1
EXHIBIT 1.1
INTERNET PICTURES CORPORATION
[ ] Shares of Common Stock
Underwriting Agreement
, 2000
X.X. Xxxxxx Securities Inc.
Chase Securities Inc.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxx Xxxxxxxx Incorporated
Prudential Securities Incorporated
As Representatives of the several Underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Internet Pictures Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters listed in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), an aggregate of [ ] shares (the
"Underwritten Shares") of common stock, par value $.001 per share, of the
Company (the "Common Stock"). In addition, at the option of the Underwriters and
for the sole purpose of covering over-allotments in connection with the sale of
the Underwritten Shares, the Company proposes to issue and sell to the
Underwriters up to an additional [ ] shares (the "Option Shares") of Common
Stock. The Underwritten Shares and the Option Shares are herein referred to as
the "Shares."
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective including
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act, is referred to
in this Agreement as the "Registration Statement", and the prospectus in the
form first used to confirm sales of Shares is referred to in this Agreement as
the "Prospectus." If the Company has filed an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"),
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then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement.
1. The Company agrees to issue and sell the Underwritten
Shares, to the several Underwriters as hereinafter provided, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase,
severally and not jointly, from the Company at a purchase price per share of
$ (the "Purchase Price") the number of Underwritten Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Underwritten Shares by a fraction, the numerator of
which is the aggregate number of Underwritten Shares to be purchased by such
Underwriter as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the aggregate number of Underwritten
Shares to be purchased by all the Underwriters from the Company hereunder.
In addition, the Company agrees to sell the Option Shares to
the several Underwriters, and the Underwriters shall have the option to purchase
at their election up to [ ] Option Shares for the sole purpose of covering
over-allotments in the sale of the Underwritten Shares. The Underwriters, on the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company at the Purchase Price that portion of the number
of Option Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction, the numerator of which is the
maximum number of Option Shares which such Underwriter is entitled to purchase
and the denominator of which is the maximum number of Option Shares that all of
the Underwriters are entitled to purchase hereunder, for the sole purpose of
covering over-allotments (if any) in the sale of the Underwritten Shares by the
several Underwriters.
The Underwriters may exercise the option to purchase the
Option Shares at any time (but not more than once) on or before the thirtieth
day following the date of this Agreement, by written notice from the
Representatives to the Company. Such notice shall set forth the aggregate number
of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same
date and time as the Closing Date (as hereinafter defined) but shall not be
earlier than the Closing Date nor later than the tenth full Business Day (as
hereinafter defined) after the date of such notice (unless such time and date
are postponed in accordance with the provisions of Section 9 hereof). Any such
notice shall be given at least two full Business Days prior to the date and time
of delivery specified therein.
2. The Company understands that the Underwriters intend
(i) to make a public offering of the Shares as soon after (A) the Registration
Statement has become effective and (B) the parties hereto have executed and
delivered this Agreement, as in the judgment
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of the Representatives is advisable and (ii) initially to offer the Shares upon
the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer
in immediately available funds to the account specified to the Representatives
by the Company with regard to payment to the Company in the case of the
Underwritten Shares, on , 2000, or at such other time on the same or
such other date, not later than the fifth Business Day thereafter, as the
Representatives and the Company may agree upon in writing or (Y) to the account
specified to the Representatives by the Company with regard to payment to the
Company with regard to the Option Shares on the date and time specified by the
Representatives in the written notice of the Underwriters' election to purchase
such Option Shares. The time and date of such payment for the Underwritten
Shares is referred to herein as the "Closing Date" and the time and date for
such payment for the Option Shares, if other than the Closing Date, are herein
referred to as the "Additional Closing Date." As used herein, the term "Business
Day" means any day other than a day on which banks are permitted or required to
be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or
the Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several Underwriters
of the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of X.X. Xxxxxx Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each
Underwriter that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant
to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein;
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(b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) comply, or will
comply, as the case may be, in all material respects with the
Securities Act and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as
of the date of the Prospectus and any amendment or supplement thereto,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional Closing
Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein;
(c) the financial statements, and the related notes
thereto, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates indicated and the results
