EXHIBIT 1.1
DRAFT -- JULY 14, 1999
Xxxxx.xxx Inc.
_________Shares *
Common Stock
($0.01 par value)
Underwriting Agreement
New York, New York
August ___, 1999
Xxxxxxx Xxxxx Xxxxxx Inc.
XX Xxxxx Securities Corporation
U.S. Bancorp Xxxxx Xxxxxxx Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxx.xxx, a corporation organized under the laws of Delaware (the
"Company"), proposes to sell to the several underwriters named in Schedule I
hereto (the "Underwriters"), for whom you (the "Representatives") are acting as
representatives, _________ shares of Common Stock, $0.01 par value ("Common
Stock") of the Company (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The Company also proposes to
grant to the Underwriters an option to purchase up to __________ additional
shares of Common Stock to cover over-allotments (the "Option Securities"; the
Option Securities, together with the Underwritten Securities, being hereinafter
called the "Securities"). To the extent there are no additional Underwriters
listed on Schedule I other than you, the term Representatives as used herein
shall mean you, as Underwriters, and the terms Representatives and Underwriters
shall mean either the singular or plural as the context requires. Certain terms
used herein are defined in Section 17 hereof.
As part of the offering contemplated by this Agreement, Xxxxxxx Xxxxx
Xxxxxx ("Xxxxxxx Xxxxx Xxxxxx") has agreed to reserve out of the Shares set
forth opposite its name on the Schedule I to this Agreement, up to
__________shares for sale to the Company's employees, officers, and directors
and other parties associated with the Company (collectively, "Participants"), as
set forth in the Prospectus under the heading "Underwriting" (the "Directed
Share Program"). The Shares to be sold by Xxxxxxx Xxxxx Barney pursuant to the
Directed Share Program (the "Directed Shares") will be sold by Xxxxxxx Xxxxx
Xxxxxx
--------
* Plus an option to purchase from the Company up to ___________ additional
Securities to cover over-allotments.
pursuant to this Agreement at the public offering price. Any Directed Shares not
orally confirmed for purchase by any Participants by the end of the Business Day
on which this Agreement is executed will be offered to the public by Xxxxxxx
Xxxxx Barney as set forth in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to, and agrees with, each Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-80627) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission either (1) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein)
and on any date on which Option Securities are purchased, if such date
is not the Closing Date (a "settlement date"), the Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement
did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and,
on the Effective Date, the Prospectus, if not filed pursuant to Rule
424(b), will not, and on the date of any filing pursuant to Rule 424(b)
and on the Closing Date and any settlement date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in
2
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration
Statement, or the Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the
Prospectus (or any supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification;
(d) All of the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances;
(e) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable; the outstanding shares of capital stock of the Company
were issued pursuant to valid exemptions from the registration
requirements of Section 5 of the Act and in accordance with applicable
state securities laws; the Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities are duly listed, and admitted and
authorized for trading, subject to official notice of issuance, on the
Nasdaq National Market; the certificates for the Securities are in
valid and sufficient form; the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
subscribe for the Securities; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
3
(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the caption "Business -- Strategic Relationships" fairly
summarize the matters therein described;
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms;
(h) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(i) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus;
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, (i) the charter or by-laws of the Company or any of its
subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its
or their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties;
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement;
(l) The consolidated historical financial statements and
financial statement schedule of the Company and its consolidated
subsidiaries and the consolidated historical financial statements of
Tunes Network, Inc. included in the Prospectus and the Registration
Statement present fairly in all material respects the financial
condition,
4
results of operations and cash flows of the Company and Tunes
Network, Inc., respectively as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted
therein). The selected historical and pro forma financial data set
forth under the captions "Selected Consolidated Financial Data" and
"Selected Pro Forma Consolidated Financial Data" in the Prospectus
and Registration Statement fairly present, on the basis stated in
the Prospectus and the Registration Statement, the information
included therein. The pro forma financial statements included in the
Prospectus and the Registration Statement include assumptions that
provide a reasonable basis for presenting the significant effects
directly attributable to the transactions and events described
therein, the related pro forma adjustments give appropriate effect
to those assumptions, and the pro forma adjustments reflect the
proper application of those adjustments to the historical financial
statement amounts in the pro forma financial statements included in
the Prospectus and the Registration Statement. The pro forma
financial statements included in the Prospectus and the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the Act
and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto);
(n) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted;
(o) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body,
5
arbitrator or other authority having jurisdiction over the Company or
such subsidiary or any of its properties, as applicable;
(p) Ernst & Young LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and of
Tunes Network, Inc. and delivered their report with respect to the
audited consolidated financial statements and schedules included in the
Prospectus, are independent public accountants with respect to the
