[_______]Shares
L90, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
[________], 1999
XX XXXXX SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
WIT CAPITAL CORPORATION
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. L90, Inc., a Delaware corporation (the "Company"),
proposes to sell, pursuant to the terms of this Agreement, to the several
underwriters named in Schedule A hereto (the "Underwriters," or, each, an
"Underwriter"), an aggregate of [________] shares of Common Stock, $0.001 par
value per share (the "Common Stock") of the Company. The aggregate of [________]
shares so proposed to be sold is hereinafter referred to as the "Firm Stock".
The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 3(d) hereof, up to an additional [________]
shares of Common Stock (the "Optional Stock"). The Firm Stock and the Optional
Stock are hereinafter collectively referred to as the "Stock". XX Xxxxx
Securities Corporation ("XX Xxxxx"), Banc of America Securities LLC, CIBC World
Markets Corp. and Wit Capital Corporation are acting as representatives of the
several Underwriters and in such capacity are hereinafter referred to as the
"Representatives."
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-
[_____]) (the "Initial Registration Statement") in respect of the Stock has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations (the "Rules and Regulations") of
the Commission thereunder, which became effective upon filing, no other document
with respect
to the Initial Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the Rules and Regulations, is hereinafter
called a "Preliminary Prospectus"); the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act and deemed by virtue of Rule 430A under the Securities Act to
be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statements"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Securities Act, is
hereinafter called the "Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. No order
preventing or suspending the use of any Preliminary Prospectus has been issued
by the Commission.
(b) The Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any amendments or supplements
to either of the Registration Statements or the Prospectus, when they become
effective or are filed with the Commission, as the case may be, will conform) in
all material respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective date (as
to the Registration Statements and any amendment thereto) and as of the
applicable filing date (as to 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; provided, however, that the foregoing representations
and warranties shall not apply to information contained in or omitted from the
Registration Statements or the Prospectus or any such amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company [and each of its subsidiaries (as defined in
Section 14 hereof)] have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to so qualify or have such power or authority would not
have, singularly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect").
[The Company owns or controls, directly or indirectly, only the following
corporations, associations or other entities: [_______________].]
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(d) This Agreement has been duly authorized executed and
delivered by the Company.
(e) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights and will conform to the description thereof contained in the Prospectus.
(f) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description thereof contained in the Prospectus.
(g) All the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and, except to the extent set forth in the
Prospectus, are owned by the Company directly or indirectly through one or more
wholly-owned subsidiaries, free and clear of any claim, lien, encumbrance,
security interest, restriction upon voting or transfer or any other claim of any
third party.
(h) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation 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 such actions result in any
violation of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets.
(i) Except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(j) Xxxxxx Xxxxxxxx LLP, who have expressed their opinions on
the audited financial statements and related schedules included in the
Registration Statements and the Prospectus are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(k) The financial statements, together with the related notes
and schedules, included in the Prospectus and in each Registration Statement
fairly present the financial position
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and the results of operations and changes in financial position of the Company
and its consolidated subsidiaries at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the Prospectus.
(l) 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; and, since such
date, there has not 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, in or affecting the
business, general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus.
(m) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the Company
to perform its obligations under this Agreement; and to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(n) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any respect, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) is in violation in
any respect of any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject except any violations or
defaults which, singularly or in the aggregate, would not have a Material
Adverse Effect.
(o) The Company and each of its subsidiaries possess all
licenses, certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or foreign
regulatory agencies or bodies which are necessary or desirable for the ownership
of their respective properties or the conduct of their respective businesses as
described in the Prospectus except where any failures to possess or make the
same, singularly or in the aggregate, would not have a Material Adverse Effect,
and the Company has not received notification of any revocation or modification
of any such license, authorization or permit and has no reason to believe that
any such license, certificate, authorization or permit will not be renewed.
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(p) Neither the Company nor any of its subsidiaries is or, after
giving effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus will become, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended and the
rules and regulations of the Commission thereunder.
(q) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any action designed
or intended to stabilize or manipulate the price of any security of the Company,
or which caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any security of the Company.
(r) The Company and its subsidiaries own or possess the right
to use all patents, trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by them for the conduct of
their respective businesses, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company and
its subsidiaries with respect to the foregoing. The Company's business as now
conducted and as proposed to be conducted does not and will not infringe or
conflict with any patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses or other intellectual property or franchise right of any
person. Except as described in the Prospectus, no claim has been made against
the Company alleging the infringement by the Company of any patent, trademark,
service xxxx, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person.