of their operations and changes in their consolidated cash flows for
the periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein; the financial statements, and the related notes
thereto, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of each of
Interactive Pictures Corporation ("IPC") and PictureWorks Technology,
Inc. ("PictureWorks") as of the dates indicated and the results of
their operations and changes in their consolidated cash flows for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein; and the pro forma financial information, and the
related notes thereto, included in the Registration Statement and the
Prospectus has been prepared in accordance with the applicable
requirements of the Securities Act and are base upon good faith
estimates and assumptions believed by the Company to be reasonable;
(d) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has
not been any change in the capital
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stock or long-term debt of the Company or any of its subsidiaries, or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Change"), otherwise than as set forth or
contemplated in the Prospectus; and except as set forth or contemplated
in the Prospectus neither the Company nor any of its subsidiaries has
entered into any transaction or agreement (whether or not in the
ordinary course of business) material to the Company and its
subsidiaries taken as a whole;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect");
(f) each of the Company's subsidiaries has been duly
incorporated or organized and is validly existing as a corporation
under the laws of its jurisdiction of incorporation or organization,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus, and has been
duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each jurisdiction in which it
owns or leases properties, or conducts any business, so as to require
such qualification, other than where the failure to be so qualified or
in good standing would not have a Material Adverse Effect; and all the
outstanding shares of capital stock of each subsidiary of the Company
have been duly authorized and validly issued, are fully-paid and
non-assessable, and (except, in the case of foreign subsidiaries, for
directors' qualifying shares and except as described in the Prospectus)
are owned by the Company, directly or indirectly, free and clear of all
liens, encumbrances, security interests and claims;
(g) this Agreement has been duly authorized, executed and
delivered by the Company;
(h) the Company has an authorized capitalization as set
forth in the Prospectus and such authorized capital stock conforms as
to legal matters to the description thereof set forth in the
Prospectus, and all of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully-paid
and
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non-assessable and are not subject to any pre-emptive or similar
rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock
of the Company or any such subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options;
(i) the Underwritten Shares and the Option Shares have
been duly authorized, and, when issued and delivered to and paid for by
the Underwriters in accordance with the terms of this Agreement, will
be duly issued and will be fully paid and non-assessable and will
conform to the descriptions thereof in the Prospectus; and the issuance
of such Shares is not subject to any preemptive or similar rights;
(j) neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its certificate or articles of
incorporation or by-laws or any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it or any of them or any
of their respective properties is bound, except for violations and
defaults which individually or in the aggregate would not have a
Material Adverse Effect; the issue and sale of the Shares to be sold by
the Company hereunder and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will any such action result in any
violation of the provisions of the certificate or articles of
incorporation or the by-laws of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, its subsidiaries
or any of their respective properties; and no consent, approval,
authorization, order, license, registration or qualification of or with
any such court or governmental agency or body is required for the issue
and sale of the Shares to be sold by the Company hereunder or the
consummation by the Company of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been obtained under
the Securities Act and as may be required under state securities or
Blue Sky Laws in connection with the purchase and distribution of the
Shares by the Underwriters;
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(k) other than as set forth or contemplated in the
Prospectus, there are no legal or governmental investigations, actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries
or any of their respective properties or to which the Company or any of
its subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have, or reasonably be expected to
have, a Material Adverse Effect, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required;
(l) the Company and its subsidiaries have good and
marketable title in fee simple to all items of real property and good
and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except such
as are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company and
its subsidiaries; and any real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
existing and enforceable leases with such exceptions as are not
material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or its subsidiaries;
(m) no relationship, direct or indirect, exists between
or among the Company or any or its subsidiaries on the one hand, and
the directors, officers, stockholders, customers or suppliers of the
Company or any of its subsidiaries on the other hand, which is required
by the Securities Act to be described in the Registration Statement and
the Prospectus which is not so described;
(n) except as disclosed in the Registration Statement, no
person has the right to require the Company to register any securities
