nor Creative will amend any of Sections _____ or _____
of the Separation and Distribution Agreement (as defined in the Prospectus)
without the prior written consent of Xxxxxxx Xxxxx.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectus and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the NASD of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection with the inclusion
of the Securities in the
13
Nasdaq National Market and (xi) all costs and expenses of the Underwriters,
including the reasonable fees and disbursements of counsel for the Underwriters,
in connection with matters related to the Reserved Securities which are
designated by the Company for sale to employees and others having a business
relationship with the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters hereunder are subject to the accuracy of the joint and
several representations and warranties of the Company and Creative contained in
Section 1 hereof or in certificates of any officer of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Securities Act
or proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if
the Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the opinion, dated as of Closing Time,
of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A hereto and to such further effect as counsel
to the Underwriters may reasonably request.
(c) Opinion of PricewaterhouseCoopers LLP. At the time of the
execution of this Agreement and at Closing Time, the Company shall have
received the favorable opinion, dated as of Closing Time, of
PricewaterhouseCoopers LLP, in form and substance satisfactory to counsel
for the Company and the Underwriters, to the effect that, among other
things, the Distribution (as defined in the Prospectus) will qualify as a
tax-free distribution for federal income tax purposes under Section 355 of
the Internal Revenue Code of 1986, as amended, and to such further effect
as counsel to the Company and the Underwriters may reasonably request, and
the Underwriters will be entitled to rely on such opinion as if it was
addressed to them and dated as of the Closing Time.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxx & Xxxxxxx,
14
counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters with respect to the matters
set forth in clauses (i), (ii), (v), (vi) (solely as to preemptive or other
similar rights arising by operation of law or under the charter or bylaws
of the Company), (viii) through (x), inclusive, (xii), (xiv) (solely as to
the information in the Prospectus under "Description of Capital Stock--
Common Stock") and the penultimate paragraph of Exhibit A hereto. In giving
such opinion such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of New York, the federal
law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information
is given in the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated by the
Commission.
(f) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter
for each of the other Underwriters containing statements and information of
the type ordinarily included in accountants' "comfort letters" to
underwriters, delivered according to Statement of Auditing Standards Nos.
72 and 76 (or any successor bulletins), with respect to the audited and
unaudited financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(g) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Ernst & Young LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(h) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
15
(i) No Objection. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(j) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form
of Exhibit B hereto signed by the persons listed on Schedule C hereto.
(k) Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
---------------------
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(e) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
------------------------------
Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iii) Opinion of Counsel for Underwriters. The favorable opinion
-----------------------------------
of Xxxxxx & Xxxxxxx, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(iv) Bring-down Comfort Letter. A letter from Xxxxx & Young LLP,
-------------------------
in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as
the letter furnished to the Representatives pursuant to Section 5(g)
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.
(l) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated shall
be satisfactory in form and substance to the Representatives and counsel
for the Underwriters.
16
(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in
full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Company and Creative, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement of a
material fact included in the supplement distributed in the United States
in connection with the reservation and sale of the Reserved Securities to
certain eligible employees and persons having business relationships with
the Company or the omission or alleged omission therefrom of a material
fact necessary to make the statements therein, when considered in
conjunction with the Prospectus or preliminary prospectus, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the nature referred to in Section 6(a)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
17
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission or
in connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof, to the extent that any such expense is not paid under
(i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided further that
the Company will not be liable to an Underwriter with respect to any preliminary
prospectus to the extent that the Company shall sustain the burden of proving
that any such loss, liability, claim, damage or expense resulted from the fact
that such Underwriter, in contravention of a requirement of this Agreement or
applicable law, sold Securities to a person to whom such Underwriter failed to
send or give, at or prior to the Closing Time, a copy of the final Prospectus,
as then amended or supplemented if: (i) the Company has previously furnished
copies thereof (sufficiently in advance of the Closing Time and in sufficient
quantity to allow for distribution by the Closing Time) to the Underwriters and
the loss, liability, claim, damage or expense of such Underwriter resulted from
an untrue statement or omission of a material fact contained in or omitted from
the preliminary prospectus which was corrected in the Prospectus as, if
applicable, amended or supplemented prior to the Closing Time and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person and (ii) such failure to give or send such
Prospectus by the Closing Time to the party or parties asserting such loss,
liability, claim, damage or expense would have constituted a valid defense to
the claim asserted by such person.