(s) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or otherwise
use, all items of real or personal property which are material to the business
of the Company and its subsidiaries taken as a whole, in each case free and
clear of all liens, encumbrances, claims and defects that may result in a
Material Adverse Effect.
(t) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the best of the Company's knowledge, is
imminent which might be expected to have a Material Adverse Effect. The Company
is not aware that any key employee or significant group of employees of the
Company or any subsidiary plans to terminate employment with the Company or any
such subsidiary.
(u) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the "Code"))
or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan which could
have a Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the Code; the
Company has not incurred and does not expect to incur liability under Title IV
of ERISA with respect to the termination of, or
5
withdrawal from, any "pension plan"; and each "pension plan" (as defined in
ERISA) for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
(v) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company or any of its subsidiaries (or, to the best of the Company's
knowledge, any other entity for whose acts or omissions the Company or any of
its subsidiaries is or may be liable) upon any of the property now or previously
owned or leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any ordinance,
rule (including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability, except for any violation or liability which
would not have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no disposal, discharge,
emission or other release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company or any of its subsidiaries have
knowledge, except for any such disposal, discharge, emission, or other release
of any kind which would not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.
(w) The Company and its subsidiaries each (i) have filed with
all necessary federal, state and foreign income and franchise tax returns, (ii)
have paid all federal sate, local and foreign taxes due and payable for which it
is liable, and (iii) do not have any tax deficiency or claims outstanding or
assessed or, to the best of the Company's knowledge, proposed against it which
could reasonably be expected to have a Material Adverse Effect.
(x) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
(y) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (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
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The minute books of the Company and each of its subsidiaries
have been made available to the Underwriters and counsel for the Underwriters,
and such books (i) contain a complete summary of all meetings and actions of the
directors and shareholders of the Company and each of its subsidiaries since the
time of its respective incorporation through the
6
date of the latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes.
(aa) There is no franchise, lease, contract, agreement or
document required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the Registration
Statements which is not described or filed therein as required; and all
descriptions of any such franchises, leases, contracts, agreements or documents
contained in the Registration Statements are accurate and complete descriptions
of such documents in all material respects.
(bb) 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 to be
described in the Prospectus and which is not so described.
(cc) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statements or otherwise, except for persons
and entities who have expressly waived such right or who have been given proper
notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right.
(dd) Neither the Company nor any of its subsidiaries own any
"margin securities" as that term is defined in Regulations G and U of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit" within the
meanings of Regulation G, T, U or X of the Federal Reserve Board.
(ee) Neither the Company nor any of its subsidiaries is a party
to any contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering and
sale of the Stock.
(ff) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(gg) None of the Company or any of its subsidiaries does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Florida Statutes Section 517.075.
(hh) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which the
business or operations of the Company or any of its subsidiaries
7
will be affected by the Year 2000 Problem. As a result of such review, the
Company has no reason to believe, and does not believe, that the Year 2000
Problem will have a Material Adverse Effect. 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.
(ii) The Stock has been approved for listing subject to notice of
issuance on the NASDAQ Stock Market's National Market.
3. Purchase, Sale and Delivery of Offered Securities.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company that number of shares of Firm Stock (rounded up or down, as
determined by XX Xxxxx in its discretion, in order to avoid fractions) obtained
by multiplying [________] shares of Firm Stock by a fraction the numerator of
which is the number of shares of Firm Stock set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the total
number of shares of Firm Stock.
(b) The purchase price per share to be paid by the Underwriters
to the Company for the Stock will be $[_____] per share (the "Purchase Price").
(c) The Company will deliver the Firm Stock to the
Representatives for the respective accounts of the several Underwriters in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York time, on the second full business day preceding
the First Closing Date (as defined below) against payment of the aggregate
Purchase Price therefor by wire transfer to an account at a bank acceptable to
XX Xxxxx, payable to the order of the Company at the offices of XX Xxxxx,
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 10:00 A.M., New York time, on [________],
1999, in accordance with Rule 15c6-1 of the Exchange Act. The time and date of
such payment and delivery are herein referred to as the "First Closing Date".
