EXHIBIT 1.1
DRAFT - - 10/14/99
NETCREATIONS, INC.
3,300,000 Shares of Common Stock
UNDERWRITING AGREEMENT
October __, 1999
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
X.X. XXXXXXXXX, TOWBIN
xxx.xxx, a division of FBR Investment Services, Inc.
FIDELITY CAPITAL MARKETS,
a division of National Financial Services Corporation
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
NetCreations, Inc., a New York corporation (the "Company"),
Xxxxxxxx Xxxxxxx ("Xxxxxxx") and Xxxx Xxxxx Xxxxxxxxxxxxx ("Xxxxxxxxxxxxx")
confirm their agreement with each of the Underwriters listed on Schedule II
hereto (collectively, the "Underwriters"), for whom Friedman, Billings, Xxxxxx &
Co., Inc., X.X. Xxxxxxxxx, Towbin, xxx.xxx and Fidelity Capital Markets are
acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company set forth in Schedule I opposite its name
of 3,300,000 shares (the "Initial Shares") of Common Stock, par value $.01 per
share, of the Company ("Common Stock"), and the purchase by the Underwriters,
acting severally and not jointly, of the respective number of shares of Common
Stock set forth opposite the names of the Underwriters in Schedule II hereto,
and (ii) the grant of the option described in Section 1(b) hereof to purchase
all or any part of 495,000 additional shares of Common Stock to cover
over-allotments (the "Option Shares"), if any, by the Company to the
Underwriters, acting severally and not jointly, in the respective numbers of
shares of Common Stock set forth opposite the names of the Underwriters in
Schedule II hereto. The 3,300,000 shares of Common Stock to be purchased by the
Underwriters and all or any part of the 495,000 shares of Common Stock subject
to the option described in Section l(b) hereof are hereinafter called,
collectively, the "Shares".
The Company understands that the Underwriters propose to make
a public offering of the Shares as soon as the Underwriters 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.
333-84019) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder (the "Securities Act
Regulations"). The Company has prepared and filed such amendments thereto, if
any, and such amended preliminary prospectuses, if any, as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. The registration
statement has been declared effective under the Securities Act by the
Commission. The registration statement as amended at the time it became
effective (including all information deemed (whether by incorporation by
reference or otherwise) to be a part of the registration statement at the time
it became effective pursuant to Rule 430A(b) of the Securities Act Regulations)
is hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the registration statement, or amendments
thereof or supplements thereto, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with the consent
of the Underwriters pursuant to Rule 424(a) of the Securities Act Regulations is
hereinafter called the "Preliminary Prospectus." The term "Prospectus" means the
final prospectus, as first filed with the Commission pursuant to paragraph (1)
or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments
thereof or supplements thereto. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE:
(a) INITIAL SHARES. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________, the Company agrees to sell to the Underwriters the
number of Initial Shares set forth in Schedule I opposite its name, and each
Underwriter agrees, severally and not jointly, to purchase from the Company the
number of Initial Shares set forth in Schedule II opposite such Underwriter's
name, plus any additional number of Initial Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 8 hereof,
subject in each case, to such adjustments among the Underwriters as the
Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional shares. The Underwriters may from time to time increase
or decrease the public offering price after the initial public offering to such
extent as the Underwriters may determine.
(b) OPTION SHARES. In addition, upon the basis of the
warranties and representations and other terms and conditions herein set forth,
at the purchase price per share set forth in paragraph (a), the Company hereby
grants an option to purchase, in the number of shares of Common Stock set forth
opposite its name in Schedule I hereto, to the Underwriters, acting severally
and not jointly, in the respective numbers of shares of Common Stock set forth
opposite the names of the Underwriters in Schedule II hereto, plus any
additional number of
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Option Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 8 hereof. 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 Shares upon notice
by the Representatives to the Company setting forth the number of Option Shares
as to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Shares. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives,
but shall not be later than three full business days (or earlier, without the
consent of the Company, than two 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 Shares, the
Company will sell that proportion of the total number of Option Shares then
being purchased which the number of Initial Shares set forth in Schedule I
opposite the name of the Company bears to the total number of Initial Shares,
and each of the Underwriters, acting severally and not jointly, will purchase
that proportion of the total number of Option Shares then being purchased which
the number of Initial Shares set forth in Schedule II opposite the name of such
Underwriter bears to the total number of Initial Shares, subject in each case to
such adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
The Underwriters may from time to time increase or decrease the public offering
price of the Option Shares after the initial public offering to such extent as
the Underwriters may determine.
2. PAYMENT AND DELIVERY:
(a) INITIAL SHARES. Payment of the purchase price for the
Initial Shares shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal
(same-day) funds at the offices of Fulbright & Xxxxxxxx L.L.P. located at 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (unless another place shall be agreed
upon by the Representatives and the Company) against delivery of the
certificates for the Initial Shares to the Representatives for the respective
accounts of the Underwriters. Such payment and delivery shall be made at 9:30
a.m., New York City time, on the third (fourth, if pricing occurs after 4:30
p.m., New York City time) business day after the date hereof (unless another
time, not later than ten business days after such date, shall be agreed to by
the Representatives and the Company). The time at which such payment and
delivery are actually made is hereinafter sometimes called the "Closing Time."
Certificates for the Initial Shares shall be delivered to the Representatives in
definitive form registered in such names and in such denominations as the
Representatives shall specify. For the purpose of expediting the checking of the
certificates for the Initial Shares by the Representatives, the Company agrees
to make such certificates available to the Representatives for such purpose at
least one full business day preceding the Closing Time.