Company and Tunes Network, Inc., respectively, within the meaning of
the Act and the applicable published rules and regulations thereunder;
(q) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the
Company or sale by the Company of the Securities;
(r) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto);
(s) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, that could have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto);
(t) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of
6
insurance and fidelity or surety bonds insuring the Company or any
of its subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the
Company and its subsidiaries are in compliance with the terms of
such policies and instruments in all material respects; and there
are no claims by the Company or any of its subsidiaries under any
such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause;
neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company
nor any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would
not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto);
(u) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such subsidiary's capital
stock, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such
subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by
the Prospectus;
(v) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the
Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto);
(w) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded
accountability for assets is
7
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(x) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities;
(y) The Company and its subsidiaries are (i) 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 wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto). Neither the Company nor any
of the subsidiaries has been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended;
(z) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the
business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws, or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of
such review, the Company has reasonably concluded that such
associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business;
(aa) Each of the Company and its subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security
Act of 1974 ("ERISA") and the regulations and
8
published interpretations thereunder with respect to each "plan"
(as defined in Section 3(3) of ERISA and such regulations and
published interpretations) in which employees of the Company and its
subsidiaries are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published
interpretations. The Company and its subsidiaries have not incurred
any unpaid liability to the Pension Benefit Guaranty Corporation
(other than for the payment of premiums in the ordinary course) or to
any such plan under Title IV of ERISA;
(bb) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, domain names, copyrights, licenses,
inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the "Intellectual Property") necessary for the
conduct of the Company's business as now conducted or as proposed in
the Prospectus to be conducted. Except as set forth in the Prospectus
under the captions "Risk Factors -- We depend on the music industry and
others for content and we may not be able to attract visitors to our
Web sites if we cannot obtain that content," "-- We do not have
licenses for a substantial amount of music and associated artwork
available on our Web sites, which may subject us to infringement
damages and significant license fees or loss of access to that
content" and "-- We will be required to pay additional statutory
royalties for the broadcast of music on the Web which may significantly
increase our operating costs," (a) there are no rights of third parties
to any such Intellectual Property; (b) there is no material
infringement by third parties of any such Intellectual Property; (c)
there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's rights in
or to any such Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (d) there
is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (e) there is no
pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other
fact which would form a reasonable basis for any such claim; (f) there
is no U.S. patent or published U.S. patent application which contains
claims that dominate or may dominate any Intellectual Property
described in the Prospectus as being owned by or licensed to the
Company or that interferes with the issued or pending claims of any
such Intellectual Property; and (g) there is no prior act of which the
Company is aware that may render any U.S. patent held by the Company
invalid or any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark Office;
9
(cc) The statements contained in the Prospectus under the
captions "Risk Factors -- We depend on the music industry and others
for content and we may not be able to attract visitors to our Web sites
if we cannot obtain that content," "-- We do not have licenses for a
substantial amount of music and associated artwork available on our Web
sites, which may subject us to infringement damages and significant
license fees or loss of access to that content," "-- We will be
required to pay additional statutory royalties for the broadcast of
music on the Web which may significantly increase our operating costs,"
"-- We may be unable to protect our trademarks and copyrights which
could result in the loss of our rights or increased costs" and
"Business -- Intellectual Property," insofar as such statements
summarize legal matters, agreements, documents or proceedings discussed
therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings; and
(dd) The Company and its subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that
the computer hardware and software used by them may be unable to
recognize and properly execute date-sensitive functions involving
certain dates prior to and any dates after December 31, 1999 (the "Year
2000 Problem"), and has determined that such risk will be remedied on a
timely basis without material expense and will not have a material
adverse effect upon the financial condition and results of operations
of the Company and its subsidiaries, taken as a whole; and the Company
believes, after due inquiry, that each supplier, vendor, customer or
financial service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year
2000 Problem, except to the extent that a failure to remedy by any such
supplier, vendor, customer or financial service organization would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole. The Company is in compliance with the Commission's
staff legal bulletin No. 5 dated January 12, 1998 related to Year 2000
compliance, as amended to date.
