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EXHIBIT 1.1
NETWORK SOLUTIONS, INC.
3,300,000 SHARES(1)
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
September __, 0000
XXXXXXXXX & XXXXX LLC
X.X. Xxxxxx Securities Inc.
PaineWebber Incorporated
As Representatives of the several
Underwriters named in Schedule I,
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Network Solutions, Inc., a Delaware corporation (herein called
the Company), proposes to issue and sell 2,800,000 shares of its authorized but
unissued Class A Common Stock, $.001 par value (herein called the Common Stock)
and the principal stockholder of the Company, Science Applications
International Corporation (herein called the Principal Stockholder) proposes to
sell an aggregate of 500,000 shares of Common Stock (said 500,000 shares of
Common Stock together with the 2,800,000 shares of Common Stock proposed to be
sold by the Company being herein called the Underwritten Stock). The Company
and the Principal Stockholder propose to grant to the Underwriters (as
hereinafter defined) an option to purchase up to 420,000 and 75,000 additional
shares of Common Stock, respectively (herein called the Option Stock and with
the Underwritten Stock herein collectively called the Stock). The Common Stock
is more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Principal Stockholder severally hereby
confirm the agreements made with respect to the purchase of the Stock by the
several underwriters, for whom you are acting, named in Schedule I hereto
(herein collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent
and warrant that you have been authorized by each of the other Underwriters to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with
the Securities and Exchange Commission (herein called the Commission) a
registration statement on Form S-1 (No. 333-30705), including the related
preliminary prospectus, for the registration under the Securities Act of 1933,
as amended (herein called the Securities Act) of the Stock. Copies of such
registration statement and of each amendment thereto, if any, including the
related preliminary prospectus (meeting the requirements of Rule 430A of the
rules and regulations of the Commission) heretofore filed by the Company with
the Commission have been delivered to you.
The term Registration Statement as used in this agreement
shall mean such registration statement, including all exhibits and financial
statements, all information omitted therefrom in reliance upon Rule 430A and
contained in the
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(1) Plus an option to purchase from the Company up to 495,000 additional
shares to cover over-allotments.
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Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto
after the effective date of such registration statement (herein called the
Effective Date), shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended (including any Rule 462(b)
registration statement). The term Prospectus as used in this Agreement shall
mean the prospectus relating to the Stock first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from
and after the filing with the Commission of such supplement or the
effectiveness of such amendment) such prospectus as so supplemented or amended.
The term Preliminary Prospectus as used in this Agreement shall mean each
preliminary prospectus included in such registration statement prior to the
time it becomes effective.
The Registration Statement has been declared effective under
the Securities Act, and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The Company has
caused to be delivered to you copies of each Preliminary Prospectus and has
consented to the use of such copies for the purposes permitted by the
Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF EACH OF THE COMPANY
AND THE PRINCIPAL STOCKHOLDER.
(a) The Company hereby represents and warrants as
follows:
(i) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own
or lease its properties and conduct its business as described
in the Registration Statement and the Prospectus and as being
conducted, and is duly qualified as a foreign corporation and
in good standing in all jurisdictions in which the character
of the property owned or leased or the nature of the business
transacted by it makes qualification necessary (except where
the failure to be so qualified would not have a material
adverse effect on the business, properties, financial
condition, results of operations or prospects of the Company).
The Company has no subsidiaries.
(ii) Since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, there has not been any materially adverse
change in the business, properties, financial condition,
results of operations or prospects of the Company, whether or
not arising from transactions in the ordinary course of
business, other than as set forth in the Registration
Statement and the Prospectus, and since such dates, except in
the ordinary course of business, the Company has not entered
into any material transaction not referred to in the
Registration Statement and the Prospectus and since the date
of the Prospectus the Company has not declared or paid any
dividend on its capital stock.
(iii) The Registration Statement and the
Prospectus comply, and on the Closing Date (as hereinafter
defined) and any later date on which Option Stock is to be
purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the
rules and regulations of the Commission thereunder; on the
Effective Date, the Registration Statement did not contain any
untrue statement of a material fact and did not 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 did not and, on the
Closing Date and any later date on which Option Stock is to be
purchased, will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that none of the representations and
warranties in this subparagraph (iii) shall apply to
statements in, or omissions from, the Registration Statement
or the Prospectus made in reliance upon and in conformity with
information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the
Registration Statement or the Prospectus.
(iv) The Stock, when issued and sold to
the Underwriters as provided herein, will be duly and validly
issued, fully paid and nonassessable and conforms in all
material respects to the description thereof in
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the Prospectus. No further approval or authority of the
stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Stock as
contemplated herein.
(v) Prior to the Closing Date the Stock
to be issued and sold by the Company will be authorized for
listing by the Nasdaq National Market Stock Exchange upon
official notice of issuance.
(vi) 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 in all material respects to the
description thereof contained in the Prospectus.
(vii) The execution, delivery and
performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby and the
application of $10,000,000 of the proceeds from the sale of
the shares of Stock to pay the dividend to the Principal
Stockholder as contemplated by the Prospectus 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 (including, without limitation, the Cooperative
Agreement between the National Science Foundation and the
Company, dated as of January 1, 1993, as amended to date
(herein called the Cooperative Agreement)) or instrument to
which the Company is a party or by which the Company is bound
or to which any of the properties or assets of the Company is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company 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 properties or assets; and 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 Securities
Exchange Act of 1934, as amended (herein called 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.
(viii) Except as described in the
Registration Statement, there are no contracts, agreements or
understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the securities registered pursuant to the Registration
Statements or in any securities being registered pursuant to
any other registration statement filed by the Company under
the Securities Act.