(b) OPTION SHARES. In addition, payment of the purchase price
for the Option Shares shall be made to the Company by wire transfer of
immediately available funds or certified or official bank check payable in
federal (same-day) funds at the offices of Fulbright & Xxxxxxxx L.L.P. located
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (unless another place shall be
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agreed upon by the Representatives and the Company), against delivery of the
certificates for the Option Shares to the Representatives for the respective
accounts of the Underwriters. Such payment and delivery shall be made at 9:30
a.m., New York City time, on each Date of Delivery determined pursuant to
Section 1(b) above. Certificates for the Option Shares shall be delivered to the
Representatives in definitive form registered in such names and in such
denominations as the Representatives shall specify. For the purpose of
expediting the checking of the certificates for the Option Shares by the
Representatives, the Company agrees to make such certificates available to the
Representatives for such purpose at least one full business day preceding the
relevant Date of Delivery.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: The Company, Xxxxxxx
and Xxxxxxxxxxxxx represent and warrant to the Underwriters that:
(a) the Company has an authorized capitalization as set forth
in the Prospectus under the caption "Capitalization;" the outstanding shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable; except as disclosed in the Prospectus,
there are no outstanding (i) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company, (ii)
warrants, rights or options to subscribe for or purchase from the Company any
such capital stock or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options;
(b) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of New
York with full corporate power and authority to own its properties and to
conduct its business as described in the Registration Statement and Prospectus
and to execute and deliver this Agreement and to consummate the transactions
contemplated hereby;
(c) the Company is duly qualified or licensed by each
jurisdiction in which it conducts its business and in which the failure,
individually or in the aggregate, to be so qualified or licensed could have a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company;
other than as disclosed in the Prospectus, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint venture or other
association;
(d) the Company is in compliance in all material respects
with all applicable laws, rules and regulations applicable to it, expect where
failure to comply could materially and adversely affect the financial condition
or business of the Company;
(e) the Company is not in breach of or in default under (nor
has any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), its articles of incorporation or
by-laws, or in the performance or observance of any obligation, agreement,
covenant or condition contained in any license, indenture, mortgage, deed of
trust,
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loan or credit agreement or other agreement or instrument to which the Company
is a party or by which its properties are bound, except for such breaches or
defaults which would not have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company, and the execution, delivery and performance of this
Agreement, and consummation of the transactions contemplated hereby will not
conflict with, or result in any breach of, or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would constitute
a breach of, or default under), (i) any provision of the articles of
incorporation or bylaws of the Company, or (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company is a party or by which it or its properties
may be bound or affected, or under any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the Company,
except in the case of this clause (ii) for such breaches or defaults which would
not have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company; or result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company;
(f) this Agreement has been duly authorized, executed and
delivered by the Company, and assuming this Agreement constitutes a legal, valid
and binding agreement of each of the Underwriters, constitutes a legal, valid
and binding agreement of the Company enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, and by general principles
equity, and except to the extent that the indemnification and contribution
provisions of Section 9 hereof may be limited by federal or state securities
laws and public policy considerations in respect thereof;
(g) no approval, authorization, consent or order of or filing
with any federal, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the Company's
execution, delivery and performance of this Agreement, its consummation of the
transaction contemplated hereby, and its sale and delivery of the Shares, other
than (A) such as have been obtained, or will have been obtained at the Closing
Time or the relevant Date of Delivery, as the case may be, under the Securities
Act, (B) such approvals as have been obtained in connection with the approval of
the quotation of the Shares on the Nasdaq National Market and (C) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters;
(h) the Company has sufficient licenses, authorizations,
consents and approvals as are required for the conduct of its business and has
made sufficient filings required under any federal, state or local law,
regulation or rule as are required for the conduct of its business, and has
obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct its business as described in the
Prospectus, except to the extent that any failure to have any such licenses,
authorizations, consents or approvals, to make any such filings or to obtain any
such authorizations, consents or approvals would not, individually or in the
aggregate, have a material adverse effect on the assets, business,
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operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company; the Company is not required by any applicable law to
obtain accreditation or certification from any governmental agency or authority
in order to provide the products and services which it currently provides or
which it proposes to provide as set forth in the Prospectus; the Company is not
in violation of, in default under, or has received any notice regarding a
possible violation, default or revocation of any such license, authorization,
consent or approval or any federal, state, local or foreign law, regulation or
rule or any decree, order or judgment applicable to the Company the effect of
which could be material and adverse to the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company taken as a whole; and no such license, authorization, consent or
approval contains a materially burdensome restriction that is not adequately
disclosed in the Registration Statement and the Prospectus;
(i) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
(j) the Preliminary Prospectus and the Registration Statement
comply and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as the
case may be, comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations; the Registration Statement
did not, and any amendment thereto will not, in each case as of the applicable
effective date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and the Preliminary Prospectus does not, and the
Prospectus or any amendment or supplement thereto will not, as of the applicable
filing date and at the Closing Time and on each Date of Delivery (if any),
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no warranty or representation with
respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriters and furnished in writing by or on behalf of the Underwriters
through the Representatives to the Company expressly for use in the Registration
Statement or the Prospectus (that information being limited to that described in
the last sentence of the first paragraph of Section 9(b) hereof);
(k) the Preliminary Prospectus was and the Prospectus
delivered to the Underwriters for use in connection with this offering will be
identical to the versions of the Preliminary Prospectus and Prospectus created
to be transmitted to the Commission for filing via the Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), except to the extent permitted by
Regulation S-T;
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(l) all legal or governmental proceedings, contracts or
documents of a character required to be filed as exhibits to the Registration
Statement or to be summarized or described in the Prospectus have been so filed,
summarized or described as required;
(m) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its officers and directors or to which the properties,
assets or rights of such entity are subject, at law or in equity, before or by
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority, arbitral panel or agency which could result in a
judgment, decree, award or order having a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company;
(n) the financial statements, including the notes thereto,
included in the Registration Statement and the Prospectus present fairly the
financial position of the Company as of the dates indicated and the consolidated
results of operations and changes in financial position and cash flows of the
Company for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved and in accordance with Regulation
S-X promulgated by the Commission; the financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under the captions
"Prospectus Summary - Summary Financial Data" and "Selected Financial Data"
fairly present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration Statement
and the Prospectus; the unaudited pro forma financial information (including the
related notes) included in the Prospectus or any Preliminary Prospectus complies
as to form in all material respects to the applicable accounting requirements of
the Securities Act and the Securities Act Regulations, and management of the
Company believes that the assumptions underlying the pro forma adjustments are
reasonable; such pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such information