(ee) The Company has not offered, or caused the Underwriters
to offer, Shares to any person pursuant to the Directed Share Program
with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or
type of business with the Company, or (ii) a trade journalist or
publication to write or publish favorable information about the Company
or its products.
Furthermore, the Company represents and warrants to Xxxxxxx Xxxxx
Xxxxxx that (i) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and that (ii) no authorization, approval, consent, license, order, registration
or
10
qualification of or with any government, governmental instrumentality or court,
other than such as have been obtained, is necessary under the securities laws
and regulations of foreign jurisdictions in which the Directed shares are
offered outside the United States.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. PURCHASE AND SALE.
(a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company agrees
to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of
$_____ per share, the amount of the Underwritten Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby
grants an option to the several Underwriters to purchase, severally and
not jointly, up to __________ Option Securities at the same purchase
price per share as the Underwriters shall pay for the Underwritten
Securities. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Securities by the Underwriters. Said
option may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of the Prospectus
upon written or telegraphic notice by the Representatives to the
Company setting forth the number of shares of the Option Securities as
to which the several Underwriters are exercising the option and the
settlement date. The number of Option Securities to be purchased by
each Underwriter shall be the same percentage of the total number of
shares of the Option Securities to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten
Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on August ___,
1999, or at such time on such later date not more than three Business Days after
the foregoing date as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment
11
by the several Underwriters through the Representatives of the purchase price
thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. Delivery of the
Underwritten Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. AGREEMENTS. The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph
of Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Representatives of such timely filing.
The Company will promptly advise the Representatives (1) when the
Registration Statement, if not effective at the Execution Time, shall
have become effective, (2) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement
shall have been filed with the Commission, (3) when, prior to
12
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (4)
of any request by the Commission or its staff for any amendment of
the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any
additional information, (5) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that purpose
and (6) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the institution or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any
such qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (1) notify the Representatives of any such event, (2)
prepare and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance; and (3)
supply any supplemented Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto)
and, so long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate and will maintain
such qualifications in effect so long as required for the distribution
of the Securities; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take
13
any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in
any jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
Xxxxxxx Xxxxx Barney Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any other shares of Common
Stock or any securities convertible into, or exercisable, or
exchangeable for, shares of Common Stock; or publicly announce an
intention to effect any such transaction, for a period of 180 days
after the date of the Underwriting Agreement, PROVIDED, HOWEVER, that
the Company may issue and sell Common Stock pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the Execution Time and the Company may
issue Common Stock issuable upon the conversion of securities or the
exercise of warrants outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum
and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (v) the
registration of the Securities under the Exchange Act and the listing
of the Securities
14
on the Nasdaq National Market; (vi) any registration or
qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii)
any filings required to be made with the National Association of
Securities Dealers, Inc. (including filing fees and the reasonable
fees and expenses of counsel for the Underwriters relating to such
filings); (viii) the transportation and other expenses incurred by
or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities; (ix) the
fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the
Company; and (x) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
(i) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. Xxxxxxx Xxxxx Xxxxxx will
notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer restrictions upon such
period of time.
(j) The Company agrees to pay all fees and disbursements of
counsel incurred by the Underwriters in connection with the Directed
Share Program and stamp duties, similar taxes or duties or other taxes,
if any, incurred by the Underwriters in connection with the Directed
Share Program.