for offering and sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issue and sale
of the Shares to be sold by the Company hereunder; all holders of
securities of the Company having rights to the registration of shares
of Common Stock, or other securities, because of the filing of the
Registration Statement by the Company, have waived such rights or such
rights have expired by reason of lapse of time following notification
of the Company's intent to file the Registration Statement;
(o) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
or an entity "controlled" by an
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"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(p) PricewaterhouseCoopers LLP ("PricewaterhouseCoopers")
who have certified certain financial statements of the Company, its
subsidiaries, IPC and PictureWorks are independent public accountants
as required by the Securities Act;
(q) the Company and its subsidiaries have filed all
federal, state, local and foreign tax returns which have been required
to be filed and have paid all taxes shown thereon and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith; and, except as
disclosed in the Registration Statement and the Prospectus, there is no
tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company or any subsidiary which
individually or in the aggregate would have a Material Adverse Effect;
(r) the Company has not taken nor will it take, directly
or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(s) each of the Company and its subsidiaries owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made
all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as conducted as
of the date hereof, and neither the Company nor any such subsidiary has
received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the
Registration Statement and the Prospectus; and each of the Company and
its subsidiaries is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of the date
hereof, except for noncompliance which would not, individually or in
the aggregate, have a Material Adverse Effect;
(t) there are no existing or, to the best knowledge of
the Company, threatened labor disputes with the employees of the
Company or any of its subsidiaries which are likely to have a Material
Adverse Effect;
(u) the Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or
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wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of
any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, individually or in
the aggregate, have a Material Adverse Effect;
(v) each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") that is maintained, administered or contributed to
by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been maintained in
compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended ("Code"). To
the knowledge of the Company, no prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code has
occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption. For each such plan
which is subject to the funding rules of Section 412 of the Code or
Section 302 of ERISA no "accumulated funding deficiency" as defined in
Section 412 of the Code has been incurred, whether or not waived, and
the fair market value of the assets of each such plan (excluding for
these purposes accrued but unpaid contributions) exceeded the present
value of all benefits accrued under such plan determined using
reasonable actuarial assumptions;
(w) each of the Company and its subsidiaries owns, is
licensed to use or otherwise possesses adequate rights to use the
patents, patent rights, licenses, inventions, trademarks, service
marks, trade names, copyrights and know-how, including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures (collectively, the "Intellectual
Property") necessary to carry on the business conducted by it, except
to the extent that the failure to own, be licensed to use or otherwise
possess adequate rights to use such Intellectual Property would not
have a Material Adverse Effect; except as set forth in the Prospectus,
the Company has not received any notice of infringement of or conflict
with (and the Company has no knowledge of any infringement of or
conflict with ) asserted rights of others with respect to its
Intellectual Property; the discoveries, inventions, products or
processes of the Company referred to in the Registration Statement and
the Prospectus do not, to the knowledge of the Company, infringe or
conflict with any right or patent of any third party, or any discovery,
patent product or process which is the subject of a
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patent application filed by any third party, known to the Company which
could have a Material Adverse Effect;
(x) the statistical and market-related data included in
the Registration Statement and the Prospectus are based on or derived
from sources which are believed by the Company to be reliable;
(y) the Company carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of
its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries;
(z) except for compensation to be received by the
Underwriters under this Agreement, the Company does not know of any
outstanding claims for services, either in the nature of a finder's fee
or origination fee, with respect to any of the transactions
contemplated hereby;
(aa) The Company has reviewed its operations, the
operations of its subsidiaries and the operations of 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 the Year 2000 Problem. As a result of such review and
except as disclosed in the Prospectus, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem has had or
will have a Material Adverse Effect or result in any material loss or
interference with the Company's or any subsidiary's business or
operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000; and
(bb) the Company has delivered to the Representatives
written lock-up agreements, substantially in the form attached hereto
as Exhibit 1 (each, a "Lock-Up Agreement"), of each of its directors
and executive officers and certain stockholders previously identified
by the Representatives.