fairly presents with respect to the Company, the financial position, results of
operations and other information purported to be shown therein at the respective
dates and for the respective periods specified;
(o) Xxxxx Xxxxxxxx LLP, whose reports on the financial
statements of the Company are filed with the Commission as part of the
Registration Statement and Prospectus, are and were during the periods covered
by their reports independent public accountants as required by the Securities
Act and the Securities Act Regulations;
(p) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not been
(A) any material adverse change in the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise), present or
prospective, of the Company, whether or not arising in the ordinary course of
business, (B) any transaction, which is material to the Company, contemplated or
entered into by the Company, (C) any material obligation, contingent or
otherwise, directly or indirectly incurred by
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the Company or (D) any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock;
(q) the Shares conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
(r) there are no persons with registration or other similar
rights to have any equity securities, including securities which are convertible
into or exchangeable for equity securities, registered pursuant to the
Registration Statement;
(s) the Shares have been duly authorized and, when issued and
duly delivered against payment therefor as contemplated by this Agreement, will
be validly issued, fully paid and nonassessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the articles of incorporation or
by-laws of the Company, under any agreement to which the Company is a party or
otherwise;
(t) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(u) the Company (i) is not required to register as a "broker"
or "dealer" in accordance with the provisions of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or the rules and regulations thereunder,
or (ii) directly, or indirectly through one or more intermediaries, controls or
has any other association with (within the meaning of Article I of the By-laws
of the National Association of Securities Dealers, Inc. (the "NASD")) any member
firm of the NASD;
(v) the Company has not relied upon the Representatives or
legal counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(w) any certificate signed by any officer of the Company
delivered to the Representatives or to counsel for the Underwriters pursuant to
or in connection with this Agreement shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
(x) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the articles of incorporation and by-laws of
the Company and the requirements of the Nasdaq National Market;
(y) the Company does not own any real property; the Company
has good title to personal property owned by it, in each case free and clear of
all liens, security interests,
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pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed to
be made of such property by the Company; and any real property and buildings
held under lease by the Company are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company;
(z) the descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no contracts,
leases, or other documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required;
(aa) the Company owns or possesses, or can acquire on
reasonable terms, adequate license or other rights to use all patents,
trademarks, service marks, trade names, copyrights, software and design
licenses, trade secrets, manufacturing processes, other intangible property
rights and know-how (collectively "Intangibles") necessary to entitle the
Company to conduct its business as described in the Prospectus, and the Company
has not received notice of infringement of or conflict with (and the Company
knows of no such infringement of or conflict with) asserted rights of others
with respect to any Intangibles which could materially and adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company;
(bb) the Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(cc) the Company has filed on a timely basis all necessary
federal, state, local and foreign income and franchise tax returns required to
be filed through the date hereof and have paid all taxes shown as due thereon;
and no tax deficiency has been asserted against it, nor does the Company know of
any tax deficiency which is likely to be asserted against it which if determined
adversely to the Company, could materially adversely affect the business,
prospects, properties, assets, results of operations or condition (financial or
otherwise) of the Company; all tax liabilities are adequately provided for on
the respective books of the Company; the Company has duly and properly filed an
election to be taxed as an S corporation for federal and state income tax
purposes (each an "S Election"), and each such S Election has been and will be
in full force and effect since its date of election (each an "S Election Date"),
without interruption through the day prior to the Closing Date; there has not
been any termination of any such S Election, including any inadvertent
termination which has been reinstated under Section 1362 of
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the Code and the rules and regulations promulgated thereunder and the
corresponding provisions of state income tax laws; from its inception to the S
Election Date, the Company was taxable as a C corporation for federal and state
income tax purposes;
(dd) the Company maintains insurance (issued by insurers of
recognized financial responsibility) of the types and in the amounts generally
deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect;
(ee) the Company has not violated, or received notice of any
violation with respect to, any applicable environmental, safety or similar law
applicable to its business, nor has it violated, or received notice of any
violation with respect to, any federal or state law relating to discrimination
in the hiring, promotion or pay of employees, nor any applicable federal or
state wages and hours law, nor any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated thereunder, nor any state
law precluding the denial of credit due to the neighborhood in which a property
is situated, the violation of any of which could have a material adverse effect
on the business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company;
(ff) neither the Company nor any officer or director
purporting to act on behalf of the Company has at any time; (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contributions, in violation of law, (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
allowed by applicable law, (iii) made any payment outside the ordinary course of
business to any investment officer or loan broker or person charged with similar
duties of any entity to which the Company sells or from which the Company buys
loans or servicing arrangements for the purpose of influencing such agent,
officer, broker or person to buy loans or servicing arrangements from or sell
loans to the Company, or (iv) engaged in any transactions, maintained any bank
account or used any corporate funds except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and
records of the Company;
(gg) except as otherwise disclosed in the Prospectus, there
are no material outstanding loans or advances or material guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them;
(hh) neither the Company nor, to the knowledge of the Company,
any employee or agent of the Company, has made any payment of funds of the
Company or received or retained any funds in violation of any law, rule or
regulation or of a character required to be disclosed in the Prospectus;
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(ii) all securities issued by the Company have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
(ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq National Market;
(jj) in connection with this offering, the Company has not
offered and will not offer its Common Stock or any other securities convertible
into or exchangeable or exercisable for Common Stock in a manner in violation of
the Securities Act. The Company has not distributed and will not distribute any
Prospectus or other offering material in connection with the offer and sale of
the Shares;
(kk) the Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions herein
contemplated;
(ll) no relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required by
the Securities Act and the Securities Act Regulations to be described in the
Registration Statement and the Prospectus and which is not so described;
(mm) the Company is not and, after giving effect to the
offering and sale of the Shares, will be an "investment company" or an entity
"controlled" by and "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(nn) there are no existing or, to the knowledge of the
Company, threatened labor disputes with the employees of the Company which are
likely to have individually or in the aggregate a material adverse effect on
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company; and
(oo) except as disclosed in the Prospectus, all computer
software (including, without limitation software which forms a part of any
hardware) owned or used by the Company, or licensed by the Company, as licensor
or as licensee, other than any shrinkwrap software available generally to retail
customers, is "Year 2000 Compliant" (as hereinafter defined). For purposes of
this Agreement, "Year 2000 Compliant" shall mean (i) all such software shall
operate in 4-digit year format and, in all material respects, without errors in
the recognition, calculation and processing of date data relating to century
recognition, leap years, single and multi-century formulae, date values and
interfaces of date-related functionalities; (ii) all date processing shall be
conducted in a four-digit year format and all date sorting that includes a "year
field" or "year category" shall be based upon a four-digit year format; and
(iii) any date arithmetic programs or calculators in the software shall operate
in all material respects in accordance with the related user documentation in
the Year 2000, and the years following, without degrading functionality or
performance.