Furthermore, the Company covenants with Xxxxxxx Xxxxx Barney that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time on the date of
determination of the public offering price, if such determination
15
occurred at or prior to 3:00 PM New York City time on such date or (ii)
9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have requested and caused Xxxxxxxx &
Xxxxxx, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, to the effect that:
(i) each of the Company, Tunes Acquisition Corp. and
JAMtv Interactive Services Corporation (individually a
"Subsidiary" and collectively the "Subsidiaries") has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it
is chartered or organized, with full corporate power and
authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Prospectus, all outstanding shares
of capital stock of the Subsidiaries are owned by the Company
either directly or through wholly owned subsidiaries free and
clear of any perfected security interest and, to the knowledge
of such counsel, after due inquiry, any other security
interest, claim, lien or encumbrance;
(iii) the Company's authorized equity capitalization
is as set forth in the Prospectus; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Prospectus; the outstanding shares of
capital stock of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable;
the outstanding shares of capital stock of the Company were
issued pursuant to valid exemptions from the registration
requirements of Section 5 of the Act and in accordance with
applicable state securities laws; the Securities have been
duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the Securities are duly
listed, and admitted and authorized for trading, subject to
official notice
16
of issuance, on the Nasdaq Stock Market; the certificates
for the Securities are in valid and sufficient form; the
holders of outstanding shares of capital stock of the Company
are not entitled to preemptive or other rights to subscribe
for the Securities; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for,
shares of capital stock of or ownership interests in the
Company are outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or
its or their property of a character required to be disclosed
in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise,
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, which is not described or
filed as required; and the statements in the Prospectus under
the caption "Business -- Strategic Relationships" fairly
summarize the matters therein described;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements and other financial
information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules
thereunder; and such counsel has no reason to believe that on
the Effective Date or at the Execution Time the Registration
Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date and on the
Closing Date included or includes any untrue statement of a
material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in
each case, other than the financial statements and other
financial information contained therein, as to which such
counsel need express no opinion);
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
17
(vii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be, an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing
with or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and such
other approvals (specified in such opinion) as have been
obtained;
(ix) neither the issue and sale of the Securities,
nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant
to, (i) the charter or by-laws of the Company or its
subsidiaries, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiaries is a party
or bound or to which its or their property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or its subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over
the Company or its subsidiaries or any of its or their
properties;
(x) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement; and
(xi) the statements contained in the Prospectus under
the captions "Risk Factors -- We depend on the music industry
and others for content and we may not be able to attract
visitors to our Web sites if we cannot obtain that content,"
"-- We do not have licenses for a substantial amount of music
and associated artwork available on our Web sites, which may
subject us to infringement damages and significant license
fees or loss of access to that content," "-- We will be
required to pay additional statutory royalties for the
broadcast of music on the Web which may significantly increase
our operating costs," "-- We may be unable to protect our
trademarks and copyrights which could result in the loss of
our rights or increased costs" and "Business -- Intellectual
Property," insofar
18
as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and
fair summaries of such legal matters, agreements, documents
or proceedings.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of Delaware or the Federal laws of the United States, to
the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at the Closing Date.
(c) The Representatives shall have received from Xxxxx, Xxxxx
& Xxxxx, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to
the issuance and sale of the Securities, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse effect
on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business,
19
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(e) The Company shall have requested and caused Ernst & Young
LLP to have furnished to the Representatives, at the Execution Time and
at the Closing Date, letters, dated respectively as of the Execution
Time and as of the Closing Date, in form and substance satisfactory
to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the applicable rules and
regulations adopted by the Commission thereunder and that they have
performed a review of the unaudited interim financial information of
the Company for the six-month period ended June 30, 1999, and as at
June 30, 1999, in accordance with Statement on Auditing Standards No.