5. (A) The Company covenants and agrees with each of the
several Underwriters as follows:
(a) to use its best efforts to cause the Registration
Statement to become effective at the earliest possible time and, if
required, to file the final Prospectus with the Commission within the
time periods specified by Rule 424(b) and Rule 430A under
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the Securities Act and to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange
Act") subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Shares; and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 a.m., New York City time,
on the Business Day next succeeding the date of this Agreement in such
quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the
Representatives six signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits, and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment
thereto, in each case without exhibits and, during the period mentioned
in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as
the Representatives may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for
review and not to file any such proposed amendment or supplement to
which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to
confirm such advice in writing (i) when the Registration Statement has
become effective, (ii) when any amendment to the Registration Statement
has been filed or becomes effective, (iii) when any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or
the Prospectus or the initiation or threatening of any proceeding for
that purpose, (vi) of the occurrence of any event, within the period
referenced in paragraph (e) below, as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, and (vii) of
the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any
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proceeding for such purpose; and to use its best efforts to prevent the
issuance of any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or
of any order suspending any such qualification of the shares, or
notification of any such order thereof and, if issued, to obtain as
soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date
of the public offering of the Shares as in the opinion of counsel for
the Underwriters a prospectus relating to the Shares is required by law
to be delivered in connection with sales by the Underwriters or any
dealer, any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriters and to the
dealers (whose names and addresses the Representatives will furnish to
the Company) to which Shares may have been sold by the Representatives
on behalf of the Underwriters and to any other dealers upon request,
such amendments or supplements to the Prospectus as may be necessary so
that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law;
(f) to endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such
qualification in effect so long as reasonably required for distribution
of the Shares; provided that the Company shall not be required to file
a general consent to service of process in any jurisdiction;
(g) to make generally available to its security holders
and to the Representatives as soon as practicable an earnings statement
covering a period of at least twelve months beginning with the first
fiscal quarter of the Company occurring after the effective date of the
Registration Statement, which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder;
(h) so long as the Shares are outstanding, to furnish to
the Representatives copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange;
(i) for a period of 90 days after the date of the
Prospectus (the "Lock-Up Period") not to (i) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
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any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock or (ii) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the
Common Stock, whether any such 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 without the prior written consent of
the Representatives, other than the Shares to be sold by the Company
hereunder and any options granted or to be granted shares of Common
Stock of the Company issued upon the exercise of options granted under
the Company's Amended and Restated 1997 Equity Compensation Plan and
the Amended, Restated 1998 Employee Director and Consultant Stock Plan
and any other stock option plan maintained by the Company.
Notwithstanding the foregoing, the Company may issue shares of its
Common Stock during the Lock-Up Period in connection with acquisitions,
strategic alliances or joint ventures ("Excepted Transactions");
provided, however, that: (i) the Company shall give X.X. Xxxxxx
Securities Inc. 5 days prior written notice of any such issuance
describing the Excepted Transaction in reasonable detail and stating
the number of shares of Common Stock proposed to be issued in the
Excepted Transaction, (ii) all Common Stock issued in connection with
the Excepted Transaction shall remain subject to the lock-up
restrictions of this paragraph 5(A)(i) for the remainder of the Lock-up
Period, (iii) prior to any such issuance of Common Stock, each person
that is to acquire any such Common Stock shall sign a lock-up agreement
in form and substance reasonably acceptable to X.X. Xxxxxx Securities
Inc. covering all such Securities for the remainder of the Lock-up
Period and (iv) no such issuance shall be made unless and until the
requirements and conditions in the foregoing clauses (i), (ii) and
(iii) have been complied with and satisfied;
(j) to use the net proceeds received by the Company from
the sale of the Shares by the Company pursuant to this Agreement in the
manner specified in the Prospectus under caption "Use of Proceeds";
(k) to use its best efforts to list for quotation the
Shares on the National Association of Securities Dealers Automated
Quotations National Market (the "Nasdaq National Market"); and
(l) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
reregistration, transfer, execution and delivery of the Shares, (ii)
incident to the preparation, printing and filing under the Securities
Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all
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exhibits, amendments and supplements thereto), (iii) incurred in
connection with the registration or qualification of the Shares under
the laws of such jurisdictions as the Representatives may designate
(including fees of counsel for the Underwriters and its disbursements),
(iv) in connection with the listing of the Shares on the Nasdaq
National Market, (v) related to the filing with, and clearance of the
offering by, the National Association of Securities Dealers, Inc., (vi)
in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and the furnishing to the Underwriters
and dealers of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided, (vii) any expenses
incurred by the Company in connection with a "road show" presentation
to potential investors, (viii) the cost of preparing stock certificates
and (ix) the cost and charges of any transfer agent and any registrar.