4. CERTAIN COVENANTS: The Company hereby agrees with each Underwriter:
11
(a) to furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as the Representatives may designate
and to maintain such qualifications in effect as long as required for the
distribution of the Shares, provided that the Company shall not be required to
qualify as a foreign corporation or to consent to the service of process under
the laws of any such state (except service of process with respect to the
offering and sale of the Shares);
(b) to prepare the Prospectus in a form approved by the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) not later than 10:00 a.m. (New York City time), on the day following the
execution and delivery of this Agreement and to furnish promptly (and with
respect to the initial delivery of such Prospectus, not later than 10:00 a.m.
(New York City time) on the day following the execution and delivery of this
Agreement) to the Underwriters as many copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the version created to be transmitted to the Commission for filing
via XXXXX, except to the extent permitted by Regulation S-T;
(c) to advise the Representatives promptly and (if requested
by the Representatives) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(d) to advise the Representatives immediately, confirming such
advice in writing, of (i) the receipt of any comments from, or any request by,
the Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing;
(e) to furnish to the Underwriters for a period of five years
from the date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders of
shares of Common Stock, (ii) as soon as practicable after the filing thereof,
copies of all reports filed by the Company with the Commission, the NASD or any
securities exchange and (iii) such other information as the Underwriters may
reasonably request regarding the Company;
12
(f) to advise the Underwriters promptly of the happening of
any event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities Act
Regulations which, in the judgment of the Company, would require the making of
any change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as may
be necessary to reflect any such change and to furnish to the Underwriters a
copy of such proposed amendment or supplement before filing any such amendment
or supplement with the Commission;
(g) to furnish promptly to each Representative a signed copy
of the Registration Statement, as initially filed with the Commission, and of
all amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representative may reasonably request;
(h) to furnish to each Representative, not less than two
business days before filing with the Commission subsequent to the effective date
of the Prospectus and during the period referred to in paragraph (f) above, a
copy of any document proposed to be filed with the Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act;
(i) to apply the net proceeds of the sale of the Shares in
accordance with its statements under the caption "Use of Proceeds" in the
Prospectus;
(j) to make generally available to its security holders as
soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the effective date of the
Registration Statement an earnings statement complying with the provisions of
Section 11(a) of the Securities Act (in form, at the option of the Company,
complying with the provisions of Rule 158 of the Securities Act Regulations,)
covering a period of 12 months beginning after the effective date of the
Registration Statement;
(k) to use its best efforts to effect and maintain the
quotation of the Shares on the Nasdaq National Market and to 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;
(l) to engage and maintain, at its expense, a registrar and
transfer agent for the Shares;
(m) to refrain during a period of 180 days from the date of
the Prospectus, without the prior written consent of the Representatives, from
(i) offering, pledging, selling, contracting to sell, selling any option or
contract to purchase, purchasing any option or contract
13
to sell, granting any option for the sale of, or otherwise disposing of or
transferring, directly or indirectly, any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
filing any registration statement under the Securities Act with respect to any
of the foregoing, or (ii) entering 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 Shares to be sold hereunder, or (B) any
shares of Common Stock issued by the Company upon the exercise of an option
outstanding on the date hereof and referred to in the Prospectus;
(n) to not itself and to use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company;
(o) if at any time during the 30-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in the
reasonable opinion of the Representatives the market price of the Common Stock
has been or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates a supplement to or amendment of the
Prospectus) and after written notice from the Representatives advising the
Company to the effect set forth above, to forthwith prepare, consult with the
Representatives concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to the Representative,
responding to or commenting on such rumor, publication or event;
(p) at or prior to the time the Registration Statement becomes
effective, the Company shall make each of the Underwriters an insured party
under the Company's directors and officers insurance policy and shall provide
the Representatives a summary of such directors and officers insurance policy.
5. PAYMENT OF EXPENSES:
(a) The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for
14
the Shares to the Underwriters, including any stock or other transfer taxes or
duties payable upon the sale of the Shares to the Underwriters, (iii) the
printing of this Agreement and any dealer agreements and furnishing of copies of
each to the Underwriters and to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering and sale under
state laws that the Company and the Representatives have mutually agreed are
appropriate and the determination of their eligibility for investment under
state law as aforesaid (including the legal fees and filing fees and other
disbursements of counsel for the Underwriters in the maximum amount of $75,000
assuming that the Common Stock is approved for quotation on the Nasdaq National
Market) and the printing and furnishing of copies of any blue sky surveys or
legal investment surveys to the Underwriters and to dealers, (v) filing for
review of the public offering of the Shares by the NASD (including the legal
fees and filing fees and other disbursements of counsel for the Underwriters
relating thereto), (vi) the fees and expenses of any transfer agent or registrar
for the Shares and miscellaneous expenses referred to in the Registration
Statement, (vii) the fees and expenses incurred in connection with the inclusion
of the Shares in the Nasdaq National Market, (viii) making road show
presentations with respect to the offering of the Shares and the reasonable road
show costs and expenses of the Underwriters, (ix) preparing and distributing
bound volumes of transaction documents for the Representatives and its legal
counsel and (x) the performance of the Company's other obligations hereunder.
