EXHIBIT 1.1
TOTAL SPORTS INC.
Shares of Common Stock
Underwriting Agreement
, 2000
X.X. Xxxxxx Securities Inc.
Xxxxxxxxx & Xxxxx LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxx & Company Incorporated
As Representatives of several Underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Total Sports Inc., a Delaware corporation (the "Company"), proposes to
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issue and sell to the several Underwriters listed in Schedule I hereto (the
"Underwriters"), for whom you are acting as representatives (the
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"Representatives"), an aggregate of shares (the "Underwritten
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Shares") of Common Stock, no par value, of the Company (the "Common Stock") and,
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for the sole purpose of covering over-allotments in connection with the sale of
the Underwritten Shares, at the option of the Underwriters, up to an additional
shares of Common Stock of the Company (the "Option Shares"). The Underwritten
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Shares and the Option Shares are herein referred to as the "Shares". As part of
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the offering contemplated by this Agreement, Xxxxxxxxx & Xxxxx LLC (the
"Designated Underwriter") has agreed to reserve out of the Underwritten Shares
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purchased by it under this Agreement, up to shares,
for sale to the Company's directors, officers, employees and other parties
associated with the Company (collectively, "Participants"), as set forth in the
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Prospectus (as defined herein) under the heading "Underwriting" (the "Directed
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Share Program"). The Underwritten Shares to be sold by the Designated
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Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
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be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by a
Participant by the end of the business day on which this Agreement is executed
will be offered to the public by the Underwriters as set forth in the
Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
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Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
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statement, including a prospectus, relating to the Shares. The registration
statement, as amended at the time when it shall become effective including
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act, is referred to
in this Agreement as the "Registration Statement", and the prospectus in the
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form first used to confirm sales of Shares is referred to in this Agreement as
the "Prospectus". If the Company has filed an abbreviated registration
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statement pursuant to Rule 462(b) under the Securities Act (the "Rule 462
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Registration Statement"), then any reference herein to the term "Registration
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Statement" shall be deemed to include such Rule 462 Registration Statement.
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The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to
the several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share of $
(the "Purchase Price").
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In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as hereinafter provided, and the Underwriters, on the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company up to an aggregate of Option Shares at
the Purchase Price, for the sole purpose of covering over-allotments (if any) in
the sale of Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as
to which the option is being exercised and the date and time when the Option
Shares are to be delivered and paid for which may be the same date and time as
the Closing Date (as hereinafter defined) but shall not be earlier than the
Closing Date nor later than the tenth full Business Day (as hereinafter defined)
after the date of such notice (unless such time and date are postponed in
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accordance with the provisions of Section 9 hereof). Any such notice shall be
given at least two Business Days prior to the date and time of delivery
specified therein.
2. The Company understands that the Underwriters intend (i) to make
a public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives in the case of the Underwritten Shares, on , 2000, or
at such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing or, in the case of the Option Shares, on the date and time specified
by the Representatives in the written notice of the Underwriters' election to
purchase such Option Shares. The time and date of such payment for the
Underwritten Shares is referred to herein as the "Closing Date" and the time and
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date for such payment for the Option Shares, if other than the Closing Date, are
herein referred to as the "Additional Closing Date". As used herein, the term
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"Business Day" means any day other than a day on which banks are permitted or
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required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates
for the Shares will be made available for inspection and packaging by the
Representatives at the office of X.X. Xxxxxx Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary prospectus has
been issued by the Commission, and each preliminary prospectus filed as
part of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act,
and did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
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made, not misleading; provided that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been instituted or,
to the knowledge of the Company, threatened by the Commission; and the
Registration Statement and Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) comply,