In making a claim for indemnification under this Section 6 (other than
pursuant to clause (a)(iii) of this Section 6) or contribution under Section 7
hereof by the Company or Creative, the indemnified parties may proceed against
either (i) both the Company and Creative or (ii) the Company only, but may not
proceed solely against Creative. In the event that the indemnified parties are
entitled to seek indemnity or contribution hereunder against any loss,
liability, claim, damage and expense incurred with respect to a final judgment
from a trial court then, as a precondition to any indemnified party obtaining
indemnification or contribution from Creative, the indemnified parties shall
first obtain a final judgment from a trial court that such indemnified parties
are entitled to indemnity or contribution under this Agreement with respect to
such loss, liability, claim, damage or expense (the "Final Judgment") from
either or both of the Company and Creative and shall seek to satisfy such Final
Judgment in full from the Company by making a written demand upon the Company
for such satisfaction. Only in the event such Final Judgment shall remain
unsatisfied in whole or in part 30 days following the date of the demand to the
Company shall any indemnified party have the right to take action to satisfy
such Final Judgment by making demand directly on Creative (but only if and to
the extent the Company has not already satisfied such Final Judgment, whether by
settlement, release or otherwise). The indemnified parties shall, however, be
relieved of their obligation to first obtain a Final Judgment, to seek to obtain
payment from the Company with respect to such Final Judgment or, having sought
such
18
payment, to wait such 30 days after failure by the Company to immediately
satisfy any such Final Judgment if (i) the Company files a petition for relief
under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii) an order
for relief is entered against the Company in an involuntary case under the
Bankruptcy Code, (iii) the Company makes an assignment for the benefit of its
creditors, or (iv) any court orders or approves the appointment of a receiver or
custodian for the Company or a substantial portion of its assets. The foregoing
provisions of this paragraph are not intended to require any indemnified party
to obtain a Final Judgment against the Company or Creative before obtaining
reimbursement of expenses pursuant to clause (a)(iv) of this Section 6. However,
the indemnified parties shall first seek to obtain such reimbursement in full
from the Company by making a written demand upon the Company for such
reimbursement. Only in the event such expenses shall remain unreimbursed in
whole or in part 30 days following the date of the demand to the Company shall
any indemnified party have the right to receive reimbursement of such expenses
from Creative by making written demand directly on Creative (but only if and to
the extent the Company has not already satisfied the demand for reimbursement,
whether by settlement, release or otherwise). The indemnified parties shall,
however, be relieved of their obligation to first seek to obtain such
reimbursement in full from the Company or, having made written demand therefor,
to wait such 30 days after failure by the Company to immediately reimburse such
expenses if (i) the Company files a petition for relief under the Bankruptcy
Code, (ii) an order for relief is entered against the Company in an involuntary
case under the Bankruptcy Code, (iii) the Company makes an assignment for the
benefit of its creditors, or (iv) any court orders or approves the appointment
of a receiver or custodian for the Company or a substantial portion of its
assets.
(b) Indemnification of Company and Creative, Directors and Officers.
Each Underwriter severally agrees to indemnify and hold harmless each of the
Company and Creative and their respective directors, each of the officers of the
Company who signed the Registration Statement, and each person, if any, who
controls either the Company or Creative within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Xxxxxxx Xxxxx expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
19
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) or Section 6(a)(iii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of eligible employees and persons having
business relationships with the Company to pay for and accept delivery of
Reserved Securities which, by the end of the first business day following the
date of this Agreement, were subject to a properly confirmed agreement to
purchase.