(ix) Except as described in the
Prospectus, neither the Company nor the Principal Stockholder
has sold or issued any shares of Common Stock during the
six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act.
(x) The Company has not 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 material adverse
change, or any development involving a prospective material
adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or
results of operations of the Company, otherwise than as set
forth or contemplated in the Prospectus.
(xi) The financial statements (including
the related notes and supporting schedules) filed as part of
the Registration Statements or included in the Prospectus
present fairly the financial condition and results of
operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved, except as otherwise stated herein.
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(xii) Price Waterhouse LLP, who have
certified certain financial statements of the Company and
whose report appears in the Prospectus are independent public
accountants as required by the Securities Act and the rules
and regulations of the Commission thereunder during the
periods covered by the financial statements on which they
reported contained in the Prospectus.
(xiii) The Company carries, or is covered
by, insurance in such amounts and covering such risks as is
adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in
similar businesses in similar industries.
(xiv) Except as otherwise disclosed in the
Prospectus, the Company owns, or holds valid licenses for, all
trademarks, trade names and other rights to inventions,
know-how, technology, patents, copyrights, service marks,
names and logos, trade secrets, confidential information,
databases, computer applications, programs and other software
and other intellectual property (collectively, "Intellectual
Property Rights") necessary to conduct the business now
operated by it, or presently used by it, and has not received
any notice of infringement of or conflict with asserted rights
of others with respect to any Intellectual Property Rights
that, if determined adversely to the Company, would have a
material adverse effect on the business, properties, financial
condition, results of operations or prospects of the Company.
(xv) Except as described in the
Prospectus, there are no legal or governmental proceedings
pending to which the Company is a party or of which any
property or asset of the Company is the subject which, if
determined adversely to the Company, might have a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or
prospects of the Company or the transactions contemplated
hereby; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(xvi) There are no contracts or other
documents which are required to be described in the Prospectus
or filed as exhibits to either of the Registration Statements
by the Securities Act or by the rules and regulations of the
Commission thereunder which have not been described in the
Prospectus or filed as exhibits to either of the Registration
Statements.
(xvii) 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 which is not so described.
(xviii) The Company is in compliance in all
material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and
each "pension plan" 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 would cause the loss of such qualification.
(xix) The Company, or the Principal
Stockholder on its behalf, has filed all federal, state and
local income and franchise tax returns required to be filed
through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to the
Company which has had (nor does the Company have any knowledge
of any tax deficiency which, if determined adversely to the
Company, might have) a material adverse effect on the
consolidated financial position, stockholders' equity, results
of operations, business or prospects of the Company.
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(xx) The Company is not, and the conduct
of the Company's business in the manner contemplated by the
Prospectus will not cause the Company to be, (i) in violation
of its charter or by-laws or similar organizational documents,
(ii) in default in any material 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
material indenture, mortgage, deed of trust, loan agreement or
other agreement (including, without limitation, the
Cooperative Agreement) or instrument to which it is a party or
by which it is bound or to which any of its properties or
assets is subject or (iii) in violation in any material
respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its properties or assets may be
subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or
permit necessary to the ownership of its properties or assets
or to the conduct of its business. To the best of the
Company's knowledge, except as described in the Prospectus, no
other party to any material contract or agreement of the
Company (including, without limitation, the Cooperative
Agreement) is in default thereunder or is intending to
terminate such contract or agreement prior to its stated term.
(xxi) The Company is not, and after giving
effect to the transaction contemplated hereby, will not be, an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations
of the Commission thereunder.
(xxii) The transfers of the Company's
government business contemplated by the Prospectus have been
consummated as disclosed in the Prospectus, and the Company
has no liabilities not related to its commercial business
(other than liabilities for which the Principal Stockholder
has agreed to fully indemnify the Company). Each agreement
between the Company and the Principal Stockholder referred to
in the Prospectus has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms.
(b) The Principal Stockholder hereby represents and warrants
as follows:
(i) The Principal Stockholder has good
and marketable title to all the shares of Class B Common Stock
$.001 par value of the Company (herein called the Class B
Common Stock) to be converted into Stock to be sold by the
Principal Stockholder hereunder, and upon conversion of such
Class B Common Stock, will have good and marketable title to
all the shares of the Stock to be sold by the Principal
Stockholder hereunder in each case free and clear of all
liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same
hereunder and that upon the delivery of and payment for such
shares of the Stock hereunder, the several Underwriters will
receive good and marketable title thereto, free and clear of
all liens, encumbrances, equities, security interests and
claims whatsoever.
(ii) The Principal Stockholder has taken
all actions required under the Company's Certificate of
Incorporation to convert shares of Class B Common Stock into
the shares of Underwritten Stock to be delivered by the
principal Stockholder hereunder on the Closing Date and will
take such action with respect to shares of Class B Common
Stock to be converted into shares of Option Stock to be
delivered by the Principal Stockholder hereunder prior to the
date on which Option Stock is to be purchased.
(iii) The Principal Stockholder has not
taken and will not take, directly or indirectly, any action
which has constituted, or which is designed to or might
reasonably be expected to cause or result in, stabilization or
manipulation of the price of sale or resale of the Stock.
(iv) The Principal Stockholder has no
actual knowledge that the representations and warranties of
the Company contained in Section 2(a) of this Agreement are
not true and correct, is familiar with the Registration
Statement and has no knowledge of any material fact, condition
or information not disclosed in the Registration Statement
which has materially adversely affected or may materially
adversely affect the business of the Company; and the sale of
the Stock by such Principal Stockholder pursuant to this
Agreement
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is not prompted by any information concerning the Company
which is not set forth in the Registration Statement. The
information pertaining to such Principal Stockholder under the
caption "Principal and Selling Shareholder" in the Prospectus
is complete and accurate in all material respects.
(v) On the Effective Date, the
Registration Statement did not contain any untrue statement of
a material fact and did not 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 did not and, on the Closing Date and any
later date on which Option Stock is to be purchased, will not,
contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that
none of the representations and warranties in this
subparagraph (iii) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus made in
reliance upon and in conformity with information herein or
otherwise furnished in writing to the Company by or on behalf
of the Underwriters for use in the Registration Statement or
the Prospectus.
(vi) The Principal Stockholder has full
right, power and authority to enter into this Agreement; the
execution, delivery and performance of this Agreement by the
Principal Stockholder and the consummation by the Principal
Stockholder 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 Principal Stockholder is
a party or by which the Principal Stockholder is bound or to
which any of the property or assets of the Principal
Stockholder is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the
Principal Stockholder or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Principal Stockholder or the property or
assets of the Principal Stockholder; and 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 or foreign 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 Principal Stockholder and
the consummation by the Principal Stockholder of the
transactions contemplated hereby; each agreement between the
Company and the Principal Stockholder referred to in the
Prospectus has been duly executed and delivered by the
Principal Stockholder and constitutes a valid and binding
obligation of the Principal Stockholder enforceable against
the Principal Stockholder in accordance with its terms.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell 2,300,000 shares of the Underwritten Stock to the several
Underwriters and the Principal Stockholder agrees to sell 500,000 shares of the
Underwritten Stock to the several Underwriters and each of the Underwriters
agrees to purchase from the Company and the Principal Stockholder the
respective aggregate number of shares of Underwritten Stock set forth opposite
its name in Schedule I. The price at which such shares of Underwritten Stock
shall be sold by the Company and purchased by the several Underwriters shall be
$___ per share. The obligation of each Underwriter to the Company and the
Principal Stockholder shall be to purchase from the Company and the Principal
Stockholder that number of shares of the Underwritten Stock which represents
the same proportion of the total number of shares of the Underwritten Stock to
be sold by each of the Company and the Principal Stockholder pursuant to this
Agreement as the number of shares of the Underwritten Stock set forth opposite
the name of such Underwriter in Schedule I hereto represents the total number
of shares of the Underwritten Stock to be purchased by all Underwriters
pursuant to this Agreement, as adjusted by you in such manner as you deem
advisable to avoid fractional shares. In making the agreement set forth in
this Section 3(a), the Company and each of the Principal Stockholder is
contracting severally and not jointly; except as provided in paragraphs (b)
and (c) of this Section 3, the agreement of each Underwriter is to purchase
only the respective number of shares of the Underwritten Stock specified in
Schedule I.
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(b) If for any reason one or more of the Underwriters
shall fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 8 or 9 hereof) to
purchase and pay for the number of shares of the Stock agreed to be purchased
by such Underwriter or Underwriters, the Company shall immediately give notice
thereof to you, and the non-defaulting Underwriters shall have the right within
24 hours after the receipt by you of such notice to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail so to make such arrangements with respect to
all such shares and portion, the number of shares of the Stock which each
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining shares and portion which the defaulting Underwriter or Underwriters
agreed to purchase; provided, however, that the non-defaulting Underwriters
shall not be obligated to purchase the shares and portion which the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate number of such
shares of the Stock exceeds 10% of the total number of shares of the Stock
which all Underwriters agreed to purchase hereunder. If the total number of
shares of the Stock which the defaulting Underwriter or Underwriters agreed to
purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company and the Principal Stockholder shall have the
right, within 24 hours next succeeding the 24-hour period above referred to, to
make arrangements with other underwriters or purchasers satisfactory to you for
purchase of such shares and portion on the terms herein set forth. In any such
case, either you or the Company and the Principal Stockholder shall have the
right to postpone the Closing Date determined as provided in Section 5 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary changes in
the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company and the Principal Stockholder shall make arrangements within the
24-hour periods stated above for the purchase of all the shares of the Stock
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company and the Principal Stockholder to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company or the Principal Stockholder. Nothing
in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein set
forth, the Company and the Principal Stockholder grant an option to the several
Underwriters to purchase, severally and not jointly, up to 420,000 shares and
75,000 shares, respectively, of the Option Stock from the Company and the
Principal Stockholder at the same price per share as the Underwriters shall pay
for the Underwritten Stock. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the thirtieth day after the date of this Agreement upon written or
telegraphic notice by you to the Company and the Principal Stockholder setting
forth the aggregate number of shares of the Option Stock as to which the
several Underwriters are exercising the option. Delivery of certificates for
the shares of Option Stock, and payment therefor, shall be made as provided in
Section 5 hereof. The number of shares of the Option Stock to be purchased by
each Underwriter shall be the same percentage of the total number of shares of
the Option Stock to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Stock, as adjusted by you in such
manner as you deem advisable to avoid fractional shares. In the event that
said option is exercised in part, the number of shares of Option Stock to be
sold by the Company and the Principal Stockholder shall be the same percentage
of the total number of shares of the Option Stock to be sold by the Company as
is set forth above, as adjusted by you in such reasonable manner as you deem
advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the
Underwriters of the Stock to be purchased by them shall be as set forth in the
Prospectus. The Underwriters may from time to time change the public offering
price after the closing of the initial public offering and increase or decrease
the concessions and discounts to dealers as they may determine.
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(b) The information set forth in the last paragraph on
the front cover page and under "Underwriting" in the Registration Statement,
any Preliminary Prospectus and the Prospectus relating to the Stock filed by
the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and
the Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the
Underwritten Stock and the Option Stock (if the option granted by Section 3(c)
hereof shall have been exercised not later than 7:00 A.M., San Francisco time,
on the date two business days preceding the Closing Date), and payment
therefor, shall be made at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx, New York,
New York, at 10:00 a.m., New York time, on the [fourth](2) business day after
the date of this Agreement, or at such time on such other day, not later than
seven full business days after such [fourth] business day, as shall be agreed
upon in writing by the Company, the Principal Stockholder and you. The date
and hour of such delivery and payment (which may be postponed as provided in
Section 3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of Xxxxxxx Xxxxxxx &
Xxxxxxxx, New York, New York, at 10:00 a.m., New York time, on the third
business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company
shall be made to the Company or its order and payment for the Stock purchased
from the Principal Stockholder shall be made to the Principal Stockholder or
its order, in each case, by one or more certified or official bank check or
checks or wire transfer in same day funds. Such payment shall be made upon
delivery of certificates for the Stock to you for the respective accounts of
the several Underwriters against receipt therefor signed by you. Certificates
for the Stock to be delivered to you shall be registered in such name or names
and shall be in such denominations as you may request at least one business day
before the Closing Date, in the case of Underwritten Stock, and at least one
business day prior to the purchase thereof, in the case of the Option Stock.
Such certificates will be made available to the Underwriters for inspection,
checking and packaging at the offices of Lewco Securities Corporation, 0
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the business day prior to the Closing
Date or, in the case of the Option Stock, by 3:00 p.m., New York time, on the
business day preceding the date of purchase.
It is understood that you, individually and not on behalf of
the Underwriters, may (but shall not be obligated to) make payment to the
Company and the Principal Stockholders for shares to be purchased by any
Underwriter whose check shall not have been received by you on the Closing Date
or any later date on which Option Stock is purchased for the account of such
Underwriter. Any such payment by you shall not relieve such Underwriter from
any of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDER. The Company and the Principal Stockholder (with respect to
paragraph (k) only) covenant and agree as follows:
(a) The Company will (i) prepare and timely file
with the Commission under Rule 424(b) a Prospectus containing
information previously omitted at the time of effectiveness of
the Registration Statement in reliance on Rule 430A and (ii)
not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously
have been advised and furnished with a copy or to which you
shall have reasonably objected in writing or which is not in
compliance with the Securities Act or the rules and
regulations of the Commission.
--------------------
2 This assumes that the transaction will be priced after the close of
market and that T+4 will apply to the transaction. If the pricing took
place before or during market hours (which will generally not be the
case), the closing would be three business days after pricing.
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(b) The Company will promptly notify each
Underwriter in the event of (i) the request by the Commission
for amendment of the Registration Statement or for supplement
to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, (iii) the
institution or notice of intended institution of any action or
proceeding for that purpose, (iv) the receipt by the Company
of any notification with respect to the suspension of the
qualification of the Stock for sale in any jurisdiction, or
(v) the receipt by it of notice of the initiation or
threatening of any proceeding for such purpose. The Company
will make every reasonable effort to prevent the issuance of
such a stop order and, if such an order shall at any time be
issued, to obtain the withdrawal thereof at the earliest
possible moment.
(c) The Company will (i) on or before the Closing
Date, deliver to you a signed copy of the Registration
Statement as originally filed and of each amendment thereto
filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy
of each post-effective amendment, if any, to the Registration
Statement (together with, in each case, all exhibits thereto
unless previously furnished to you) and will also deliver to
you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but
without exhibits) so that one copy of each may be distributed
to each Underwriter, (ii) as promptly as possible deliver to
you and send to the several Underwriters, at such office or
offices as you may designate, as many copies of the Prospectus
as you may reasonably request, and (iii) thereafter from time
to time during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, likewise send
to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the
Prospectus and of any amended prospectus, filed by the Company
with the Commission, as you may reasonably request for the
purposes contemplated by the Securities Act.
(d) If at any time during the period in which a
prospectus is required by law to be delivered by an
Underwriter or dealer any event relating to or affecting the
Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in
the opinion of counsel for the Company or of counsel for the
Underwriters, to supplement or amend the Prospectus in order
to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a
purchaser of the Stock, the Company will forthwith prepare and
file with the Commission a supplement to the Prospectus or an
amended prospectus so that the Prospectus as so supplemented
or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such
period, the Underwriters shall propose to vary the terms of
offering thereof by reason of changes in general market
conditions or otherwise, you will advise the Company in
writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the
Underwriters such proposed variation requires that the
Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus setting forth such
variation. The Company authorizes the Underwriters and all
dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time
amended or supplemented, in connection with the sale of the
Stock in accordance with the applicable provisions of the
Securities Act and the applicable rules and regulations
thereunder for such period.
(e) Prior to the filing thereof with the
Commission, the Company will submit to you, for your
information, a copy of any post-effective amendment to the
Registration Statement and any supplement to the Prospectus or
any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as
requested by you, in the qualification of the Stock for offer
and sale under the securities or blue sky laws of such
jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered by an
Underwriter or dealer, in keeping such qualifications in good
standing under said securities or blue sky laws; provided,
however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare
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and file such statements, reports, and other documents as are
or may be required to continue such qualifications in effect
for so long a period as you may reasonably request for
distribution of the Stock.
(g) During a period of five years commencing with
the date hereof, the Company will furnish to you, and to each
Underwriter who may so request in writing, copies of all
periodic and special reports furnished to stockholders of the
Company and of all information, documents and reports filed
with the Commission.
(h) Not later than the 45th day following the end
of the fiscal quarter first occurring after the first
anniversary of the Effective Date, the Company will make
generally available to its security holders an earnings
statement in accordance with Section 11(a) of the Securities
Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and
expenses incident to the performance of its obligations under
this Agreement (including, without limitation, those costs and
expenses relating to Stock to be sold by the Principal
Stockholder (other than underwriting discounts relating to
Stock to be sold by the Principal Stockholder)), including all
costs and expenses incident to (i) the preparation, printing
and filing with the Commission and the National Association of
Securities Dealers, Inc. of the Registration Statement, any
Preliminary Prospectus and the Prospectus (but not after 9
months after the date hereof), (ii) the furnishing to the
Underwriters of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this
Section 6 to be so furnished, (iii) the printing of this
Agreement and related documents delivered to the Underwriters,
(iv) the preparation, printing and filing of all supplements
and amendments to the Prospectus referred to in paragraph (d)
of this Section 6 (but not after 9 months after the date
hereof), (v) the furnishing to you and the Underwriters of the
reports and information referred to in paragraph (g) of this
Section 6 and (vi) the printing and issuance of stock
certificates, including the transfer agent's fees. The
Principal Stockholder will pay any transfer taxes incident to
the transfer of the Stock to the Underwriters hereunder.
(j) The Company agrees to reimburse you, for the
account of the several Underwriters, for blue sky fees and
related disbursements (including counsel fees and
disbursements and cost of printing memoranda for the
Underwriters) paid by or for the account of the Underwriters
or their counsel in qualifying the Stock under state
securities or blue sky laws and in the review of the offering
by the NASD.
(k) Except for the offer, sale or grant of stock
options pursuant to the equity incentive plans of the Company
described in the Prospectus (so long as such options are not
exercisable during the 180 day period referred to below) and
except for issuances of shares of Common Stock upon exercises
of stock options outstanding on the date hereof, the Company
and the Principal Stockholder hereby agree that, without the
prior written consent of Xxxxxxxxx & Xxxxx LLC on behalf of
the Underwriters, neither the Company nor the Principal
Stockholder will, for a period of 180 days following the
commencement of the public offering of the Stock by the
Underwriters, directly or indirectly, (i) sell, offer,
contract to sell, make any short sale, pledge, sell any option
or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any shares of Common Stock,
Class B Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or
acquire Common Stock or Class B Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences or ownership of
Common Stock or Class B Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or Class B Common Stock,
in cash or otherwise. The foregoing sentence shall not apply
to the Stock to be sold to the Underwriters pursuant to this
Agreement.
(l) If at any time during the 25-day period after
the Registration Statement becomes effective any rumor,
publication or event relating to or affecting the Company
shall occur as a result of which in your opinion the market
price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith
prepare,
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consult with you concerning the substance of, and disseminate
a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such
rumor, publication or event.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Principal Stockholder, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person (including each partner or officer thereof) who controls any Underwriter
within the meaning of Section 15 of the Securities Act from and against any and
all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise, and the Company and the
Principal Stockholder, jointly and severally, agree to reimburse each such
Underwriter and controlling person for any legal or other expenses (including,
except as otherwise hereinafter provided, reasonable fees and disbursements of
counsel) incurred by the respective indemnified parties in connection with
defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding which may
be brought against, the respective indemnified parties, in each case arising
out of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the Prospectus
as part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement), or 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, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that (1) the indemnity agreements of
the Company and the Principal Stockholder contained in this paragraph (a) shall
not apply to any such losses, claims, damages, liabilities or expenses if such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of any Underwriter for use in any Preliminary
Prospectus or the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto, (2) the obligations under the
indemnity agreement of the Principal Stockholder contained in this paragraph
(a) shall not exceed the sum of $10,000,000 and the proceeds received by the
Principal Stockholder of the Stock sold by the Principal Stockholder hereunder
and (3) the indemnity agreement contained in this paragraph (a) with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Stock which is the subject thereof if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements
of the Company and the Principal Stockholder contained in this paragraph (a)
and the representations and warranties of the Company and the Principal
Stockholder contained in Section 2 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, each of its officers who signs the Registration
Statement on his own behalf or pursuant to a power of attorney, each of its
directors, the Principal Stockholder, each other Underwriter and each person
(including each partner or officer thereof) who controls the Company or any
such other Underwriter within the meaning of Section 15 of the Securities Act,
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or the common law or otherwise and
to reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact
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required to be stated therein or necessary to make the statements therein not
misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, if such
statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of such indemnifying Underwriter for use in the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto. The indemnity agreement of each Underwriter contained in
this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of
paragraphs (a) and (b) of this Section 7 agrees that, upon the service of a
summons or other initial legal process upon it in any action or suit instituted
against it or upon its receipt of written notification of the commencement of
any investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall
not relieve such indemnifying party or parties from any liability which it or
they may have to the indemnified party for contribution or otherwise than on
account of such indemnity agreement. Any indemnifying party shall be entitled
at its own expense to participate in the defense of any action, suit or
proceeding against, or investigation or inquiry of, an indemnified party. Any
indemnifying party shall be entitled, if it so elects within a reasonable time
after receipt of the Notice by giving written notice (herein called the Notice
of Defense) to the indemnified party, to assume (alone or in conjunction with
any other indemnifying party or parties) the entire defense of such action,
suit, investigation, inquiry or proceeding, in which event such defense shall
be conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or
parties shall be entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties and (ii) in any event, the indemnified party or
parties shall be entitled to have counsel chosen by such indemnified party or
parties participate in, but not conduct, the defense. If, within a reasonable
time after receipt of the Notice, an indemnifying party gives a Notice of
Defense and the counsel chosen by the indemnifying party or parties is
reasonably satisfactory to the indemnified party or parties, the indemnifying
party or parties will not be liable under paragraphs (a) through (c) of this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear
such other expenses as it or they have authorized to be incurred by the
indemnified party or parties. If, within a reasonable time after receipt of the
Notice, no Notice of Defense has been given, the indemnifying party or parties
shall be responsible for any legal or other expenses incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party
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in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Principal Stockholder on the one hand and the Underwriters on
the other hand shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Stock received by the Company and
the Principal Stockholder and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. 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 each indemnifying
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) 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 in the first sentence of this
paragraph (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof, referred
to in the first sentence of this paragraph (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigation, preparing to defend or defending against any
action or claim which is the subject of this paragraph (d). Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Stock purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this paragraph
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in paragraph (c) of this Section 7).
(e) Neither the Company nor the Principal Stockholder
will, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such Underwriter or any person who controls
such Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
8. TERMINATION. This Agreement may be terminated by you
at any time prior to the Closing Date by giving written notice to the Company
if there shall have occurred (i) the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, (ii) any
outbreak of hostilities or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
calamity, crisis or change in economic or political conditions in the financial
markets of the United States would, in the Underwriters' reasonable judgment,
make the offering or delivery of the Stock impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, The Nasdaq Stock Market, or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation by, any court, legislative
body, agency or other governmental authority, or any change or development with
respect to any existing or pending statute, regulation, rule, order, proceeding
or investigation, which in the Underwriters' reasonable opinion materially and
adversely affects or will materially or adversely affect the business or
operations of the Company, (v) declaration of a banking moratorium by either
federal or New York State authorities or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Underwriters' reasonable opinion has a material
adverse effect on the securities markets in the United States. If this
Agreement shall be terminated
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pursuant to this Section 8, there shall be no liability of the Company to the
Underwriters and no liability of the Underwriters to the Company; provided,
however, that in the event of any such termination the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company under this
Agreement, including all costs and expenses referred to in paragraphs (i) and
(j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
obligations of the several Underwriters to purchase and pay for the Stock shall
be subject to the performance by the Company and the Principal Stockholders of
all their respective obligations to be performed hereunder at or prior to the
Closing Date or any later date on which Option Stock is to be purchased, as the
case may be, and to the following further conditions:
(a) The Registration Statement shall have become
effective; and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings therefor
shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of
the Stock hereunder and the validity and form of the
certificates representing the Stock, all corporate proceedings
and other legal matters incident to the foregoing, and the
form of the Registration Statement and of the Prospectus
(except as to the financial statements contained therein),
shall have been approved at or prior to the Closing Date by
Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Underwriters.
(c) You shall have received from Pillsbury,
Madison & Sutro LLP, counsel for the Company and the Principal
Stockholder, an opinion, addressed to the Underwriters and
dated the Closing Date, covering the matters set forth in
Annex A hereto, and if Option Stock is purchased at any date
after the Closing Date, additional opinions from such counsel,
addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing
Date in such opinion remain valid as of such later date.
(d) You shall be satisfied that (i) as of the
Effective Date, the statements made in the Registration
Statement and the Prospectus were true and correct and neither
the Registration Statement nor the Prospectus omitted to state
any material fact required to be stated therein or necessary
in order to make the statements therein, respectively, not
misleading, (ii) since the Effective Date, no event has
occurred which should have been set forth in a supplement or
amendment to the Prospectus which has not been set forth in
such a supplement or amendment, (iii) since the respective
dates as of which information is given in the Registration
Statement in the form in which it originally became effective
and the Prospectus contained therein, there has not been any
material adverse change or any development involving a
prospective material adverse change in or affecting the
business, properties, financial condition or results of
operations of the Company, whether or not arising from
transactions in the ordinary course of business, and, since
such dates, except in the ordinary course of business, the
Company has not entered into any material transaction not
referred to in the Registration Statement in the form in which
it originally became effective and the Prospectus contained
therein, (iv) the Company has no material contingent
obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not any pending or
known threatened legal proceedings to which the Company is a
party or of which property of the Company is the subject which
are material and which are not disclosed in the Registration
Statement and the Prospectus, (vi) there are not any
franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement
which have not been filed as required, (vii) the
representations and warranties of the Company and the
Principal Stockholder herein are true and correct in all
material respects as of the Closing Date or any later date on
which Option Stock is to be purchased, as the case may be, and
(viii) there has not been any material change in the market
for securities in general or in political, financial or
economic conditions from those reasonably foreseeable as to
render it impracticable in your reasonable judgment to make a
public offering of the Stock, or a material adverse change in
market levels for securities in general (or those of companies
in particular) or financial or economic conditions which
render it inadvisable to proceed.
(e) You shall have received on the Closing Date
and on any later date on which Option Stock is purchased a
certificate, dated the Closing Date or such later date, as the
case may be, and signed by the
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President and the Chief Financial Officer of the Company,
stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus
contained therein and any supplements or amendments thereto,
and that the statements included in clauses (i) through (vii)
of paragraph (d) of this Section 9 are true and correct.
(f) You shall have received on the Closing Date
and on any later date on which Option Stock is purchased a
certificate, dated the Closing Date or such later date, as the
case may be, and signed by, or on behalf of, the Principal
Stockholder, stating that the representations, warranties and
agreements of the Principal Stockholder contained herein are
true and correct as of the Closing Date or such later date.
(g) You shall have received from Price Waterhouse
LLP, a letter or letters, addressed to the Underwriters and
dated the Closing Date and any later date on which Option
Stock is purchased, confirming that they are independent
public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published
rules and regulations thereunder and based upon the procedures
described in their letter delivered to you concurrently with
the execution of this Agreement (herein called the Original
Letter), but carried out to a date not more than three
business days prior to the Closing Date or such later date on
which Option Stock is purchased (i) confirming, to the extent
true, that the statements and conclusions set forth in the
Original Letter are accurate as of the Closing Date or such
later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set
forth in the Original Letter which are necessary to reflect
any changes in the facts described in the Original Letter
since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or
information. The letters shall not disclose any change, or
any development involving a prospective change, in or
affecting the business or properties of the Company which, in
your sole judgment, makes it impractical or inadvisable to
proceed with the public offering of the Stock or the purchase
of the Option Stock as contemplated by the Prospectus.
(h) You shall have received from Price Waterhouse
LLP a letter stating that their review of the Company's system
of internal accounting controls, to the extent they deemed
necessary in establishing the scope of their examination of
the Company's financial statements as at * , 19 * ,
did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(i) You shall have been furnished evidence in
usual written or telegraphic form from the appropriate
authorities of the several jurisdictions, or other evidence
satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(j) Prior to the Closing Date, the Stock to be
issued and sold by the Company shall have been duly authorized
for listing by the Nasdaq National Market upon official notice
of issuance.
(k) On or prior to the Closing Date, you shall
have received from all directors, officers, and beneficial
holders of more than 5% of the outstanding Common Stock
agreements, in form reasonably satisfactory to Xxxxxxxxx &
Xxxxx LLC, stating that without the prior written consent of
Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, such
person or entity will not, for a period of 180 days following
the commencement of the public offering of the Stock by the
Underwriters, directly or indirectly, (i) sell, offer,
contract to sell, make any short sale, pledge, sell any option
or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any shares of Common Stock or
any securities convertible into or exchangeable or exercisable
for or any rights to purchase or acquire Common Stock or (ii)
enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences or
ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise.
All the agreements, opinions, certificates and letters
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if Xxxxxxx Xxxxxxx & Xxxxxxxx,
counsel for the Underwriters, shall be satisfied that they comply in form and
scope.
16
16
In case any of the conditions specified in this Section 9
shall not be fulfilled, this Agreement may be terminated by you by giving
notice to the Company and the Principal Stockholder. Any such termination
shall be without liability of the Company to the Underwriters and without
liability of the Underwriters to the Company or the Principal Stockholder;
provided, however, that (i) in the event of such termination, the Company
agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company and the
Principal Stockholder under this Agreement, including all costs and expenses
referred to in paragraphs (i) and (j) of Section 6 hereof, and (ii) if this
Agreement is terminated by you because of any refusal, inability or failure on
the part of the Company or the Principal Stockholder to perform any agreement
herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the transactions
contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE
PRINCIPAL STOCKHOLDER. The obligation of the Company and the Principal
Stockholder to deliver the Stock shall be subject to the conditions that (a)
the Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10
shall not be fulfilled, this Agreement may be terminated by the Company and the
Principal Stockholder by giving notice to you. Any such termination shall be
without liability of the Company and the Principal Stockholder to the
Underwriters and without liability of the Underwriters to the Company;
provided, however, that in the event of any such termination the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company and the Principal
Stockholder under this Agreement, including all costs and expenses referred to
in paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to
its other obligations under Section 7 of this Agreement, the Company hereby
agrees to reimburse on a quarterly basis the Underwriters for all reasonable
legal and other expenses incurred in connection with investigating or defending
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in paragraph (a) of Section 7 of this Agreement, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the obligations under this Section 11 and the possibility that such payments
might later be held to be improper; provided, however, that (i) to the extent
any such payment is ultimately held to be improper, the persons receiving such
payments shall promptly refund them and (ii) such persons shall provide to the
Company, upon request, reasonable assurances of their ability to effect any
refund, when and if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This
Agreement shall inure to the benefit of the Company, the Principal Stockholder
and the several Underwriters and, with respect to the provisions of Section 7
hereof, the several parties (in addition to the Company, the Principal
Stockholder and the several Underwriters) indemnified under the provisions of
said Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser,
as such purchaser, of any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Xxxxxxxxx & Xxxxx
LLC, Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company or
the Principal Stockholder, shall be mailed, telegraphed or delivered to it at
its office, * , Attention:
* . All notices given by telegraph shall be promptly confirmed by
letter.
14. MISCELLANEOUS. The reimbursement, indemnification
and contribution agreements contained in this Agreement and the
representations, warranties and covenants in this Agreement shall remain in
full force and effect
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17
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or their respective directors or officers, and (c)
delivery and payment for the Stock under this Agreement; provided, however,
that if this Agreement is terminated prior to the Closing Date, the provisions
of paragraphs (k) and (l) of Section 6 hereof shall be of no further force or
effect.
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18
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Please sign and return to the Company the enclosed duplicates
of this letter, whereupon this letter will become a binding agreement among the
Company, the Principal Stockholder and the several Underwriters in accordance
with its terms.
Very truly yours,
NETWORK SOLUTIONS, INC.
By
--------------------------
Name:
Title:
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
By
--------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
X.X. XXXXXX SECURITIES INC.
PAINEWEBBER INCORPORATED
By: XXXXXXXXX & XXXXX LLC
By
--------------------------
Managing Director
For themselves and as Representatives of the
several Underwriters named in Schedule I hereto.
19
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
Xxxxxxxxx & Xxxxx LLC ..................................................
X.X. Xxxxxx Securities Inc. ............................................
PaineWebber Incorporated................................................
_______
Total .........................................................
=======
20
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF *
COUNSEL FOR THE COMPANY
(i) Each of the Company and the Principal Stockholder has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation. The Company
is duly qualified as a foreign corporation and in good standing in each state
of the United States of America in which its ownership or leasing of property
requires such qualification (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company) and has full corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement;
(ii) the authorized capital stock of the Company consists
of 10,000,000 shares of Preferred Stock, of which there are no outstanding
shares, 30,000,000 shares of Class B Common Stock, of which there are
outstanding [12,500,000] shares, (excluding the shares of Class B Common Stock
converted into shares of Underwritten Stock, and the shares of Option Stock
issued on the date hereof) and 100,000,000 shares of Class A Common Stock, of
which there are outstanding * shares (including the Underwritten
Stock plus the number of shares of Option Stock issued on the date hereof);
proper corporate proceedings have been taken validly to authorize such
authorized capital stock; all of the outstanding shares of such capital stock
(including the Underwritten Stock and the shares of Option Stock issued, if
any) have been duly and validly issued and are fully paid and nonassessable;
any Option Stock purchased after the Closing Date, when issued and delivered to
and paid for by the Underwriters as provided in the Underwriting Agreement,
will have been duly and validly issued and be fully paid and nonassessable; and
no preemptive rights of, or rights of refusal in favor of, stockholders exist
with respect to the Stock, or the issue and sale thereof, and no restrictions
on transfer or voting exist with respect to the Stock in each case pursuant to
the Certificate of Incorporation or Bylaws of the Company or under law and, to
the knowledge of such counsel, there are no contractual preemptive rights that
have not been waived, rights of first refusal or rights of co-sale which exist
with respect to the issue and sale of the Stock and there are no contractual
restrictions on transfer or voting which exist with respect to the Stock;
(iii) the Registration Statement has become effective under
the Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for that
purpose have been instituted or are pending or contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except
as to the financial statements and schedules and other financial data contained
therein, as to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Securities Act and with the
rules and regulations of the Commission thereunder;
(v) such counsel have no reason to believe that the
Registration Statement (except as to the financial statements and schedules and
other financial data contained therein, as to which such counsel need not
express any opinion or belief) at the Effective Date contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus (except as to the financial statements and schedules and
other financial data contained therein, as to which such counsel need not
express any opinion or belief) as of its date or at the Closing Date (or any
later date on which Option Stock is purchased), contained or contains any
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) the information required to be set forth in the
Registration Statement in answer to Items 9, 10 (insofar as it relates to such
counsel), 11(c), 11(m), 14 and 15 of Form S-1 is to the best of such counsel's
knowledge accurately and adequately set forth therein in all material respects
or no response is required with respect to such Items, and the description of
the stock option plan[s] and the options granted and which may be granted
thereunder [and the options
21
2
granted otherwise than under such plan[s]] set forth [add additional stock
plans and agreements as necessary] in the Prospectus accurately and fairly
presents the information required to be shown with respect to said plans and
options to the extent required by the Securities Act and the rules and
regulations of the Commission thereunder;
(vii) such counsel do not know of any franchises,
contracts, leases, documents or legal or governmental proceedings, pending or
threatened, which in the opinion of such counsel are of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement, which are not described and filed as
required;
(viii) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company and the Principal Stockholder;
(ix) each of the intercompany agreements referred to in
the Prospectus has been duly authorized, executed and delivered by the Company
and the Principal Stockholder;
(x) the execution, delivery and performance by the
Company and the Principal Stockholder of the Underwriting Agreement and each of
the intercompany agreements referred to in the Prospectus and the issue and
sale by the Company and the sale by the Principal Stockholder of the shares of
Stock as contemplated by the Underwriting Agreement and the application of
$10,000,000 of the proceeds from the sale of the shares of Stock to pay the
dividend to the Principal Stockholder as contemplated by the Prospectus will
not conflict with, or result in a breach of, the Certificate of Incorporation
or Bylaws of the Company or the Principal Stockholder or any agreement
(including, without limitation, the Cooperative Agreement) or instrument known
to such counsel to which the Company or the Principal Stockholder is a party or
any applicable law or regulation, or so far as is known to such counsel, any
order, writ, injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(xi) all holders of securities of the Company having
rights to the registration of shares of Common Stock, or other securities,
because of the filing of the Registration Statement by the Company have waived
such rights or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement;
(xii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation of the
transactions contemplated in the Underwriting Agreement, except such as have
been obtained under the Securities Act and such as may be required under state
securities or blue sky laws in connection with the purchase and distribution of
the Stock by the Underwriters.
(xiii) the Principal Stockholder is the sole registered owner
of the shares of Stock to be sold by the Principal Stockholder under the
Underwriting Agreement; the Principal Stockholder has full corporate power,
right and authority to sell such shares; and upon payment for and delivery of
such shares in accordance with the Underwriting Agreement, the Underwriters
will acquire all of the rights of the Principal Stockholder in such shares and
will also acquire their interest in such shares free of any adverse claim
(within the meaning of the Uniform Commercial Code as in effect in the State of
New York)
------------------------
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or of the State of New York,
Delaware or California, upon opinions of local counsel satisfactory in form and
scope to counsel for the Underwriters. Copies of any opinions so relied upon
shall be delivered to the Representatives and to counsel for the Underwriters
and the foregoing opinion shall also state that counsel knows of no reason the
Underwriters are not entitled to rely upon the opinions of such local counsel.
