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uBID, INC.
(a Delaware corporation)
2,000,000 Shares of Common Stock
PURCHASE AGREEMENT
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_____________, 1999
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Table of Contents
Page
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PURCHASE AGREEMENT....................................................... 1
SECTION 1. Representations and Warranties.............................. 2
(a) Representations and Warranties by the Company..................... 2
(i) Compliance with Registration Requirements....................... 2
(ii) Independent Accountants........................................ 3
(iii) Financial Statements.......................................... 3
(iv) No Material Adverse Change in Business........................ 4
(v) Good Standing of the Company.................................... 4
(vi) Good Standing of Subsidiaries.................................. 4
(vii) Capitalization................................................ 4
(viii) Authorization of Purchase Agreement.......................... 4
(ix) Authorization and Description of Securities.................... 4
(x) Absence of Defaults and Conflicts............................... 5
(xi) Absence of Labor Dispute....................................... 5
(xii) Absence of Proceedings........................................ 5
(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............................................ 6
(xviii) Investment Company Act...................................... 7
(xix) Environmental Laws............................................ 7
(xx) Registration Rights............................................ 7
(xxi) Tax Matters................................................... 7
(xxii) Internal Accounting Controls................................. 8
(xxiii) Adequacy of Insurance....................................... 8
(xxiv) ERISA Compliance............................................. 8
(xxv) Year 2000 Issues.............................................. 8
(xxvi) Tax-Free Status of Spin-off.................................. 8
(b) Officer's Certificates............................................ 8
SECTION 2. Sale and Delivery to Underwriters; Closing................... 8
(a) Initial Securities................................................ 8
(b) Option Securities................................................. 9
(c) Payment........................................................... 9
(d) Denominations; Registration....................................... 10
SECTION 3. Covenants of the Company..................................... 10
(a) Compliance with Securities Regulations and Commission Requests.... 10
(b) Filing of Amendments.............................................. 10
(c) Delivery of Registration Statements............................... 10
(d) Delivery of Prospectuses.......................................... 11
(e) Continued Compliance with Securities Laws......................... 11
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(f) Blue Sky Qualifications........................................... 11
(g) Rule 158.......................................................... 11
(h) Use of Proceeds................................................... 11
(i) Listing........................................................... 12
(j) Restriction on Sale of Securities................................. 12
(k) Reporting Requirements............................................ 12
SECTION 4. Payment of Expenses.......................................... 12
(a) Expenses.......................................................... 12
(b) Termination of Agreement.......................................... 13
SECTION 5. Conditions of Underwriters' Obligations...................... 13
(a) Effectiveness of Registration Statement........................... 13
(b) Opinion of Counsel for Company.................................... 13
(c) Opinion of PricewaterhouseCoopers LLP............................. 13
(d) Opinion of Counsel for Underwriters............................... 13
(e) Officers' Certificate............................................. 14
(f) Accountants' Comfort Letter....................................... 14
(g) Bring-down Comfort Letter......................................... 14
(h) Approval of Listing............................................... 14
(i) No Objection...................................................... 14
(j) Lock-up Agreements................................................ 14
(k) Conditions to Purchase of Option Securities....................... 14
(l) Additional Documents.............................................. 15
(m) Termination of Agreement.......................................... 15
SECTION 6. Indemnification.............................................. 15
(a) Indemnification of Underwriters................................... 15
(b) Indemnification of Company, Directors and Officers................ 16
(c) Actions against Parties; Notification............................. 17
(d) Settlement without Consent if Failure to Reimburse................ 17
SECTION 7. Contribution................................................. 18
SECTION 8. Representations, Warranties and Agreements
to Survive Delivery......................................... 19
SECTION 9. Termination of Agreement..................................... 19
(a) Termination; General.............................................. 19
(b) Liabilities....................................................... 19
SECTION 10. Default by One or More of the Underwriters.................. 19
SECTION 11. Notices..................................................... 20
SECTION 12. Parties..................................................... 20
SECTION 13. Governing Law and Time...................................... 19
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SECTION 14. Effect of Headings......................................... 21
SECTION 15. Miscellaneous.............................................. 21
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
Exhibit C - Form of Lock-up Letter signed by
Messrs. Xxxxx and Xxx Xxxxxxx....................... C-1
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uBID, INC.
(a Delaware corporation)
2,000,000 Shares of Common Stock
(Par Value $.001 Per Share)
PURCHASE AGREEMENT
____________, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Xxxxxxx Xxxxx & Company, L.L.C.
Wit Capital Corporation
as Representatives of the several Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
uBid, Inc., a Delaware corporation (the "Company") confirms its agreement
with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx") and each of the other Underwriters named in Schedule A hereto
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(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Xxxxxxx
Xxxxx, Banc of America Securities LLC, Xxxxxxx Xxxxx & Company, L.L.C. and Wit
Capital Corporation 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
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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
300,000 additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 2,000,000 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 300,000 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
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 has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-83319) 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 August 31, 1999 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").
SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company represents
and warrants 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
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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
2
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. 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 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
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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
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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
stockholder's 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
3
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
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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.
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(vii) Capitalization. The authorized, issued and outstanding
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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 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 Purchase Agreement. This Agreement has
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been duly authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities
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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.