The First Closing Date and the location of delivery of, and the form of payment
for, the Firm Stock may be varied by agreement between the Company and XX Xxxxx.
The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters in New York, New
York at least twenty-four hours prior to the First Closing Date.
(d) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Stock as contemplated by the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Stock. The price per share to be paid for the Optional
8
Stock shall be the Purchase Price. The Company agrees to sell to the
Underwriters the number of shares of Optional Stock specified in the written
notice by XX Xxxxx described below and the Underwriters agree, severally and not
jointly, to purchase such shares of Optional Stock. Such shares of Optional
Stock shall be purchased from the Company for the account of each Underwriter in
the same proportion as the number of shares of Firm Stock set forth opposite
such Underwriter's name bears to the total number of shares of Firm Stock
(subject to adjustment by XX Xxxxx to eliminate fractions). The option granted
hereby may be exercised as to all or any part of the Optional Stock at any time,
and from time to time, not more than thirty (30) days subsequent to the date of
this Agreement. No Optional Stock shall be sold and delivered unless the Firm
Stock previously has been, or simultaneously is, sold and delivered. The right
to purchase the Optional Stock or any portion thereof may be surrendered and
terminated at any time upon notice by XX Xxxxx to the Company. The option
granted hereby may be exercised by written notice being given to the Company by
XX Xxxxx setting forth the number of shares of the Optional Stock to be
purchased by the Underwriters and the date and time for delivery of and payment
for the Optional Stock. Each date and time for delivery of and payment for the
Optional Stock (which may be the First Closing Date, but not earlier) is herein
called the "Option Closing Date" and shall in no event be earlier than two (2)
business days nor later than five (5) business days after written notice is
given. The Option Closing Date and the First Closing Date are herein called the
"Closing Dates". The Company will deliver the Optional Stock to the Underwriters
(in the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company given at or prior to 12:00 Noon, New York time, on the second full
business day preceding the Option Closing Date against payment of the aggregate
Purchase Price therefor in federal (same day) funds by certified or official
bank check or checks or wire transfer to an account at a bank acceptable to XX
Xxxxx payable to the order of the Company. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The Company shall
make the certificates for the Optional Stock available to the Representatives
for examination on behalf of the Underwriters in New York, New York not later
than 10:00 A.M., New York Time, on the business day preceding the Option Closing
Date. The Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by agreement between the Company
and XX Xxxxx.
(e) The several Underwriters propose to offer the Stock for sale
upon the terms and conditions set forth in the Prospectus.
4. Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration
Statement, if necessary, in a form approved by the Representatives and file such
Rule 462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representatives and file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the
second business day following the execution and delivery of this Agreement; make
no further amendment or any supplement to the Registration Statements or to the
Prospectus to which the Representatives shall reasonably object by notice to the
Company after a reasonable
9
period to review; advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to either Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Representatives with copies
thereof; advise the Representatives, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statements or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, use promptly its best efforts to obtain its
withdrawal.
(b) If at any time prior to the expiration of nine months after
the effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered any event occurs as a result
of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Securities Act, the Company will
promptly notify the Representatives thereof and upon their request will prepare
an amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance. The Company will furnish without charge to
each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of such amended or
supplemented Prospectus; and in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the effective date
of the Initial Registration Statement, the Company upon the request of the
Representatives and at the expense of such Underwriter will prepare promptly an
amended or supplemented Prospectus as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Securities Act.
(c) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed therewith.
(d) To deliver promptly to the Representatives in New York City
such number of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statements as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits), (ii) each Preliminary Prospectus, (iii) the Prospectus (not later
than 10:00 A.M., New York time, of the business day following the execution and
delivery of this Agreement) and any amended or supplemented Prospectus (not
later than 10:00 A.M., New York City time, on the business day following the
date of such amendment or supplement).
(e) To make generally available to its shareholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as
10
defined in Rule 158(c) under the Securities Act), an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158).
(f) The Company will promptly take from time to time such actions as
the Representatives may reasonably request to qualify the Stock for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may designate and to continue such qualifications in effect for
so long as required for the distribution of the Stock ; provided that the
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the Company and its subsidiaries shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or to file a
general consent to service of process in any jurisdiction.