SECTION 7. Contribution. If the indemnification provided for in
------------
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and Creative, on the one hand, and the Underwriters, on the other hand,
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) 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 or Creative,
on the one hand, and of the Underwriters, on the other hand, in connection with
the statements or omissions, or in connection with any violation of the nature
referred to in Section 6(a)(ii)(A) hereof, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
20
The relative benefits received by the Company and Creative, on the one
hand, and the Underwriters, on the other hand, in connection with the offering
of the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company or Creative, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or any violation of the nature referred to in
Section 6(a)(ii)(A) hereof.
The Company, Creative and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, 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 the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any 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.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each director of the Company or Creative, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or Creative within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of
21
the Company or Creative or any of Creative's subsidiaries submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of the Securities to
the Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and Creative, at any time at or prior to
Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company or Creative has been suspended
or materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv)
if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which
22
occurs after the Closing Time, the obligation of the Underwriters to
purchase and of the Company to sell the Option Securities to be purchased
and sold on such Date of Delivery shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. 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 directed to the Representatives at 0000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx 00000, attention of Xxxxxx Xxxxx, Managing
Director (with a copy, which shall not constitute notice, to Xxxxxx & Xxxxxxx,
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, attention
of Xxxxxxx X. Xxxxxx); and notices to the Company shall be directed to it at
0000 Xxxxx Xxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000, xxxxxxxxx of Xxxxxxx X.
Xxxxx (with a copy, which shall not constitute notice, to Xxxxxxxx & Xxxxxxxx
LLP, 00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000, attention
of Xxxxxx X. Xxxxxxx, Xx.).
SECTION 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the Underwriters, the Company and Creative and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and Creative and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Company and
Creative and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
----------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. UNLESS
OTHERWISE STATED, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
------------------
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
23
SECTION 15. Miscellaneous. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Company and Creative in accordance with its terms.
Very truly yours,
uBID, INC.
By
_____________________________
Title:
CREATIVE COMPUTERS, INC.
By
_____________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
XXXXXXX XXXXX & COMPANY, L.L.C.
By: XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By _____________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
25
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated............................................................
Xxxxxxx Xxxxx & Company, L.L.C......................................................
----------
Total............................................................................... 1,580,000
==========
Sch A-1
SCHEDULE B
uBID, INC.
1,580,000 Shares of Common Stock
(Par Value $.001 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $ , being an amount equal to the initial
public offering price set forth above less $ per share; provided that the
purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be
reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not
payable on the Option Securities.
Sch B-1
SCHEDULE C
List of persons and entities
subject to lock-up
Xxxxxxx X. Xxxxx
Xxxxxx Xx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Sch C-1
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
conduct of its business requires such qualification, except for any such
jurisdiction where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.
(iv) The Company has an authorized capitalization as of November ,
1998 as set forth in the Prospectus under the caption "Description of
Capital Stock--Authorized Capital Stock", and the shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable.
(v) The Securities have been duly authorized for issuance and sale
to the Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment
of the consideration set forth in the Purchase Agreement, will be validly
issued and fully paid and non-assessable.
(vi) The issuance of the Securities is not subject to preemptive or
other similar rights of any securityholder of the Company arising by
operation of law, the charter or bylaws of the Company or, to our
knowledge, otherwise.
(vii) To our knowledge, the Company does not have any subsidiaries.
(viii) Each of the Purchase Agreement and the Ancillary Agreements
(as defined in the Prospectus) has been duly authorized, executed and
delivered by the Company.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the Securities
Act; any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b); and,
to our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the Securities Act and no proceedings for that purpose have
been instituted or are pending or threatened by the Commission.