Upon the request of the Representatives, the Company will provide funds in
advance for filing fees.
(b) The Company agrees to reimburse the Representatives for
reasonable out-of-pocket expenses, not to exceed $25,000 in the individual and
$50,000 in the aggregate, in connection with the performance of its activities
under this Agreement, including, but not limited to, costs such as printing,
facsimile, courier service, direct computer expenses, accommodations and travel,
but excluding the fees and expenses of the Underwriters' outside legal counsel
and any other advisors, accountants, appraisers, etc. (other than the fees and
expenses of counsel with respect to state securities or blue sky laws and
obtaining the filing for review of the public offering of the Shares by the
NASD, all of which shall be reimbursed by the Company pursuant to the provisions
of subsection (a) above).
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS: The obligations of the
Underwriters hereunder to purchase Shares at the Closing Time or on the Date of
Delivery, as applicable, are subject to the accuracy of the representations and
warranties on the part of the Company and the in all material respects on the
date hereof and at the Closing Time and on each Date of Delivery, as applicable,
the performance by the Company of its obligations hereunder in all material
respects and to the satisfaction of the following further conditions at the
Closing Time or on the Date of Delivery, as applicable:
(a) The Company shall furnish to the Underwriters at the
Closing Time and on each Date of Delivery an opinion of Xxxxxxxxx Traurig LLP,
counsel for the Company, addressed to the Underwriters and dated the Closing
Time and each Date of Delivery and in form and substance satisfactory to
Fulbright & Xxxxxxxx L.L.P., counsel for the Underwriters, stating that:
15
(i) the Company has an authorized capitalization as
set forth in the Prospectus under the caption "Capitalization"; the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable;
except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company convertible into or
exchangeable for any capital stock of the Company, (ii) warrants,
rights or options to subscribe for or purchase from the Company any
such capital stock or any such convertible or exchangeable securities
or obligations, or (iii) obligations of the Company to issue any shares
of capital stock, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options;
(ii) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of New York with full corporate power and authority to own
its properties and to conduct its business as described in the
Registration Statement and Prospectus and to execute and deliver this
Agreement and to consummate the transactions described in this
Agreement;
(iii) the Company is duly qualified or licensed by
each jurisdiction in which it conducts its business and in which the
failure, individually or in the aggregate, to be so licensed could have
a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of the Company; other than as disclosed in the Prospectus, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
(iv) the Company is in compliance in all material
respects with all applicable laws, orders, rules and regulations
applicable to it, except where failure to comply could materially and
adversely affect the financial condition and business of the Company;
(v) the Company is not in breach of, or in default
under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under), any license,
indenture, mortgage, deed of trust, loan or credit agreement or any
other agreement or instrument to which the Company is a party or by
which it or its properties may be bound or affected or under any law,
regulation or rule or any decree, judgment or order applicable to the
Company, except such breaches or defaults which would not have a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the
Company;
(vi) the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement do not and will not (A)
conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of or default under), (i) any provisions
of the articles of incorporation or by-laws of the Company, (ii) any
provision of any material license,
16
indenture, mortgage, deed of trust, loan, credit or other agreement or
instrument to which the Company is a party or by which it or its
properties or assets may be bound or affected, (iii) any law or
regulation binding upon or applicable to the Company or any of their
respective properties or assets, or (iv) any decree, judgment or order
applicable to the Company; or (B) result in the creation or imposition
of any lien, charge, claim or encumbrance upon any property or assets
of the Company;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and, assuming due execution of
the Agreement by the other parties hereto, is a legal, valid and
binding agreement of the Company enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except that
enforceability of the indemnification and contribution provisions set
forth in Section 9 of this Agreement may be limited by the federal or
state securities laws of the United States or public policy underlying
such laws;
(viii) no approval, authorization, consent or order
of or filing with any federal or state governmental or regulatory
commission, board, body, authority or agency is required in connection
with the execution, delivery and performance of this Agreement, the
consummation of the transaction contemplated hereby, and the sale and
delivery of the Shares by the Company as contemplated hereby, other
than such as have been obtained or made under the Securities Act and
the Securities Act Regulations, and except that such counsel need
express no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or any approval of the
underwriting terms and arrangements by the National Association of
Securities Dealers, Inc.;
(ix) the Company has sufficient material licenses,
authorizations, consents and approvals as are required for the conduct
of its business and has made sufficient filings required under any
federal, state or local law, regulation or rule as are required for the
conduct of its business, and has obtained all necessary authorizations,
consents and approvals from other persons, required to conduct its
business, as described in the Prospectus; to such counsel's knowledge
the Company is not in violation of, in default under, or has received
any notice regarding a possible violation, default or revocation of any
such material license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or decree, order or
judgment applicable to the Company;
(x) assuming that the Underwriters purchase the
Shares pursuant to this Agreement for value, in good faith and without
notice of any adverse claim, the delivery of such Shares pursuant to
this Agreement will pass good and valid title to the Shares free and
clear of any security interest, mortgage, pledge, lien, encumbrance or
other claim;
17
(xi) the issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights arising by
operation of law, under the articles of incorporation or by-laws of the
Company, or under any agreement to which the Company is a party or, to
such counsel's knowledge, otherwise;
(xii) there are no persons with registration or other
similar rights to have any equity securities, including securities
which are convertible into or exchangeable for equity securities,
registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act;
(xiii) the Shares conform in all material respects to
the descriptions thereof contained in the Registration Statement and
Prospectus;
(xiv) the form of certificate used to evidence the
Common Stock complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the
articles of incorporation and by-laws of the Company and the
requirements of the Nasdaq National Market;
(xv) the Registration Statement has become effective
under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement has been issued and, to such counsel's
knowledge, no proceedings with respect thereto have been commenced or
threatened;
(xvi) as of the effective date of the Registration
Statement, the Registration Statement and the Prospectus (except as to