(B) The Representatives represent and agree that (i) they
have not offered or sold and, prior to the expiry of the period of six months
from the Closing Date, will not offer or sell, any Shares to persons in the
United Kingdom except persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public within the meaning of
the Public Offers of Securities Regulation 1995, (ii) they have complied and
will comply with all applicable provisions of the Financial Services Act of 1986
with respect to anything done by them in relation to the Common Stock in, form
or otherwise involving the United Kingdom and (iii) they have only issued or
passed on, and will only issue and pass on, in the United Kingdom any document
received by them in connection with the offering of the Common Stock to a person
who is of a kind described in Article 11(3) of the Financial Services Xxx 0000
(Investment Advertisement) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
6. The several obligations of the Underwriters hereunder
to purchase the Shares on the Closing Date or the Additional Closing Date, as
the case may be, are subject to the performance by the Company of their
respective obligations hereunder and to the following additional conditions:
(a) the Registration Statement shall have become
effective (or if a post-effective amendment is required to be filed
under the Securities Act, such post-effective amendment shall have
become effective) not later than 5:00 P.M., New York City time, on the
date hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b)
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within the applicable time period prescribed for such filing by the
rules and regulations under the Securities Act and in accordance with
Section 5(a) hereof; and all requests for additional information shall
have been complied with to the satisfaction of the Representatives;
(b) the representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date or
the Additional Closing Date, as the case may be, as if made on and as
of the Closing Date or the Additional Closing Date, as the case may be,
and the Company shall have complied with all agreements and all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date or the Additional Closing Date, as the case
may be;
(c) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date or the Additional Closing Date,
as the case may be, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any downgrading, (ii) any
intended or potential downgrading or (iii) any review or possible
change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any Material Adverse Change, or any development
involving a prospective Material Adverse Change, otherwise than as set
forth or contemplated in the Prospectus, the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares on
the Closing Date or the Additional Closing Date, as the case may be, on
the terms and in the manner contemplated in the Prospectus; and neither
the Company nor any of its subsidiaries has sustained since the date of
the latest audited financial statements included in the Prospectus any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus;
(e) the Representatives shall have received on and as of
the Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of the Company, with specific
knowledge about the Company's financial matters, satisfactory to the
Representatives to the effect set forth in subsections (a) through (d)
(with respect to the respective representations, warranties, agreements
and conditions of the Company) of this Section and to the further
effect that there has not occurred
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any Material Adverse Change, or any development involving a prospective
Material Adverse Change from that set forth or contemplated in the
Registration Statement;
(f) Baker, Donelson, Bearman & Xxxxxxxx, special counsel
for the Company, shall have furnished to the Representatives their
written opinion, dated the Closing Date or the Additional Closing Date,
as the case may be, in form and substance satisfactory to the
Representatives, to the effect that:
(i) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus;
(ii) the Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have
a Material Adverse Effect;
(iii) each of the Company's subsidiaries has been
duly incorporated or organized and is validly existing as a
corporation under the laws of its jurisdiction of
incorporation or organization with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Prospectus and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification,
other than where the failure to be so qualified and in good
standing would not have a Material Adverse Effect; and all of
the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except, in the case of foreign
subsidiaries, for directors' qualifying shares and except as
otherwise set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iv) other than as set forth or contemplated in
the Prospectus, there are no legal or governmental
investigations, actions, suits or proceedings pending or, to
the best of such counsel's knowledge, threatened against or
affecting the Company or any of its subsidiaries or any of
their respective properties or to which the Company or any of
its subsidiaries is or may be a party or to which any property
of the Company or its subsidiaries is or may be the subject
which, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a
17
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Material Adverse Effect; to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others; and such
counsel does not know of any statutes, regulations, contracts
or other documents that are required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(v) this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(vii) the shares of capital stock of the Company
outstanding prior to the issuance of the Shares to be sold by
the Company hereunder have been duly authorized and are
validly issued, fully paid and non-assessable;
(viii) the Shares to be issued and sold by the
Company hereunder have been duly authorized, and when
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, will be validly issued,