71 and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included in the Registration
Statement and the Prospectus and reported on by them comply as
to form in all material respects with the applicable
accounting requirements of the Act and the related rules and
regulations adopted by the Commission;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; their limited review, in accordance with
standards established under Statement on Auditing Standards
No. 71, of the unaudited interim financial information for the
six-month period ended June 30, 1999, and as at June 30, 1999;
carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, the board of directors and the committees of the
board of directors of the Company and the Subsidiaries; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events
subsequent to December 31, 1998, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements
included in the Registration Statement and the
Prospectus do not comply as to form in all material
respects with applicable accounting requirements of
the Act and with the related rules and regulations
adopted by the Commission with respect to
registration statements on Form S-1; and said
unaudited financial statements are not in conformity
with generally accepted accounting principles applied
on a basis substantially consistent with that
20
of the audited financial statements included in the
Registration Statement and the Prospectus;
(2) with respect to the period subsequent to
June 30, 1999, there were any changes, at a specified
date not more than five days prior to the date of the
letter, in the long-term obligations of the Company
and its subsidiaries or capital stock of the Company
or increases in the stockholders' deficit of the
Company or decreases in working capital of the
Company and its subsidiaries as compared with the
amounts shown on the June 30, 1999 consolidated
balance sheet included in the Registration
Statement and the Prospectus, or for the period from
July 1, 1999 to such specified date there were any
decreases, as compared with the corresponding period
in the preceding quarter, in advertising revenue or
total revenue or any increases in loss from
operations or in total or per share amounts of net
loss of the Company and its subsidiaries, except in
all instances for changes or decreases set forth in
such letter, in which case the letter shall be
accompanied by an explanation by the Company as to
the significance thereof unless said explanation is
not deemed necessary by the Representatives;
(3) the information included in the
Registration Statement and Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data),
Item 302 (Supplementary Financial Information) and
Item 402 (Executive Compensation) is not in
conformity with the applicable disclosure
requirements of Regulation S-K;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus, including the information set
forth under the captions "Prospectus Summary -- Summary
Financial Data," "Risk Factors," "Capitalization," "Dilution,"
Selected Consolidated Financial Data," "Selected Pro Forma
Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Business," "Management -- Executive Compensation," "Certain
Transactions" and "Principal Stockholders" in the Prospectus,
agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation;
and
(iv) on the basis of a reading of the unaudited pro
forma financial statements included in the Registration
Statement and the Prospectus (the "pro
21
forma financial statements"); carrying out certain specified
procedures; inquiries of certain officials of the Company and
Tunes Network, Inc. who have responsibility for financial and
accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro
forma financial statements do not comply as to form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
The Company shall have received from Ernst & Young LLP (and
furnished to the Representatives) a report with respect to a review of
unaudited interim financial information of the Company for the six
quarters ended June 30, 1999, in accordance with Statement on Auditing
Standards No. 71.
The Company shall have received from Ernst & Young LLP (and
furnished to the Representatives) an examination report with respect to
Management's Discussion and Analysis of Financial Condition and Results
of Operations of the Company for the period from inception (July 2,
1996) to December 31, 1996 and the two fiscal years ending December 31,
1998, and a review report with respect to Management's Discussion and
Analysis of Financial Condition and Results of Operations of the
Company for the six-month period ending June 30, 1999 and the
corresponding period for the prior fiscal year, each in accordance with
Statement on Standards for Attestation Engagements No. 8 issued by the
Auditing Standards Board of the American Institute of Certified Public
Accountants, and such examination report shall be included in the
Registration Statement.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change,
increase or decrease specified in the letter or letters referred to in
paragraph (e) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the
Company and its subsidiaries taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto) the effect of which, in any case referred to in clause (i) or
(ii) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated
by the
22
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(g) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
(h) The Securities shall have been listed and admitted and
authorized for trading on the Nasdaq National Market, and satisfactory
evidence of such actions shall have been provided to the
Representatives.
(i) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each officer and director of the Company and from such
other security holders as requested by the Representatives, addressed
to the Representatives.
(j) Prior to the Closing Time, the outstanding preferred stock
of the Company shall have been converted into shares of Common Stock,
and the amended and restated stockholders agreement among the Company
and the stockholders named therein shall have terminated in accordance
with its terms, and satisfactory evidence of such actions shall have
been provided to the Representatives.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Xxxxx, Xxxxx & Xxxxx, counsel for the Underwriters,
at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Xxxxxxx Xxxxx Barney on demand for all out-of-pocket expenses
(including reasonable fees and
23
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the registration statement for the registration of the Securities as
originally filed or in any amendment thereof, or in any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon 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, and agrees
to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) The Company agrees to indemnify and hold harmless Xxxxxxx
Xxxxx Xxxxxx and each person, if any, who controls Xxxxxxx Xxxxx Barney
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act ("Xxxxxxx Xxxxx Xxxxxx Entities"), from
and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action
or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the prospectus wrapper
material prepared by or with the consent of the Company for
distribution in foreign jurisdictions in connection with the Directed
Share Program attached to the Prospectus or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein, when considered in conjunction with the Prospectus
or any applicable preliminary prospectus, not misleading; (ii) caused
by the failure of any Participant to pay for and accept delivery of the
shares
24
which immediately following the effective of the Registration
Statement, were subject to a properly confirmed agreement to purchase;
or (iii) related to, arising out of, or in connection with the Directed
Share Program, provided that, the Company shall not be responsible
under this subparagraph (iii) for any losses, claim, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith or gross negligence of
Xxxxxxx Xxxxx Xxxxxx Entities.