(x) At the time the Registration Statement became effective, the
Registration Statement, including any Rule 462(b) Registration Statement,
the Rule 430A Information and
A-1
the Rule 434 Information, as applicable, the Prospectus and each amendment
or supplement to the Registration Statement and Prospectus as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to which
we need express no opinion) complied as to form in all material respects
with the requirements of the Securities Act and the Securities Act
Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(xii) The form of certificate used to evidence the Securities
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and bylaws of
the Company and the requirements of the Nasdaq National Market.
(xiii) To our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company is
a party, or to which the property of the Company is subject, before or
brought by any court or governmental agency or body, domestic or foreign,
which might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company of
its obligations thereunder.
(xiv) The information in the Prospectus under "Business--Intellectual
Property and Other Proprietary Rights", "Business--Facilities", "Certain
Transactions", and "Description of Capital Stock", and in the Registration
Statement under Item 14, to the extent that it constitutes matters of law,
summaries of legal matters, the Company's charter and bylaws or legal
proceedings, or legal conclusions, has been reviewed by us and is correct
in all material respects.
(xv) To our knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement or to
be filed as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto, and, to
our knowledge, the descriptions thereof or references thereto are correct
in all material respects.
(xvi) No authorization, approval, consent or order of any court or
governmental authority or agency, domestic or foreign (other than under the
Securities Act and the Securities Act Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of
the various states, as to which we need express no opinion) is necessary or
required in connection with the offering, issuance or sale of the
Securities.
(xvii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the issuance and sale of the Securities
as contemplated in the Purchase Agreement and in the Registration Statement
and compliance by the Company with its obligations under the Purchase
Agreement do not and will not conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the Purchase
Agreement) under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument,
A-2
known to us, to which the Company is a party or by which it may be bound,
or to which any of the property or assets of the Company is subject (except
for such conflicts, breaches or defaults or liens, charges or encumbrances
that would not have a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or bylaws of the Company,
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to us, of any government, government instrumentality or
court, domestic or foreign, to which the Company is a party.
(xviii) Except as disclosed in the Prospectus, to our knowledge,
there are no persons with registration rights or other similar rights to
have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act.
(xix) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
1940 Act.
Based upon and subject to the foregoing, nothing has come to our
attention that leads us to believe that the Registration Statement or any
amendment thereto, including the Rule 430A Information and Rule 434
Information (if applicable), (except for financial statements and schedules
and other financial data included therein or omitted therefrom, as to which
we need make no statement), at the time such Registration Statement or any
amendment thereto became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or
omitted therefrom, as to which we need make no statement), at the time the
Prospectus was issued, at any time any such amended or supplemented
prospectus was issued or at the Closing Time, contained an untrue statement
of a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
Such opinion shall not state that it is to be governed or qualified by, or
that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991).
A-3
[Form of lock-up from directors, officers or other stockholders pursuant to
Section 5(j)]
Exhibit B
November ., 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
XXXXXXX XXXXX & COMPANY, L.L.C.
as Representatives of the several Underwriters to be named in the
within-mentioned Purchase Agreement
c/x Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
North Tower, World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by uBid, Inc.
--------------------------------------
Ladies and Gentlemen:
The undersigned, a stockholder, director and/or officer of uBid, Inc., a
Delaware corporation (the "Company"), understands that Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and Xxxxxxx
Xxxxx & Company, L.L.C. as representatives of certain other underwriters propose
to enter into a Purchase Agreement (the "Purchase Agreement") with the Company
providing for the public offering of shares (the "Securities") of the Company's
common stock, par value $.001 per share (the "Common Stock"). In recognition of
the benefit that such an offering will confer upon the undersigned as a
stockholder, director and/or officer of the Company, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period of 180 days from the date of the
Purchase Agreement, the undersigned will not, without the prior written consent
of Xxxxxxx Xxxxx, directly or indirectly, (i) 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 for the sale of, or otherwise
dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
Very truly yours,
Signature:_________________________
Print Name:________________________
B-1