fully paid and non-assessable and the issuance of such Shares
is not subject to any preemptive or similar rights;
(ix) the Common Stock conforms in all material
respects as to legal matters to the description thereof
contained in the Registration Statement and the Prospectus
under the heading "Description of Capital Stock;"
(x) such counsel is of the opinion that the
Registration Statement and the Prospectus and any amendments
and supplements thereto (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and believes that
(other than the financial statements and related schedules
therein, as to which such counsel need express no belief) the
Registration Statement and the prospectus included therein at
the time the Registration Statement became effective did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
that the Prospectus, as amended or supplemented, if
applicable, does not contain any untrue statement of a
material fact or 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;
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(xi) neither the Company nor any of its
subsidiaries is, or with the giving of notice or lapse of time
or both would be, in violation of or in default under, its
certificate or articles of incorporation or by-laws or, to
such counsel's knowledge, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which it or any of them or any
of their respective properties is bound, except for violations
and defaults which individually and in the aggregate are not
material to the Company and its subsidiaries taken as a whole;
the issue and sale of the Shares being delivered on the
Closing Date or the Additional Closing Date, as the case may
be, to be sold by the Company hereunder, and the performance
by the Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will any such action result in any violation of
the provisions of the certificate or articles of incorporation
or the by-laws of the Company or, to such counsel's knowledge,
any applicable law or statute or any order, rule or regulation
of any court or governmental agency or body having
jurisdiction over the Company, its subsidiaries or any of
their respective properties;
(xii) no consent, approval, authorization, order,
license, registration or qualification of or with any court or
governmental agency or body is required for the issuance by
the Company of the Shares to be sold by it hereunder, the
consummation by the Company of the other transactions
contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Shares
by the Underwriters;
(xiii) the Company is not and, after giving effect
to the offering and sale of the Shares, will not be an
"investment company" or entity "controlled" by an "investment
company", as such terms are defined in the Investment Company
Act;
(xiv) to such counsel's knowledge, each of the
Company and its subsidiaries owns, possesses or has obtained
all licenses, permits, certificates,
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consents, orders, approvals and other authorizations from, and
has made all declarations and filings with, all federal,
state, local and other governmental authorities (including
foreign regulatory agencies), all self-regulatory
organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as
conducted as of the date hereof, and neither the Company nor
any such subsidiary has received any actual notice of any
proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or
other authorization, except as described in the Registration
Statement and the Prospectus; and, to such counsel's
knowledge, each of the Company and its subsidiaries is in
compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date of the
Prospectus;
(xv) to such counsel's knowledge, the Company and
its subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all
personal property owned by them, in each case free and clear
of all liens, encumbrances and defects except such as are
described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and, to such
counsel's knowledge, any real property and buildings held
under lease by the Company and its subsidiaries are held by
them under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings
by the Company or its subsidiaries; and
(xvi) to such counsel's knowledge, each of the
Company and its subsidiaries is in compliance with all
Environmental Laws, except, in each case, where noncompliance,
individually or in the aggregate, would not have a Material
Adverse Effect; there are no legal or governmental proceedings
pending or, to the knowledge of such counsel, threatened
against or affecting the Company or any of its subsidiaries
under any Environmental Law which, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect;
(xvii) all holders of securities of the Company
having rights to the registration of shares of Common Stock,
or other securities, because of the filing of the Registration
Statement by the Company have waived such rights or such
rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration
Statement; and
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(xviii) the Registration Statement has been declared
effective under Securities Act and, to such counsel's
knowledge, no stop order proceedings with respect thereto are
pending before or threatened by the Commission under the
Securities Act.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States, the State of Tennessee and Delaware General Corporation
Law, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to Underwriters' counsel) of
other counsel reasonably acceptable to the Underwriters' counsel,
familiar with the applicable laws; (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. The opinion of
such counsel for the Company shall state that the opinion of any such
other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered
in subparagraphs (vi), (ix) and (x) above counsel may state their
opinion and belief is based upon their participation in the preparation
of the Registration Statement and the Prospectus and any amendment or
supplement thereto and review and discussion of the contents thereof
but is without independent check or verification except as specified.