(c) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, and each person who
controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives specifically
for inclusion in the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges that the
statements set forth in the last paragraph of the cover page regarding
delivery of the Securities and, under the caption "Underwriting," (i)
the list of Underwriters and their respective participation in the sale
of the Securities, (ii) the sentences related to concessions and
reallowances and (iii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in any Preliminary
Prospectus and the Prospectus constitute the only information furnished
in writing by or on behalf of the several Underwriters for inclusion in
any Preliminary Prospectus or the Prospectus.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
in writing of the commencement thereof; but the failure so to notify
the indemnifying party (i) will not relieve it from liability under
paragraph (a), (b) or (c) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a), (b) or (c) above. The
indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification
is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained
by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ
25
separate counsel (including local counsel), and the indemnifying
party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both
the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim,
action, suit or proceeding. Notwithstanding anything contained
herein to the contrary, if indemnity may be sought pursuant to
Section 8(b) hereof in respect of such action or proceeding, then in
addition to such separate firm for the indemnified parties, the
indemnifying party shall be liable for the reasonable fees and
expenses of not more than one separate firm (in addition to any
local counsel) for Xxxxxxx Xxxxx Barney for the defense of any
losses, claims, damages and liabilities arising out of the Directed
Share Program, and all persons, if any, who control Xxxxxxx Xxxxx
Barney within the meaning of either Section 15 of the Act or Section
20 of the Exchange Act.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company and the
Underwriters severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and by the Underwriters on the other from the offering of the
Securities; PROVIDED, HOWEVER, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating
to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters severally shall contribute in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of
26
the Company on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the
total net proceeds from the offering (before deducting expenses)
received by it, and benefits received by the Underwriters shall be
deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the
Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information provided by the Company
on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (e), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section
8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the
Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (e).
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; PROVIDED, HOWEVER, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in
27
order that the required changes in the Registration Statement and the Prospectus
or in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on such
Exchange or the Nasdaq National Market, (ii) a banking moratorium shall have
been declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx Barney
Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
the Company's General Counsel, Xxxx X. Xxxxxxxxxx (fax no.: (312) 654-____), and
confirmed to it at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000,
attention General Counsel.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
28
14. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. HEADINGS. The section headings used herein are for convenience only
and shall not affect the construction hereof.
17. DEFINITIONS. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
29
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
[Intentionally left blank]
30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
XXXXX.XXX INC.
By:_________________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXX XXXXX BARNEY INC.
XX XXXXX SECURITIES CORPORATION
U.S. BANCORP XXXXX XXXXXXX INC.
By: Xxxxxxx Xxxxx Xxxxxx Inc.
By:________________________________
Name:
Title:
For themselves and the other several Underwriters named in Schedule I to the
foregoing Agreement.
31
SCHEDULE I
----------
-------------------------------------------------------------------------------------------
NUMBER OF
UNDERWRITTEN
SECURITIES TO BE
UNDERWRITER PURCHASED
-------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx Barney Inc............................................
-------------------------------------------------------------------------------------------
XX Xxxxx Securities Corporation.....................................
-------------------------------------------------------------------------------------------
U.S. Bancorp Xxxxx Xxxxxxx Inc......................................
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Total...........................................................
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
S-1
EXHIBIT A
[Letterhead of officer, director or major shareholder of Xxxxx.xxx Inc.]
PUBLIC OFFERING OF COMMON STOCK
August ___, 1999
Xxxxxxx Xxxxx Xxxxxx Inc.
ASG Cowen Securities Corporation
U.S. Bancorp Xxxxx Xxxxxxx Inc.
As Representative of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Xxxxx.xxx Inc., a
Delaware corporation (the "Company"), and each of you as representatives of a
group of Underwriters named therein, relating to an underwritten public offering
of Common Stock, $0.01 par value (the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of the Underwriting Agreement, other than shares of Common Stock disposed
of as bona fide gifts approved by Xxxxxxx Xxxxx Barney Inc.
A-1
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
A-2