the financial statements and other financial and statistical data
contained therein, as to which such counsel need express no opinion)
complied as to form in all material respects with the requirements of
the Securities Act and the Securities Act Regulations;
(xvii) the statements under the captions
"Capitalization," "Regulation", "Description of Capital Stock," and
"Shares Eligible for Future Sale," in the Registration Statement and
the Prospectus, insofar as such statements constitute a summary of the
legal matters referred to therein, constitute accurate summaries
thereof in all material respects;
(xviii) there are no actions, suits or proceedings,
inquiries, or investigations pending or threatened against the Company
or any of its officers and directors or to which the properties, assets
or rights of the Company are subject, at law or in equity, before or by
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority, arbitral panel or agency which are
required to be described in the Prospectus but are not so described;
(xix) there are no contracts or documents of a
character which are required to be filed as exhibits to the
Registration Statement or required to be described or summarized in the
Prospectus which have not been so filed, summarized or described,
18
and all such summaries and descriptions, in all material respects,
fairly and accurately set forth the material provisions of such
contracts and documents;
(xx) the Company owns or possesses, or can acquire on
reasonable terms, adequate license or other rights to use all patents,
trademarks, service marks, trade names, copyrights, software and design
licenses, trade secrets, manufacturing processes, other intangible
property rights and know-how (collectively "Intangibles") necessary to
entitle the Company to conduct its business as described in the
Prospectus, and the Company has not received notice of infringement of
or conflict with (and knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which
could materially and adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or
otherwise) of the Company;
(xxi) the Company has filed on a timely basis all
necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
taxes shown as due thereon; and no tax deficiency has been asserted
against any such entity, nor does any such entity know of any tax
deficiency which is likely to be asserted against any such entity which
if determined adversely to any such entity, could materially adversely
affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company.
In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
independent public accountants of the Company, representatives of the
Representatives, at which the contents of the Registration Statement and
Prospectus were discussed and, although such counsel is not passing upon and
does not assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectus, they have no
reason to believe that the Registration Statement, the Preliminary Prospectus or
the Prospectus, as of their respective effective or issue date, and as of the
date of such counsel's opinion, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included in the
Registration Statement, Preliminary Prospectus or Prospectus).
(b) The Representatives shall have received from Xxxxx Xxxxxxxx
LLP letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance satisfactory to the Representatives,
relating to the financial statements, including any pro forma financial
statements, of the Company, and such other matters customarily covered by
comfort letters issued in connection with registered public offerings.
(c) The Representatives shall have received at the Closing Time
and on each Date of Delivery the favorable opinion of Fulbright & Xxxxxxxx,
dated the Closing Time or such Date
19
of Delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives.
(d) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(e) Prior to the Closing Time and each Date of Delivery (i) no
stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus has been issued, and no proceedings for such purpose shall have been
initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes, has
occurred; and (ii) the Registration Statement and the Prospectus shall not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(f) Between the time of execution of this Agreement and the
Closing Time or the relevant Date of Delivery (i) no material and unfavorable
change in the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company shall occur or become known
(whether or not arising in the ordinary course of business), and (ii) no
transaction which is material and unfavorable to the Company shall have been
entered into by the Company.
(g) The Shares shall have been approved for inclusion in the
Nasdaq National Market.
(h) The NASD shall not have raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.
(i) The Representatives shall have received lock-up agreements
from each stockholder of the Company, in the form of Exhibit B attached hereto,
and such letter agreements shall be in full force and effect.
(j) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of its Chairman of the Board
and Chief Executive Officer, its Executive Vice President and Chief Technology
Officer, and its Chief Financial Officer, to the effect that, to each of such
officer's knowledge, the representations and warranties of the Company, Xxxxxxx
and Xxxxxxxxxxxxx set forth in this Agreement are true and correct and the
conditions set forth in paragraphs (g), (h) and (i) have been satisfied, in each
case as of such date.
(k) The Company shall have furnished to the Underwriters such
other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus, the representations,
warranties and statement of the Company contained herein, and the performance by
the Company of its covenants contained herein, and the
20
fulfillment of any conditions contained herein, as of the Closing Time or any
Date of Delivery as the Underwriters may reasonably request.
(l) The Company shall have performed such of its obligations under
this Agreement as are to be performed by the terms hereof at or before the
Closing Time or the relevant Date of Delivery.
7. TERMINATION: The obligations of the Underwriters hereunder shall be
subject to termination in the absolute discretion of the Representatives, at any
time prior to the Closing Time or any Date of Delivery, (i) if any of the
conditions specified in Section 6 shall not have been fulfilled when and as
required by this Agreement to be fulfilled, or (ii) if there has been since the
respective dates as of which information is given in the Registration Statement,
any material adverse change, or any development involving a prospective material
adverse change, in or affecting the assets, business, operations, earnings,
prospects, properties, condition (financial or otherwise) or management of the
Company, whether or not arising in the ordinary course of business, or (iii) if
there has occurred outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if
trading in any securities of the Company has been suspended by the Commission or
by Nasdaq, or if trading generally on the New York Stock Exchange or in the
Nasdaq over-the-counter market has been suspended (including automatic halt in
trading pursuant to market-decline triggers other than those in which solely
program trading is temporarily halted), or limitations on prices for trading
(other than limitations on hours or numbers of days of trading) have been fixed,
or maximum ranges for prices for securities have been required, by such exchange
or the NASD or Nasdaq or by order of the Commission or any other governmental
authority, or (v) any federal or state statute, regulation, rule or order of any
court or other governmental authority has been enacted, published, decreed or
otherwise promulgated which in the reasonable opinion of the Representatives
materially adversely affects or will materially adversely affect the business or
operations of the Company, or (vi) any action has been taken by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in the reasonable opinion of the Representatives has a material adverse
effect on the securities markets in the United States.