(g) During the period of five years from the date hereof, the
Company will deliver to the Representatives and, upon request, to each of the
other Underwriters, (i) as soon as they are available, copies of all reports or
other communications furnished to shareholders and (i) as soon as they are
available, copies of any reports and financial statements furnished or filed
with the Commission pursuant to the Exchange Act or any national securities
exchange or automatic quotation system on which the Stock is listed or quoted.
(h) The Company will not directly or indirectly offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of any shares
of Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days from the date of the Prospectus
without the prior written consent of XX Xxxxx other than the Company's sale of
the Stock hereunder and the issuance of shares pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights; the Company will cause each officer, director and
shareholder listed in Schedule B to furnish to the Representatives, prior to the
First Closing Date, a letter, substantially in the form of Exhibit I hereto,
pursuant to which each such person shall agree not to directly or indirectly
offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of
any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock for a period of 180 days from the date of the
Prospectus, without the prior written consent of XX Xxxxx.
(i) The Company will supply the Representatives with copies of
all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the Securities
Act.
(j) Prior to each of the Closing Dates the Company will furnish
to the Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements appearing
in the Registration Statement and the Prospectus.
(k) Prior to each of the Closing Dates, the Company will not
issue any press release or other communication directly or indirectly or hold
any press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
11
and consistent with the past practices of the Company and of which the
Representatives are notified), without the prior written consent of the
Representatives, unless in the judgment of the Company and its counsel, and
after notification to the Representatives, such press release or communication
is required by law.
(l) In connection with the offering of the Stock, until XX Xxxxx
shall have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Stock, or attempt to induce
any person to purchase any Stock; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the Stock.
(m) The Company will not take any action prior to the Option
Closing Date which would require the Prospectus to be amended or supplemented
pursuant to Section 4(b) hereof.
(n) The Company will apply the net proceeds from the sale of the
Stock as set forth in the Prospectus under the heading "Use of Proceeds".
5. Payment of Expenses. The Company agrees with the Underwriter to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Stock and any taxes payable in that connection; (b) the costs
incident to the Registration of the Stock under the Securities Act; (c) the
costs incident to the preparation, printing and distribution of the Registration
Statement, Preliminary Prospectus, Prospectus any amendments and exhibits
thereto, and the costs of printing, reproducing and distributing the "Agreement
Among Underwriters" between the Representatives and the Underwriters, the Master
Selected Dealers' Agreement, the Underwriters' Questionnaire and this Agreement
by mail, telex or other means of communications; (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the National Association of Securities
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(f) hereof and of preparing, printing and distributing Blue
Sky Memoranda and Legal Investment Surveys (including related fees and expenses
of counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Stock; and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company's counsel
and the Company's independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 9 hereof, the Underwriters shall pay
their own costs and expenses, including the fees and expenses of their counsel,
any transfer taxes on the Stock which they may sell and the expenses of
advertising any offering of the Stock made by the Underwriters.
6. Conditions of Underwriters' Obligations. The respective obligations of
the several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions
12
hereof, to the performance by the Company of their obligations hereunder, and to
each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of either the
Registration Statements shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission, and any
request for additional information on the part of the Commission (to be included
in the Registration Statements or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives. The Rule
462(b) Registration Statement, if any, and the Prospectus shall have been timely
filed with the Commission in accordance with Section 4(a) hereof.
(b) None of the Underwriters shall have discovered and disclosed
to the Company on or prior to the Closing Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters, is
material or omits to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of this Agreement, the Stock, the
Registration Statement and the Prospectus and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
(d) Paul, Hastings, Xxxxxxxx & Xxxxxx LLP shall have furnished to
the Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
i. The Company and each of its subsidiaries have been
duly incorporated and are validly existing as
corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly
qualified to do business and a re in good standing as
foreign corporations in each jurisdiction in which
their respective ownership or lease of property or
the conduct of their respective businesses requires
such qualification, and have all power and authority
necessary to own or hold their respective properties
and to conduct the businesses in which they are
engaged, except where the failure to so qualify or
have such power or authority would not have,
singularly or in the aggregate, a Material Adverse
Effect.
ii. The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares
of capital stock of the Company, including the Stock
being delivered on the Closing
13
Date, have been duly and validly authorized and
issued, are fully paid and non-assessable and conform
to the description thereof contained in the
Prospectus.
iii. All the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized
and validly issued, are fully paid and nonassessable
and, except to the extent set forth in the
Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien,
encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third
party.