The opinion of Baker, Donelson, Bearman & Xxxxxxxx described
above shall be rendered to the Underwriters at the request of the
Company and shall so state therein;
(g) Banner & Wittcoff, special intellectual property
counsel for the Company, shall have furnished to the Representatives
their written opinion, dated the Closing Date or additional Closing
Date, as the case may be, in form and substance satisfactory to the
Representatives, to the effect that the Company and each of its
subsidiaries owns, is licensed to use or otherwise possesses adequate
rights to use the Intellectual Property reasonably necessary to carry
on the business conducted by it, except to the extent that the failure
to own, be licensed to use or otherwise possess adequate rights to use
such Intellectual Property would not have a Material Adverse Effect;
except as set forth in the Prospectus, the Company has not received any
notice of infringement of or conflict with, and to the best of the such
counsel's knowledge, there is no infringement of or conflict with,
asserted rights of others with respect to the Intellectual Property;
the discoveries, inventions, products or processes of the Company
referred to in the Registration Statement and the Prospectus do not, to
the best of such counsel's knowledge, infringe or conflict with any
right or patent of any third party, or
21
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any discovery, patent product or process which is the subject of a
patent application filed by any third party; to the knowledge of such
counsel, the Company and each of its subsidiaries owns, is licensed to
use or otherwise possesses adequate rights to use patents and patent
rights reasonably necessary to carry on the business conducted by it;
(h) on the effective date of the Registration Statement
and the effective date of the most recently filed post-effective
amendment to the Registration Statement and also on the Closing Date or
Additional Closing Date, as the case may be, PricewaterhouseCoopers
shall have furnished to you letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
(i) the Representatives shall have received on and as of
the Closing Date or Additional Closing Date, as the case may be, an
opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Underwriters, with
respect to the due authorization and valid issuance of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(j) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for listing on the Nasdaq National Market, subject to official notice
of issuance;
(k) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company shall have furnished to the
Representatives such further certificates and documents as the
Representatives shall reasonably request; and
(l) the Lock-Up Agreements shall be in full force and
effect on the Closing Date or Additional Closing Date, as the case may
be.
7. The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be
22
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stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to the preceding
paragraphs of this Section 7, such person (the "Indemnified Person") shall
promptly notify the person or persons against whom such indemnity may be sought
(each an "Indemnifying Person") in writing, and such Indemnifying Persons, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
and not the Indemnifying Persons unless (i) the Indemnifying Persons and the
Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Persons has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both an
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that no Indemnifying Person
shall, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters, each affiliate of any Underwriter which
assists such Underwriter in the distribution of the Shares and such control
persons of Underwriters shall be designated in writing by X.X. Xxxxxx Securities
Inc. and any such separate firm for the Company, its directors, its officers who
sign the Registration Statement and such control persons of the Company shall be
designated in writing by the Company. No Indemnifying Person shall be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for
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the plaintiff, each Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, such Indemnifying Person agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first three
paragraphs of this Section 7 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and the commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Shares. The relative fault of the Company
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or 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
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the Underwriters were treated as one entity for such purposes) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section ll(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 7 are several in proportion to the respective number of Shares set forth
opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any other person controlling
the Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this
Agreement (or the obligations of the several Underwriters with respect to the
Option Shares) may be terminated in the absolute discretion of the
Representatives, by notice given to the Company, if after the execution and
delivery of this Agreement and prior to the Closing Date (or, in the case of the
Option Shares, prior to the Additional Closing Date) (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange or the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the
25
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Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered at
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later
of (x) execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they have agreed to purchase hereunder on such date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives, the Company
for the purchase of such Shares are not made within 36 hours after such default,
this Agreement (or the obligations of the several Underwriters to purchase the
Option Shares, as the case may be) shall terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date (or, in the case
of the Option Shares, the Additional Closing Date), but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. If this Agreement shall be terminated by the
Underwriters, or any of them, because of any failure or refusal on the part of
the Company to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason any of the Company
26
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shall be unable to perform its obligations under this Agreement or any condition
of the Underwriters' obligations cannot be fulfilled, the Company agrees to
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and expenses of its counsel) reasonably incurred by the
Underwriter in connection with this Agreement or the offering contemplated
hereunder.