If the Representatives elect to terminate this Agreement as
provided in this Section 7, the Company and the Underwriters shall be notified
promptly by telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company
shall be unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
21
8. INCREASE IN UNDERWRITERS' COMMITMENTS: If any Underwriter shall default
at the Closing Time or on a Date of Delivery in its obligation to take up and
pay for the Shares to be purchased by it under this Agreement on such date the
Representatives shall have the right, within 36 hours after such default, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Shares which
such Underwriter shall have agreed but failed to take up and pay for (the
"Defaulted Shares"). Absent the completion of such arrangements within such 36
hour period, (i) if the total number of Defaulted Shares does not exceed 10% of
the total number of Shares to be purchased on such date, each non-defaulting
Underwriter shall take up and pay for (in addition to the number of Shares which
it is otherwise obligated to purchase on such date pursuant to this Agreement)
the portion of the total number of Shares agreed to be purchased by the
defaulting Underwriter on such date in the proportion that its underwriting
obligations hereunder bears to the underwriting obligations of all
non-defaulting Underwriters; and (ii) if the total number of Defaulted Shares
exceeds 10% of such total, the Representatives may terminate this Agreement by
notice to the Company, without liability to any non-defaulting Underwriter.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a
defaulting Underwriter in accordance with the foregoing provision, the Company
or the non-defaulting Underwriters shall have the right to postpone the Closing
Time or the relevant Date of Delivery for a period not exceeding five business
days in order that any necessary changes in the Registration Statement and
Prospectus and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like effect
as, if such substituted Underwriter had originally been named in this Agreement.
9. INDEMNITY AND CONTRIBUTION BY THE COMPANY, XXXXXXXX XXXXXXX, XXXX XXXXX
XXXXXXXXXXXXX AND THE UNDERWRITERS:
(a) (i) The Company and each of Xxxxxxx and Xxxxxxxxxxxxx jointly
and severally agree to indemnify, defend and hold harmless each Underwriter and
any person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
expense, liability, damage or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability, damage or claim arises out of or is
based upon (A) any breach of any representation, warranty or covenant of the
Company contained herein, (B) any failure on the part of the Company to comply
with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, or (C) any untrue statement or
alleged untrue
22
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus (the term Prospectus for the purpose of this Section
9 being deemed to include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), or arises out of or is
based upon any omission or alleged omission to state a material fact required to
be stated in either such Registration Statement or Prospectus or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, except insofar as any such loss, expense,
liability, damage or claim arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission of a material fact
contained in and in conformity with information furnished in writing by the
Underwriters through the Representatives to the Company expressly for use in
such Registration Statement or such Prospectus, provided, however, that the
indemnity agreement contained in this subsection (a)(i) with respect to the
Preliminary Prospectus or the Prospectus shall not inure to the benefit of an
Underwriter (or to the benefit of any person controlling such Underwriter) with
respect to any person asserting any such loss, expense, liability, damage or
claim which is the subject thereof if the Prospectus or any supplement thereto
prepared with the consent of the Representatives and furnished to the
Underwriters prior to the Closing Time corrected any such alleged untrue
statement or omission and if such Underwriter failed to send or give a copy of
the Prospectus or supplement thereto to such person at or prior to the written
confirmation of the sale of Shares to such person, unless such failure resulted
from noncompliance by the Company with Section 4(b) above).
(b) Notwithstanding anything to the contrary in paragraph (a)
above, each Underwriter and each person who controls such Underwriter agrees not
to assert its rights to indemnity under paragraph (a) against Xxxxxxx or
Xxxxxxxxxxxxx for losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) unless and until (i) such Underwriter or
controlling person has damages or liabilities (including any legal or other
expense reasonably incurred) and (ii) the Company does not reimburse in full
such Underwriter or controlling person for any such losses, claims, damages or
liabilities (including legal and other expenses) incurred after exhausting all
legal remedies to compel such payment. This indemnity obligation will be in
addition to any liability which Xxxxxxx or Xxxxxxxxxxxxx may otherwise have.
(c) If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company, Xxxxxxx
or Xxxxxxxxxxxxx pursuant to subsection (a) above, such Underwriter shall
promptly notify the Company, Xxxxxxx and Xxxxxxxxxxxxx in writing of the
institution of such action, and the Company shall assume the defense of such
action, including the employment of counsel and payment of expenses, provided,
however, that any failure or delay to so notify the Company, Xxxxxxx or
Xxxxxxxxxxxxx will not relieve the Company, Xxxxxxx or Xxxxxxxxxxxxx of any
obligation hereunder, except to the extent that its ability to defend is
actually impaired by such failure or delay. Such Underwriter or controlling
person shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless the employment of such counsel
shall have been authorized in writing by the Company, Xxxxxxx or Xxxxxxxxxxxxx
in connection with the defense of such action, or the Company, Xxxxxxx or
Xxxxxxxxxxxxx shall not have employed counsel to have charge of the
23
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Company, Xxxxxxx or Xxxxxxxxxxxxx (in which
case none of the Company, Xxxxxxx or Xxxxxxxxxxxxx shall have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
Company, Xxxxxxx and Xxxxxxxxxxxxx and paid as incurred (it being understood,
however, that none of the Company, Xxxxxxx or Xxxxxxxxxxxxx shall be liable for
the expenses of more than one separate firm of attorneys for the Underwriters or
controlling persons in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the Company, Xxxxxxx Xxxxxxxxxxxxx
shall not be liable for any settlement of any such claim or action effected
without the Representatives' written consent.