iv. There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the
Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such
counsel.
v. This Agreement has been duly authorized, executed
and delivered by the Company.
vi. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result
in a breach or violation 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
after reasonable investigation 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 properties or assets of the Company
or any of its subsidiaries is subject, nor will such
actions result in any violation of the Charter or by-
laws of the Company or of any of its subsidiaries or
any statute or any order, rule or regulation of any
court or governmental agency or body or court having
jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets.
vii. Except for the registration of the Stock under the
Securities Act and such consents, approvals,
authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable
state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or
filing or registration with, any such court or
governmental agency or body is required for the
execution, delivery and performance of this Agreement
by the Company and the consummation of the
transactions contemplated hereby.
14
viii. The statements in the Prospectus under the heading
"Related Party Transactions - Founder Transactions",
"Description of Capital Stock - Anti-Takeover Effects
of Certain Provisions of Delaware Law and L90's
Certificate of Incorporation and Bylaws", "Shares
Eligible for Future Sale", "Certain U.S. Tax
Consequences to Non-U.S. Holders" and
[_______________] to the extent that they constitute
summaries of matters of law or regulation, legal
conclusions or descriptions of contractual terms,
have been reviewed by such counsel and fairly
summarize the matters described therein in all
material respects.
ix. The description in the Registration Statement and
Prospectus of statutes, legal or governmental
proceedings and contracts and other documents are
accurate in all material respects; and to the best of
such counsel's knowledge, there are no statutes,
legal or governmental proceedings, contracts or other
documents of a character required to be described in
the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement which
are not described or filed as required.
x. To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or
of which any property or asset of the Company or any
of its subsidiaries is the subject which, singularly
or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, might have a
Material Adverse Effect or would prevent or adversely
affect the ability of the Company to perform its
obligations under this Agreement; and, to the best of
such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental
authorities or threatened by others.
xi. The Registration Statement was declared effective
under the Securities Act as of the date and time
specified in such opinion, the Rule 462(b)
Registration Statement, if any, was filed with the
Commission on the date specified therein, the
Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission.
xii. The Registration Statement, as of its effective date
and the Prospectus, as of its date, and any further
amendments or
15
supplements thereto, as of their respective dates,
made by the Company prior to the Closing Date (other
than the financial statements and other financial
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 Rules and Regulations.
xiii. No person or entity has the right to require
registration of shares of Common Stock or other
securities of the Company because of the filing or
effectiveness of the Registration Statements or
otherwise, except for persons and entities who have
expressly waived such right or who have been given
proper notice and have failed to exercise such right
within the time or times required under the terms and
conditions of such right.
xiv. Neither the Company nor any of its subsidiaries is
an "investment company" within the meaning of the
Investment Company Act and the rules and regulations
of the Commission thereunder.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that such counsel
has acted as counsel to the Company in connection with the preparation of the
Registration Statements and based on such counsel's examination of the
Registration Statements and such counsel's investigations made in connection
with the preparation of the Registration Statements and "conferences with
certain officers and employees of and with auditors for and counsel to the
Company", such counsel has no reason to believe that the Registration
Statements, as of the respective effective dates, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that the Prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data contained in the
Registration Statement or the Prospectus. The foregoing opinion and statement
may be qualified by a statement to the effect that such counsel has not
independently verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and takes no
responsibility therefor except to the extent set forth in the opinion described
in clauses (viii) and (ix) above.
(e) The Representatives shall have received from Xxxxxxx, Phleger
& Xxxxxxxx LLP, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Underwriters may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for enabling them to pass upon such matters.
16
(f) At the time of the execution of this Agreement, the
Representatives shall have received from Xxxxxx Xxxxxxxx LLP a letter, addressed
to the Underwriters and dated such date, in form and substance satisfactory to
the Representatives (i) confirming that they are independent certified public
accountants with respect to the Company and its subsidiaries within the meaning
of the Securities Act and the Rules and Regulations and (ii) stating the
conclusions and findings of such firm with respect to the financial statements
and certain financial information contained or incorporated by reference in the
Prospectus.
(g) On the Closing Date, the Representatives shall have received
a letter (the "bring-down letter") from Xxxxxx Xxxxxxxx LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the bring-
down letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in the
Prospectus as of a date not more than three business days prior to the date of
the bring-down letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by its letter delivered
to the Representatives concurrently with the execution of this Agreement
pursuant to Section 6(g) hereof.