11. This Agreement shall inure to the benefit of and be
binding upon the Company and the Underwriters, each affiliate of any Underwriter
which assists such Underwriter in the distribution of the Shares, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Shares from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken
by the Representatives jointly or by X.X. Xxxxxx Securities Inc. alone on behalf
of the Underwriters, and any such action taken by the Representatives jointly or
by X.X. Xxxxxx Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (telefax: (000) 000-0000); Attention: Syndicate Department. Notices
to the Company shall be given to them at 0000 Xxxxxxxx Xxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxx (telefax: (000) 000-0000); Attention: President, with a copy to Baker,
Donelson, Bearman & Xxxxxxxx, 000 Xxxxxxxx Xx., Xxxxx 0000, Xxxxxxxxxxx,
Xxxxxxxxx 00000 (telefax: (000) 000-0000); Attention: X. Xxxxxx Durham, Jr.
13. This Agreement may be signed in counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
27
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If the foregoing is in accordance with your understanding,
please sign and return four counterparts hereof.
Very truly yours,
INTERNET PICTURES CORPORATION
By:
------------------------------
Name:
Title:
Accepted the date first written above:
X.X. XXXXXX SECURITIES INC.
CHASE SECURITIES INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: X.X. XXXXXX SECURITIES INC.
By:
-------------------------------------
Name:
Title:
28
SCHEDULE I
Number of
Underwritten Shares
Underwriter To Be Purchased
----------- -------------------
X.X. Xxxxxx Securities Inc............................
Chase Securities Inc..................................
FleetBoston Xxxxxxxxx Xxxxxxxx Inc....................
Xxxx Xxxxxxxx Incorporated............................
Prudential Securities Incorporated.................... -------------------
Total [ ]
29
EXHIBIT 1
LOCK-UP AGREEMENT
, 2000
X.X. XXXXXX SECURITIES INC.
CHASE SECURITIES INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several
Underwriters named in Schedule I to
the Underwriting Agreement referred to below
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Internet Pictures Corporation - Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of
the several Underwriters, propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Internet Pictures Corporation, a Delaware
corporation (the "Company"), providing for the public offering (the "Public
Offering") by the several Underwriters named in Schedule I to the Underwriting
Agreement (the "Underwriters"), of common stock, par value $.001 per share (the
"Common Stock"), of the Company. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase
and make the Public Offering of the Common Stock, and for other good and
valuable consideration receipt of which is hereby acknowledged, the undersigned
hereby agrees that, without the prior written consent of X.X. Xxxxxx Securities
Inc. on behalf of the Underwriters, the undersigned will not, during the period
ending 90 days after the date of the prospectus relating to the Public Offering
(the "Prospectus"), (1) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock of the Company, or any securities of the Company which are substantially
similar to the Common Stock, or any securities convertible into or exercisable
or
30
-2-
exchangeable for Common Stock (including, but not limited to, Common Stock
which may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
securities which may be issued upon exercise of a stock option or warrant) or
(2) enter into any swap, option, future, forward or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Common Stock or any securities of the Company which are substantially
similar to the Common Stock, including, but not limited to, any security
convertible into or exercisable or exchangeable for Common Stock, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. In
addition, the undersigned agrees that, without the prior written consent of X.X.
Xxxxxx Securities Inc. on behalf of the Underwriters, it will not, during the
period ending 90 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any substantially similar securities of the Company, including but not
limited to, any security convertible into or exercisable or exchangeable for
Common Stock.
In furtherance of the foregoing, the Company and any duly
appointed transfer agent for the registration or transfer of the securities
described herein are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-up Agreement.
All authority herein conferred or agreed to be conferred and any obligations of
the undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting
Agreement does not become effective, on or prior to June 30, 2000, or if the
Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Common Stock to be sold thereunder, the undersigned shall be released
from all obligations under this Lock-Up Agreement.
The undersigned understands that the Underwriters are entering
into the Underwriting Agreement and proceeding with the Public Offering in
reliance upon this Lock-Up Agreement.
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-3-
THIS LOCK-UP AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
Very truly yours,
--------------------------------
By:
-----------------------------(1)
Name:
Title:
Accepted as of the date
first set forth above:
X.X. XXXXXX SECURITIES INC.
CHASE SECURITIES INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf of themselves and
the several Underwriters to be named in
Schedule I to the Underwriting Agreement
By: X.X. XXXXXX SECURITIES INC.
By:
------------------------------------------------
Name:
Title:
----------------------------------
(1) To be completed by an entity other than an individual.