4
(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
the Separation and Distribution Agreement or the Tax Indemnification and
Allocation Agreement, in each case dated as of December 7, 1998, by and
between the Company and Creative Computers, Inc., a Delaware corporation
("Creative"), or any other 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
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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 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.
5
(xiii) Accuracy of Exhibits. There are no contracts or documents
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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
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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
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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
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
6
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) 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").
(xix) 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 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.
(xx) 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.
(xxi) 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
7
taxes have become due. All tax liabilities have been adequately provided
for in the financial statements of the Company.
(xxii) 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.
(xxiii) 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.
(xxiv) 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 ERISA.
(xxv) Year 2000 Issues. The Company has reviewed its operations
----------------
and any third parties with which the Company has a material relationship to
evaluate the extent to which the business or operations of the Company will
be affected by Year 2000 issues. As a result of such review, the Company
represents and warrants that the disclosure in the Registration Statement
relating to Year 2000 issues is accurate and complies in all material
respects with the rules and regulations under the Securities Act. "Year
2000 issues" as used herein means Year 2000 Issues described in or
contemplated by the Commission's Interpretation: Disclosure of the Year
2000 Issues and Consequences by Public Companies, Investment Advisers,
Investment Companies, and Municipal Securities Issuers (Release No. 33-
7558).
(xxvi) Tax-Free Status of Spin-off. The Company's sale of the
---------------------------
Securities should not affect the tax-free status of the spin-off of the
Company's Common Stock effected by Creative on June 7, 1999.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company 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.
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
8
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 300,000
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 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
9
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. The Company covenants 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 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.
10
(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 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".
11
(i) Listing. 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 90 days
from the date of the Prospectus, the Company will not, 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.
(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.
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
12
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the Securities and (x) the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National Market.
(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
representations and warranties of the Company 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 Company's sale of the
Securities should not result in the application of Section 355(e) of the Code
with respect to the spin-off of the Company's Common Stock effected by Creative
on June 7, 1999, 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, 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), (ix), (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 federal law of the United
13
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.
(i) No Objection. The NASD shall have 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 agreements substantially in the form of
Exhibit B hereto signed by each of the persons listed on Schedule C hereto. In
--------- ----------
addition, at the date of this Agreement, the Representatives shall have received
agreements substantially in the form of Exhibit C hereto signed by each of
---------
Messrs. Xxxxx X. Xxxxxxx and Xxx X. Xxxxxxx.
(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:
14
(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 Ernst & 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.
(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 agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the 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
15
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, 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, alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any
such settlement is effected with the written consent of the Company; and
(iii) 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, to
the extent that any such expense is not paid under (i) or (ii) 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.
(b) Indemnification of Company, Directors and Officers . Each
Underwriter severally agrees to indemnify and hold harmless the Company and
directors, each of the officers of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all loss,
16
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 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) 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.
17
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, 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, on the one hand, and of
the Underwriters, on the other hand, in connection with the statements or
omissions, which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other 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, 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.
The Company 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
18
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, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Company. 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 the Company 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, 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 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
19
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 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, attention 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 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 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 their respective
successors, and said controlling persons and officers and directors and their
heirs
20
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
----------------------
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.
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.
21
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 and the Company in accordance with its terms.
Very truly yours,
uBID, INC.
By
------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
WIT CAPITAL CORPORATION
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/
-------------------------------------
Authorized Signature
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
----------
22
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
---------------------------------------------------------- -------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated...........................................
Banc of America Securities LLC...........................
Xxxxxxx Xxxxx & Company, L.L.C...........................
Wit Capital Corporation..................................
Total................................................... 2,000,000
===================
23
SCHEDULE B
uBID, INC.
2,000,000 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.
24
SCHEDULE C
List of certain persons
subject to lock-up
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxxx
D. Xxxx Xxxxxxxxx
Xxxxx X. XxxXxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
25
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 the date
hereof 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) The Purchase Agreement 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 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
26
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
27
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, 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 or statistical 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
or statistical 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).
28
[Form of lock-up from directors, officers or other
stockholders pursuant to Section 5(j)]
Exhibit B
______________, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
WIT CAPITAL CORPORATION
as Representatives of the several Underwriters to be named in the
within-mentioned Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
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, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Banc of
America Securities LLC, Xxxxxxx Xxxxx & Company, L.L.C. and Wit Capital
Corporation 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 90 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:
--------------------------
29
[Form of lock-up from Messrs. Xxxxx X. Xxxxxxx and
Xxx X. Xxxxxxx pursuant to Section 5(j)]
Exhibit C
___________, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX & COMPANY, L.L.C.
as Representatives of the several Underwriters to be named in the
within-mentioned Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by uBid, Inc.
--------------------------------------
Ladies and Gentlemen:
The undersigned, a stockholder of uBid, Inc., a Delaware corporation
(the "Company"), understands that Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Banc of America Securities LLC,
Xxxxxxx Xxxxx & Company, L.L.C. and Wit Capital Corporation 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 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 90 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.
In addition, the undersigned agrees with each underwriter to be named
in the Purchase Agreement, for a period of 90 days, not to offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, or otherwise dispose of or transfer any shares of Common
Stock owned by them, or exercise any demand for registration of any shares of
Common Stock.
Very truly yours,
Signature:
----------------------------
Print Name:
----------------------------
30