(h) The Company shall have furnished to the Representatives a
certificate, dated the Closing Date, of its Chairman of the Board, its President
or a Vice President and its chief financial officer stating that (i) such
officers have carefully examined the Registration Statements and the Prospectus
and, in their opinion, the Registration Statements as of their respective
effective dates and the Prospectus, as of each such effective date, did not
include any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) since the effective date of the Initial
Registration Statement no event has occurred which should have been set forth in
a supplement or amendment to the Registration Statements or the Prospectus,
(iii) to the best of their knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the Company in this
Agreement are true and correct and the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, and (iv) subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the financial position or results of operation of the Company
and its subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries taken as a
whole, except as set forth in the Prospectus.
(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any 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 (ii) since such date 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 change, or any development involving a
prospective change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the
17
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Stock on the terms and
in the manner contemplated in the Prospectus.
(j) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Stock; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale
of the Stock.
(k) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an announcement
with positive implications of a possible upgrading), its rating of any of the
Company's debt securities.
(l) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
(m) The National Market System shall have approved the Stock for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.
(n) XX Xxxxx shall have received the written agreements,
substantially in the form of Exhibit I hereto, of the officers, directors and
shareholders of the Company listed in Schedule C to this Agreement.
All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriters.
7. Indemnification and Contribution.
18
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers, employees, representatives and agents and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act (collectively the "Underwriter Indemnified Parties" and , each an
"Underwriter Indemnified Party") against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which that Underwriter
Indemnified Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Prospectus, either of the Registration
Statements or the Prospectus or in any amendment or supplement thereto, (ii) the
omission or alleged omission to state in any Preliminary Prospectus, either of
the Registration Statements or the Prospectus or in any amendment or supplement
thereto a material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by any Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above, (provided that the Company shall not be liable in the case of any
matter covered by this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such act or failure to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct) and shall reimburse each Underwriter
Indemnified Party promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
the Preliminary Prospectus, either of the Registration Statements or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for use therein,
which information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 16 hereof) or (ii) an untrue statement,
alleged untrue statement, omission or alleged omission made in the Preliminary
Prospectus, either of the Registration Statements or the Prospectus or any such
amendment or supplement, if a copy of the Final Prospectus was not furnished to
the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act, and if the Final Prospectus
would have cured the defect giving rise to the loss, liability, claim or damage.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any rights
or remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company its officers, employees, representatives and
agents, each of its directors and each person, if any, who controls the Company
within the meaning of the Securities Act (collectively the "Company Indemnified
Parties" and each a "Company Indemnified Party") against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, to
19
which the Company Indemnified Parties may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Prospectus, either of
the Registration Statements or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company through
the Representatives by or on behalf of that Underwriter specifically for use
therein, and shall reimburse the Company Indemnified Parties for any legal or
other expenses reasonably incurred by such parties in connection with
investigating or preparing to defend or defending against or appearing as third
party witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided that the parties hereto hereby
agree that such written information provided by the Underwriters consists solely
of the Underwriter's Information. This indemnity agreement is not exclusive and
will be in addition to any liability which the Underwriters might otherwise have
and shall not limit any rights or remedies which may otherwise be available at
law or in equity to the Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been materially prejudiced by such failure; and, provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 7.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall
20
not have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties, which firm shall be designated in writing by XX Xxxxx, if
the indemnified parties under this Section 7 consist of any Underwriter
Indemnified Party, or by the Company if the indemnified parties under this
Section 7 consist of any Company Indemnified Parties. Each indemnified party, as
a condition of the indemnity agreements contained in Sections 7(a) and 7(b),
shall use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. Subject to the provisions of Section 7(e)
below, no indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If at any time an indemnified party shall have requested that
an indemnifying party reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7(a) or 7(b) then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Stock, or 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 with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
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 with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Stock purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the
21
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission; provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of the
Underwriters for use in any Preliminary Prospectus, either of the Registration
Statements or the Prospectus consists solely of the Underwriter's Information.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(e) were to be 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 into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7(e) shall be
deemed to include, for purposes of this Section 7(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(e), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public were offered to the public less
the amount of any damages which such Underwriter has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(e) are several in proportion to their respective underwriting
obligations and not joint.