(d) Each Underwriter agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, Xxxxxxx and Xxxxxxxxxxxxx, the
Company's directors, the Company's officers that signed the Registration
Statement, and any person who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability, damage or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company, Xxxxxxx, Xxxxxxxxxxxxx
or any such person may incur under the Securities Act, the Exchange Act or
otherwise, but only insofar as such loss, expense, liability, damage or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in and in conformity with information furnished in
writing by such Underwriter through the Representatives to the Company expressly
for use in the Registration Statement (or in the Registration Statement as
amended by any post effective amendment thereof by the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated either in such Registration Statement or Prospectus or necessary to make
such information, in the light of the circumstances under which made, not
misleading. The statements set forth (i) in the last paragraph on the cover page
and (ii) under the caption "Underwriting" in the Preliminary Prospectus and the
Prospectus (to the extent such statements relate to the Underwriters) constitute
the only information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of Section 3(j) and this Section 9.
If any action is brought against the Company, Xxxxxxx,
Xxxxxxxxxxxxx or any such person in respect of which indemnity may be sought
against any Underwriter pursuant to the foregoing paragraph, the Company,
Xxxxxxx, Xxxxxxxxxxxxx or such person shall promptly notify the Representatives
in writing of the institution of such action and the Representatives, on behalf
of the Underwriters, shall assume the defense of such action, including the
employment of counsel and payment of expenses. The Company, Xxxxxxx,
Xxxxxxxxxxxxx or such person shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of the Company, Xxxxxxx, Xxxxxxxxxxxxx or such person unless the employment of
such counsel shall have been authorized in writing by the Representatives in
connection with the defense of such action or the Representatives shall not have
employed
24
counsel to have charge of the defense of such action within a reasonable time or
such indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in which
case the Representatives shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a), (b), (c)and (d) of
this Section 9 in respect of any losses, expenses, liabilities, damages or
claims referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, Xxxxxxx, Xxxxxxxxxxxxx on
the one hand, and the Underwriters on the other hand from the offering of the
Shares or (ii) if (but only if) the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, Xxxxxxx, Xxxxxxxxxxxxx and of the Underwriters in
connection with the statements or omissions which resulted in such losses,
expenses, liabilities, damages or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company,
Xxxxxxx, Xxxxxxxxxxxxx and the Underwriters shall be deemed to be in the same
proportion as, the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
bear to the underwriting discounts and commissions received by the Underwriters.
The relative fault of the Company, Xxxxxxx, Xxxxxxxxxxxxx and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue statement or alleged untrue statement of a material fact or omission
or alleged omission relates to information supplied by the Company, Xxxxxxx,
Xxxxxxxxxxxxx or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any claim or action.
(f) The Company, Xxxxxxx, Xxxxxxxxxxxxx and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in subsection
(d)(i) and, if applicable (ii), above. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the
25
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
10. SURVIVAL: The indemnity and contribution agreements contained in
Section 9 and the covenants, warranties and representations of the Company,
Xxxxxxx and Xxxxxxxxxxxxx contained in Sections 3, 4 and 5 of this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of any Underwriter, or any person who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, or by or on behalf of the Company, its directors and officers or any person
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the sale and delivery of the Shares. The Company, Xxxxxxx,
Xxxxxxxxxxxxx and each Underwriter agree promptly to notify the others of the
commencement of any litigation or proceeding against it and, in the case of the
Company, against any of the Company's officers and directors, in connection with
the sale and delivery of the Shares, or in connection with the Registration
Statement or Prospectus.
11. NOTICES: Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing or by telegram and, if to the
Underwriters, shall be sufficient in all respects if delivered to Friedman,
Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Syndicate Department; if to the Company, shall be sufficient in all
respects if delivered to the Company, Xxxxxxx or Xxxxxxxxxxxxx at the offices of
the Company at 000 Xxxx Xxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000.
12. GOVERNING LAW; HEADINGS: THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement
have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
13. PARTIES AT INTEREST: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company, and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. COUNTERPARTS AND FACSIMILE SIGNATURES: This Agreement may be signed by
the parties in counterparts which together shall constitute one and the same
agreement among the parties. A facsimile signature shall constitute an original
signature for all purposes.
26
If the foregoing correctly sets forth the understanding among the
Company, Xxxxxxx, Xxxxxxxxxxxxx and the Underwriters, please so indicate in the
space provided below for the purpose, whereupon this Agreement shall constitute
a binding agreement among the Company, Xxxxxxx, Xxxxxxxxxxxxx and the
Underwriters.
Very truly yours,
NETCREATIONS, INC.
By:
------------------------------------------
By:
Title:
------------------------------------------
Xxxxxxxx Xxxxxxx
------------------------------------------
Xxxx Xxxxx Xxxxxxxxxxxxx
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
X.X. XXXXXXXXX, TOWBIN
xxx.xxx, a division of FBR Investment Services, Inc.
FIDELITY CAPITAL MARKETS,
a division of National Financial Services Corporation
By:
-------------------------------------
Title:
For itself and as a Representative of the other
Underwriters named on Schedule II hereto.
27
Schedule I
Number of Initial Number of Option
NAME OF PARTY SELLING SHARES SHARES TO BE SOLD SHARES TO BE SOLD
----------------------------------------------------------------------------
NetCreations, Inc. [ ] [ ]
Total [ ] [ ]
----------------- -------------
----------------- -------------
S-1
Schedule II
NUMBER OF INITIAL NUMBER OF OPTION
UNDERWRITER SHARES TO BE PURCHASED SHARES TO BE PURCHASED
------------------------------------------------------------------------------------
Friedman, Billings,
Xxxxxx & Co., Inc. [____________] [______]
X.X. Xxxxxxxxx, Towbin [____________] [______]
xxx.xxx [____________] [______]
Fidelity Capital Markets [____________] [______]
Total.......................3,300,000 495,000
---------- -------
---------- -------
S-2