or will comply, as the case may be, in all material respects with the
Securities Act and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of the
date of the Prospectus and any amendment or supplement thereto, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Prospectus, as amended or supplemented, if
applicable, at the Closing Date or Additional Closing Date, as the case may
be, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; except that
the foregoing representations and warranties shall not apply to statements
or omissions in the Registration Statement or the Prospectus made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein;
(c) the financial statements, and the related notes thereto, included in the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates indicated and the results of their operations and changes in
their consolidated cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included in the Registration Statement present fairly the
information required to be stated therein; and the pro forma financial
information, and the related notes thereto, included in the Registration
Statement and the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act and is based upon good faith
estimates and assumptions believed by the Company to be reasonable;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in
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the capital stock or long-term debt of the Company or any of its
subsidiaries, or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general affairs,
business, prospects, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Change"), otherwise than as set forth or
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contemplated in the Prospectus; and except as set forth or contemplated in
the Prospectus neither the Company nor any of its subsidiaries has entered
into any transaction or agreement (whether or not in the ordinary course of
business) material to the Company and its subsidiaries, taken as a whole;
(e) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect on the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries, taken
as a whole (a "Material Adverse Effect");
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(f) each of the Company's subsidiaries has been duly incorporated and is
validly existing as a corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each jurisdiction in
which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a Material Adverse Effect; and all the
outstanding shares of capital stock of each subsidiary of the Company have
been duly authorized and validly issued, are fully-paid and non-assessable,
and (except, in the case of foreign subsidiaries, for directors' qualifying
shares are owned by the Company), directly or indirectly, free and clear of
all liens, encumbrances, security interests and claims, provided, the
Company holds a 25% voting interest in Xxxx.Xxx L.L.C. as described in the
Prospectus;
(g) this Agreement has been duly authorized, executed and delivered by the
Company;
(h) the Company has an authorized capitalization as set forth in the Prospectus
and such authorized capital stock conforms as to legal matters to the
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description thereof set forth in the Prospectus, and all of the outstanding
shares of capital stock of the Company have been duly authorized and
validly issued, are fully-paid and non-assessable and are not subject to
any pre-emptive or similar rights; and, except as described in or expressly
contemplated by the Prospectus, there are no outstanding rights (including,
without limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or any of its subsidiaries,
or any contract, commitment, agreement, understanding or arrangement of any
kind relating to the issuance of any capital stock of the Company or any
such subsidiary, any such convertible or exchangeable securities or any
such rights, warrants or options;
(i) the Shares to be issued and sold by the Company hereunder have been duly
authorized, and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be duly
issued and will be fully paid and non-assessable and will conform to the
descriptions thereof in the Prospectus; and except for the Company's
obligation to use best efforts to cause the Underwriters to establish a
program to offer Shares to holders of the Company's Series D Convertible
Preferred Stock as described in the Prospectus, which such obligation shall
be either satisfied or waived on or prior to the Closing Date, the issuance
of the Shares is not subject to any preemptive or similar rights;
(j) neither the Company nor any of its subsidiaries is, or with the giving of
notice or lapse of time or both would be, in violation of or in default
under, its certificate of incorporation (the "Certificate of
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Incorporation") or by-laws (the "By-Laws") or any indenture, mortgage, deed
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of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them
or any of their respective properties is bound, except for violations and
defaults which individually and in the aggregate are not material to the
Company and its subsidiaries taken as a whole; the issue and sale of the
Shares and the performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated herein will
not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will any such action
result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, its subsidiaries or
any of their respective properties; and no consent, approval,
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authorization, order, license, registration or qualification of or with any
such court or governmental agency or body is required for the issue and
sale of the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except such consents, approvals,
authorizations, orders, licenses, registrations or qualifications as have
been obtained under the Securities Act and as may be required under state
securities or Blue Sky Laws and the regulations of the National Association
of Securities Dealers, Inc. (the "NASD") in connection with the purchase
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and distribution of the Shares by the Underwriters;
(k) other than as set forth or contemplated in the Prospectus, there are no
legal or governmental investigations, actions, suits or proceedings pending
or, to the knowledge of the Company, contemplated, threatened against or
affecting the Company or any of its subsidiaries or any of their respective
properties or to which the Company or any of its subsidiaries is or may be
a party or to which any property of the Company or any of its subsidiaries
is or may be the subject which, if determined adversely to the Company or
any of its subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a Material Adverse Effect and, to the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required;
(l) the Company and its subsidiaries have good and marketable title in fee
simple to all items of real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described or referred to in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made or proposed to be made of such
property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, existing and enforceable leases with such exceptions as
are not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company or its subsidiaries;
(m) no relationship, direct or indirect, exists between or among the Company or
any or its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which is required by the Securities Act to
be described in the Registration Statement and the Prospectus which is not
so described;
(n) no person has the right to require the Company to register any securities
for offering and sale under the Securities Act by reason of the filing of
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the Registration Statement with the Commission or the issue and sale of the
Shares which have not been waived;
(o) the Company is not and, after giving effect to the offering and sale of the
Shares, will not be an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act");
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(p) to the Company's knowledge, Deloitte & Touche LLP ("Deloitte & Touche"),
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who have certified certain financial statements of the Company and its
subsidiaries and who have certified certain financial statements of Long
Distance Technologies, Inc. and KOZ inc., are independent public
accountants as required by the Securities Act;
(q) the Company and its subsidiaries have filed all federal, state, local and
foreign tax returns which have been required to be filed and have paid all
taxes shown thereon and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested in
good faith; and, except as disclosed in the Registration Statement and the
Prospectus, there is no tax deficiency which has been or might reasonably
be expected to be asserted or threatened against the Company or any
subsidiary;
(r) the Company has not taken nor will it take, directly or indirectly, any
action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the Common Stock;
(s) except where a failure would not have a Material Adverse Effect, each of
the Company and its subsidiaries owns, possesses or has obtained all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including foreign
regulatory agencies), all self-regulatory organizations and all courts and
other tribunals, domestic or foreign, necessary to own or lease, as the
case may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, and neither the Company nor any such
subsidiary has received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as described in the
Registration Statement and the Prospectus, and each of the Company and its
subsidiaries is in compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date hereof;
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(t) there are no existing or, to the knowledge of the Company, threatened labor
disputes with the employees of the Company or any of its subsidiaries which
are likely to have a Material Adverse Effect;
(u) the Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
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Laws"), (ii) have received all permits, licenses or other approvals
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required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a Material Adverse Effect;
(v) each employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
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is maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its
affiliates has been maintained in compliance with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986,
as amended (the "Code"). No prohibited transaction, within the meaning of
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Section 406 of ERISA or Section 4975 of the Code has occurred with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA no
"accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeded the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions;
(w) the statistical and market-related data included in the Registration
Statement and the Prospectus are based on or derived from sources which are
believed by the Company to be reliable;
(x) except for compensation to be received by the Underwriters under this
Agreement, the Company does not know of any outstanding claims for
services, either in the nature of a finder's fee or origination fee, with
respect to any of the transactions contemplated hereby;
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(y) the Company owns, is licensed to use or otherwise possesses adequate rights
to use the patents, patent rights, licenses, inventions, trademarks,
service marks, trade names, copyrights and know-how, including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures (collectively, the
"Intellectual Property"), reasonably necessary to carry on the business
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conducted by it, except to the extent that the failure to own, license to
use or otherwise possess adequate rights to use such Intellectual Property
would not have a Material Adverse Effect, and, except as described in the
Registration Statement and the Prospectus, the Company has no knowledge of
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property, except for notices the content of which if
accurate would not have a Material Adverse Effect;
(z) the Year 2000 Problem did not have a Material Adverse Effect or result in
any material loss or interference with the Company's business or operations
resulting from any of the Company's computer systems. The "Year 2000
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Problem" as used herein means any significant risk that computer hardware
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or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the
case of dates or time periods occurring after December 31, 1999, function
at least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000;
(aa) the Company carries insurance in such amounts and covering such risks as is
adequate for the conduct of the Company's business and the value of its
properties;
(bb) the Company has not offered, or caused the Underwriters to offer, any
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.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to use its best efforts to cause the Registration Statement to become
effective at the earliest possible time and, if required, to file the final
Prospectus with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act and to furnish copies of the
Prospectus to the Underwriters in New York City prior to 10:00 a.m., Xxx
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Xxxx Xxxx time, on the Business Day next succeeding the date of this
Agreement in such quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the Representatives
five signed copies of the Registration Statement (as originally filed) and
each amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement (as originally
filed) and each amendment thereto, in each case without exhibits and,
during the period mentioned in paragraph (e) below, to each of the
Underwriters as many copies of the Prospectus (including all amendments and
supplements thereto) as the Representatives may reasonably request;
(c) before filing any amendment or supplement to the Registration Statement or
the Prospectus, whether before or after the time the Registration Statement
becomes effective, to furnish to the Representatives a copy of the proposed
amendment or supplement for review and not to file any such proposed
amendment or supplement to which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm such advice in
writing (i) when the Registration Statement has become effective, (ii) when
any amendment to the Registration Statement has been filed or becomes
effective, (iii) when any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (v) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus or the initiation or threatening of any
proceeding for that purpose, (vi) of the occurrence of any event, within
the period referenced in paragraph (e) below, as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, and (vii)
of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and to use its best efforts to prevent the issuance of any such
stop order, or of any order preventing or suspending the use of any
preliminary prospectus or the Prospectus, or of any order suspending any
such qualification of the shares, or notification of any such order thereof
and, if issued, to obtain as soon as possible the withdrawal thereof;
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(e) if, during such period of time after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addresses
the Representatives will furnish to the Company) to which Shares may have
been sold by the Representatives on behalf of the Underwriters and to any
other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the securities
or Blue Sky laws of such jurisdictions as the Representatives shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; provided that the
Company shall not be required to qualify to do business or file a general
consent to service of process in any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a
period of at least twelve months beginning with the first fiscal quarter of
the Company occurring after the effective date of the Registration
Statement, which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission promulgated thereunder;
(h) during the period of five years after the date of this Agreement, to
furnish to the Representatives copies of all reports or other
communications (financial or other) furnished to holders of the Shares, and
copies of any reports and financial statements furnished to or filed with
the Commission or any national securities exchange;
(i) for a period of 180 days after the date of the initial public offering of
the Shares (the "Lock-up Period") not to (i) offer, pledge, announce the
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intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or (ii) enter into any swap
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or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise without the
prior written consent of X.X. Xxxxxx Securities, other than the Shares to
be sold hereunder and any options granted or shares of Common Stock of the
Company issued upon the exercise of options granted under existing employee
stock option plans; notwithstanding the foregoing, the Company may issue
shares of its Common Stock during the Lock-up Period in connection with
acquisitions, strategic alliances or joint ventures ("Excepted
--------
Transactions"); provided however, that (i) the Company shall give X.X.
Xxxxxx Securities Inc. 5 days prior written notice of any such issuance
describing the Excepted Transaction in reasonable detail and stating the
number of shares of Common Stock proposed to be issued in the Excepted
Transaction, (ii) all Common Stock issued in connection with the Excepted
Transaction shall remain subject to the lock-up restrictions of this
Paragraph 5(i) for the remainder of the Lock-up Period, (iii) prior to any
such issuance of Common Stock, each person that is to acquire such Common
Stock shall sign a lock-up agreement in form and substance reasonably
acceptable to X.X. Xxxxxx Securities Inc. covering all such Common Stock
for the remainder of the Lock-up Period and (iv) no such issuance shall be
made unless and until the requirements and conditions in the foregoing
clauses (i), (ii) and (iii) have been complied with and satisfied;
(j) to use the net proceeds received by the Company from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds";
(k) to use its best efforts to list for quotation the Shares on the National
Market System of the Nasdaq Stock Market, Inc. (the "Nasdaq National
---------------
Market");
------
(l) to file with the Commission such reports as may be required by Rule 463
under the Securities Act;
(m) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution and
delivery of the Shares, (ii) incident to the preparation, printing and
filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including fees of
counsel for the Underwriters and its disbursements), (iv) in connection
-13-
with the listing of the Shares on the Nasdaq National Market, (v) related
to the filing with, and clearance of the offering by, the NASD, (vi) in
connection with the printing (including word processing and duplication
costs) and delivery of this Agreement, the Preliminary and Supplemental
Blue Sky Memoranda and the furnishing to the Underwriters and dealers of
copies of the Registration Statement and the Prospectus, including mailing
and shipping, as herein provided, (vii) any expenses incurred by the
Company in connection with a "road show" presentation to potential
investors, (viii) the cost of preparing stock certificates and (ix) the
cost and charges of any transfer agent and any registrar;
(n) In connection with the Directed Share Program, the Company will ensure that
the Directed Shares will be restricted to the extent required by 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. The Designated Underwriter will notify the Company
as to which Participants will need to be so restricted. The Company will
direct the transfer agent to place stop transfer restrictions upon such
securities for such period of time; and
(o) The Company will pay all reasonable fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Shares 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 the Underwriters 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. The several obligations of the Underwriters hereunder to
purchase the Shares on the Closing Date or the Additional Closing Date, as the
case may be, are subject to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a post-
effective amendment is required to be filed under the Securities Act, such
post-effective amendment shall have become effective) not later than 5:00
P.M., New York City time, on the date hereof; and no stop order suspending
the effectiveness of the Registration Statement or any post-effective
amendment shall be in effect, and no proceedings for such purpose shall be
pending before or threatened by the Commission; the Prospectus shall have
been filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules and
regulations under the Securities Act and in accordance with Section 5(a)
-14-
hereof; and all requests for additional information shall have been
complied with to the satisfaction of the Representatives;
(b) the representations and warranties of the Company contained herein are true
and correct on and as of the Closing Date or the Additional Closing Date,
as the case may be, as if made on and as of the Closing Date or the
Additional Closing Date, as the case may be, and the Company shall have
complied with all agreements and all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date or the Additional
Closing Date, as the case may be;
(c) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any Material
Adverse Change, or any development involving a prospective Material Adverse
Change, otherwise than as set forth or contemplated in the Prospectus, the
effect of which in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the Closing Date or the Additional Closing Date,
as the case may be, on the terms and in the manner contemplated in the
Prospectus; and neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus;
(d) the Representatives shall have received on and as of the Closing Date or
the Additional Closing Date, as the case may be, a certificate of an
executive officer of the Company, with specific knowledge about the
Company's financial matters, satisfactory to the Representatives to the
effect set forth in subsections (a) through (c) (with respect to the
respective representations, warranties, agreements and conditions of the
Company) of this Section;
(e) Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction
of incorporation, with power and authority (corporate and other)
to own its properties and conduct its business as described in
the Prospectus;
-15-
(ii) the Company has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or
in good standing would not have a Material Adverse Effect;
(iii) each of the Company's subsidiaries has been duly incorporated or
organized and is validly existing as a corporation under the laws
of its jurisdiction of incorporation or organization with power
and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus and has been
duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than
where the failure to be so qualified and in good standing would
not have a Material Adverse Effect; and all of the outstanding
shares of capital stock of each subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable,
and (except, in the case of foreign subsidiaries, for directors'
qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims, provided, the Company holds a 25% voting interest in
Xxxx.xxx L.L.C. as described in the Prospectus;
(iv) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or
proceedings pending or, to such counsel's knowledge, threatened
against or affecting the Company or any of its subsidiaries or
any of their respective properties or to which the Company or any
of its subsidiaries is or may be a party or to which any property
of the Company or its subsidiaries is or may be the subject
which, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a Material Adverse Effect; to
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
and such counsel does not know of any statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required;
(v) this Agreement has been duly authorized, executed and delivered
by the Company;
(vi) the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus;
-16-
(vii) the shares of capital stock of the Company outstanding prior to
the issuance of the Shares to be sold by the Company have been
duly authorized and are validly issued, fully paid and non-
assessable;
(viii) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and when delivered to and paid for the
Underwriters in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable and the
issuance of the Shares is not subject to any preemptive or
similar rights;
(ix) the statements in the Prospectus under "Shares Eligible for
Future Sale", "Description of Capital Stock" and "Underwriting",
and in the Registration Statement in Items 14 and 15, insofar as
such statements constitute a summary of the terms of the Common
Stock, legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect
to such terms, legal matters, documents or proceedings;
(x) such counsel is of the opinion that the Registration Statement
and the Prospectus and any amendments and supplements thereto
(other than the financial statements and related schedules
therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements
of the Securities Act and believes that (other than the
financial statements and related schedules therein, as to which
such counsel need express no belief) the Registration Statement
and the prospectus included therein at the time the Registration
Statement became effective did not contain any untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, and that the Prospectus, as amended or
supplemented, if applicable, does not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(xi) the Registration Statement has been declared effective under
Securities Act and, to such counsel's knowledge, no stop order
proceedings with respect thereto are pending before or
threatened by the Commission under the Securities Act;
(xii) 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
-17-
reason of lapse of time following notification of the Company's
intent to file the Registration Statement;
(xiii) neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation
of or in default under, its Certificate of Incorporation or By-
Laws or any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which
the Company or any of its subsidiaries is a party or by which it
or any of them or any of their respective properties is bound,
except for violations and defaults which individually and in the
aggregate are not material to the Company and its subsidiaries
taken as a whole; the issue and sale of the Shares being
delivered on the Closing Date or the Additional Closing Date, as
the case may be, and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will any such action
result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or, to such
counsel's knowledge, any applicable law or statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, its subsidiaries or any of
their respective properties;
(xiv) no consent, approval, authorization, order, license,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Shares or the consummation of the other transactions
contemplated by this Agreement, except such consents, approvals,
authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky laws
and NASD regulations in connection with the purchase and
distribution of the Shares by the Underwriters;
(xv) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or
entity "controlled" by an "investment company", as such terms
are defined in the Investment Company Act;
-18-
(xvi) to such counsel's knowledge, except where a failure would not
have a Material Adverse Effect, each of the Company and its
subsidiaries owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all self-
regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may
be, and to operate its properties and to carry on its business
as conducted as of the date hereof, and neither the Company nor
any such subsidiary has received any actual notice of any
proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement
and the Prospectus; and to such counsel's knowledge, each of the
Company and its subsidiaries is in compliance with all laws and
regulations relating to the conduct of its business as conducted
as of the date of the Prospectus;
(xvii) the Company and each of its subsidiaries owns, is licensed to
use or otherwise possesses adequate rights to use the
Intellectual Property reasonably necessary to carry on the
business conducted by it, except to the extent that the failure
to own, be licensed to use or otherwise possess adequate rights
to use such Intellectual Property would not have a Material
Adverse Effect; except as set forth in the Prospectus, the
Company has not received any notice of infringement of or
conflict with, and to such counsel's knowledge, there is no
infringement of or conflict with, asserted rights of others with
respect to the Intellectual Property, the discoveries,
inventions, products or processes of the Company referred to in
the Registration Statement and the Prospectus do not, to such
counsel's knowledge, infringe or conflict with any right or
patent of any third party, or any discovery, patent product or
process which is the subject of a patent application filed by
any third party;
(xviii) the Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as are
described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, existing and
enforceable leases with such exceptions as are not material and
-19-
do not interfere with the use made or proposed to be made of
such property and buildings by the Company or its subsidiaries;
and
(xix) each of the Company and its subsidiaries is in compliance with
all Environmental Laws, except, in each case, where
noncompliance, individually or in the aggregate, would not have
a Material Adverse Effect; there are no legal or governmental
proceedings pending or, to the knowledge of such counsel,
threatened against or affecting the Company or any of its
subsidiaries under any Environmental Law which, individually or
in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the States of Delaware and North Carolina, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon
an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; (B) as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and certificates or other written
statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered in
subparagraph (x) above counsel may state their opinion and belief is based
upon their participation in the preparation of the Registration Statement
and the Prospectus and any amendment or supplement thereto and review and
discussion of the contents thereof but is without independent check or
verification except as specified.
The opinion of Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP described above shall
be rendered to the Underwriters at the request of the Company and shall so
state therein;
(f) on the effective date of the Registration Statement and the effective date
of the most recently filed post-effective amendment to the Registration
Statement and also on the Closing Date or Additional Closing Date, as the
case may be, Deloitte & Touche shall have furnished to you letters, dated
the respective dates of delivery thereof, in form and substance
satisfactory to you, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus;
-20-
(g) the Representatives shall have received on and as of the Closing Date or
Additional Closing Date, as the case may be, an opinion of Xxxxxx Xxxxxx &
Xxxxxxx, counsel to the Underwriters, with respect to the due authorization
and valid issuance of the Shares, the Registration Statement, the
Prospectus and other related matters as the Representatives may reasonably
request, and such counsel shall have received such papers and information
as they may reasonably request to enable them to pass upon such matters;
(h) the Shares to be delivered on the Closing Date or Additional Closing Date,
as the case may be, shall have been approved for listing on the Nasdaq
National Market, subject to official notice of issuance;
(i) on or prior to the Closing Date or Additional Closing Date, as the case may
be, the Company shall have furnished to the Representatives such further
certificates and documents as the Representatives shall reasonably request;
and
(j) the lock-up agreements of the Company's officers, directors and certain
stockholders previously identified by the Underwriters, in the form
delivered to the Company, shall be in full force and effect on the Closing
Date or Additional Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein.
The Company agrees to indemnify and hold harmless the Designated
Underwriter and each person, if any, who controls the Designated Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (the "Designated 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
-21-
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase; or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or negligence of the
Designated Entities.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
------------------
notify the person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person, upon request of the
------
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters
and such control persons of Underwriters shall be designated in writing by X.X.
Xxxxxx Securities Inc. and any such separate firm for the Company, its
-22-
directors, its officers who sign the Registration Statement and such control
persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
If the indemnification provided for in the first three paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company and the total underwriting
discounts and the commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company by the Underwriters and the parties'
-23-
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or
the obligations of the several Underwriters with respect to the Option Shares)
may be terminated in the absolute discretion of the Representatives, by notice
given to the Company, if after the execution and delivery of this Agreement and
prior to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange or the American Stock Exchange, the NASD, the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of or guaranteed by the Company shall have been
-24-
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Representatives,
is material and adverse and which, in the judgment of the Representatives, makes
it impracticable to market the Shares being delivered at the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the manner
contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as the Representatives may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Shares are not made within 36 hours after such
default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Shares, the Additional Closing Date), but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
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relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement or any condition of the Underwriters' obligations cannot be
fulfilled, the Company agrees to reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and expenses of its counsel)
reasonably incurred by the Underwriter in connection with this Agreement or the
offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding
upon the Company, the Underwriters, any controlling persons referred to herein
and their respective successors and assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person, firm
or corporation any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. No purchaser of Shares from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by X.X. Xxxxxx Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
X.X. Xxxxxx Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (telefax: 648-5705); Attention: Syndicate Department. Notices to the
Company shall be given to it at 000 Xxxxxxxxxxxx Xx. Xxxx, Xxxxxxx, XX 00000
(telefax: (000) 000-0000); Attention: President.
13. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
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If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
TOTAL SPORTS INC.
By:
---------------------------------
Name:
Title:
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Accepted as of the date first
written above:
X.X. XXXXXX SECURITIES INC.
XXXXXXXXX & XXXXX LLC
U.S. BANCORP XXXXX XXXXXXX INC.
XXXXX & COMPANY INCORPORATED
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: X.X. XXXXXX SECURITIES INC.
By:
---------------------------------
Name:
Title:
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SCHEDULE I
----------
Number of
Underwritten Shares
Underwriter To Be Purchased
---------------------------------------------------------------- ---------------------------
X.X. Xxxxxx Securities Inc......................................
Xxxxxxxxx & Xxxxx LLC...........................................
U.S. Bancorp Xxxxx Xxxxxxx Inc..................................
Xxxxx & Company Incorporated....................................
---------------------------
Total
===========================
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