8. Termination. The obligations of the Underwriters hereunder may be
terminated by XX Xxxxx, in its absolute discretion by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 6(j), 6(k) or 6(l)
have occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
9. Reimbursement of Underwriters' Expenses. If (a) this Agreement shall
have been terminated pursuant to Sections 8 or 10, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason permitted under
this Agreement, or (c) the Underwriters shall decline to purchase the Stock for
any reason permitted under this Agreement the Company shall reimburse the
Underwriters for the fees and expenses of their counsel and for such other out-
of-pocket expenses as shall have been reasonably incurred by them in connection
with this Agreement and the proposed purchase of the Stock, and upon demand the
Company shall pay the full amount thereof to the XX Xxxxx. Notwithstanding any
provision contained herein to the contrary, if this Agreement is terminated
pursuant to Section 10 by reason of the default of one or more Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.
10. Substitution of Underwriters.
(a) If any Underwriter or Underwriters shall default in its or
their obligations to purchase shares of Stock hereunder and the aggregate number
of shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of
22
the total number of shares underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
(b) If the remaining Underwriters or substituted Underwriters are
required hereby or agree to take up all or part of the shares of Stock of a
defaulting Underwriter or Underwriters as provided in this Section 10, (i) the
Company shall have the right to postpone the Closing Dates for a period of not
more than five (5) full business days in order that the Company may effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary, and (ii) the
respective numbers of shares to be purchased by the remaining Underwriters or
substituted Underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company or the other
Underwriters for damages occasioned by its default hereunder. Any termination of
this Agreement pursuant to this Section 10 shall be without liability on the
part of any non-defaulting Underwriter or the Company, except expenses to be
paid or reimbursed pursuant to Sections 5 and 9 and except the provisions of
Section 7 shall not terminate and shall remain in effect.
11. Successors; Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties, and the
indemnities of the several Underwriters shall also be for the benefit of the
Company Indemnified Parties.
12. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any person controlling any of them and
shall survive delivery of and payment for the Stock.
13. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and:
23
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to XX Xxxxx Securities Corporation,
Attention: [ ] (Fax: [ ]);
(b) if to the Company shall be delivered or sent by mail, telex
or facsimile transmission to L90, Inc., Attention: [_________] (Fax: [ ]);
provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
14. Definition of Certain Terms. For purposes of this Agreement, (a)
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the
Rules and Regulations.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. Underwriters' Information. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the [_______]
paragraphs under the heading "Underwriting."
17. Authority of the Representatives. In connection with this Agreement,
you will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters.
18. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This Agreement
may be amended or modified, and the observance of any term of this Agreement may
be waived, only by a writing signed by the Company and the Representatives.
24
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[Signature page follows]
25
If the foregoing is in accordance with your understanding of the
agreement between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
L90, INC.
By:____________________________
Name:
Title:
XX XXXXX SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
WIT CAPITAL CORPORATION
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: XX XXXXX SECURITIES CORPORATION
By:______________________________
Name:
Title:
26
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
-----
XX Xxxxx Securities Corporation --------------- --------------
Total =============== ==============
SCHEDULE B
[List of stockholders subject to Section 4(h)]
Exhibit I
[Form of Lock-Up Agreement]
[Date]
XX XXXXX SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
WIT CAPITAL CORPORATION
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: L90, Inc. Shares of Common Stock
Dear Sirs:
In order to induce XX Xxxxx Securities Corporation ("XX Xxxxx"), Banc
of America Securities LLC, CIBC World Markets Corp. and Wit Capital Corporation
(together with XX Xxxxx, the "Representatives"), to enter in to a certain
underwriting agreement with L90, Inc., a Delware corporation (the "Company"),
with respect to the public offering of shares of the Company's Common Stock, par
value $0.001 per share ("Common Stock"), the undersigned hereby agrees that for
a period of 180 days following the date of the final prospectus filed by the
Company with the Securities and Exchange Commission in connection with such
public offering, the undersigned will not, without the prior written consent of
XX Xxxxx, directly or indirectly, offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares, the "Beneficially Owned
Shares")) or securities convertible into or exercisable or exchangeable in
Common Stock.
Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Agreement.
[Signatory]
By:___________________________________
Name:
Title:
