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XXXXX Online, Inc.
Shares */
Common Stock
($.001 par value)
Underwriting Agreement
New York, New York
-, 1999
X.X. Xxxxxxxxx, Towbin
Xxxxxxxxxx & Co. Inc.
c/o X.X. Xxxxxxxxx, Towbin
Swiss Bank Tower
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
XXXXX Online, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company (the "Underwritten Securities") and the
persons named in Schedule II hereto (the "Selling Stockholders") propose to
grant to the Underwriters an option to purchase up to additional shares
of Common Stock (the "Option Securities"; the Option Securities, together with
the Underwritten Securities, being hereinafter called the "Securities"). In
addition, the Company proposes to issue to the Representatives - warrants (the
"Warrants") which will initially entitle the Representatives to purchase -
shares of Common Stock of the Company pursuant to the terms of a Warrant
Agreement dated as of -, 1999, between the Company and the Representatives (the
"Warrant Agreement"). To the extent there are no additional Underwriters listed
on Schedule I other than you,
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*/ Plus an option to purchase from the persons named in Schedule II hereto up
to additional shares to cover over-allotments.
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the term Representatives as used herein shall mean you, as Underwriters, and the
terms Representatives and Underwriters shall mean either the singular or plural
as the context requires.
The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Business Day" means any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City.
"Effective Date" means each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any
Rule 462(b) Registration Statement became or become effective.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" means the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" means any preliminary prospectus referred
to in Section 1(a)(i) hereof and any preliminary prospectus included in
the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" means the prospectus relating to the Securities that is
first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, means the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" means the registration statement referred
to in Section 1(a)(i) hereof, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, also means such registration statement as so amended or any Rule
462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
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"Rule 424", "Rule 430A" and "Rule 462(b)" refer to such rules under
the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" means a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the registration statement referred to in
Section 1(a)(i) hereof.
1. Representations and Warranties.
(1) The Company and each of the Selling Stockholders jointly and
severally represent and warrant to, and agree with, each Underwriter as set
forth below in this Section 1(a).
(1) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (file number
333--) on Form S-1, including a related preliminary prospectus, for
the registration under the Securities Act of 1933 (the "Act") of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission either (A) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (B) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (B), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
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(2) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined in Section 3 hereof)
and on any date on which Option Securities are purchased, if such date
is not the Closing Date (a "settlement date"), the Prospectus (and any
supplements thereto) will comply in all material respects with the
applicable requirements of the Act and the rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement
did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and,
on the Effective Date, the Prospectus, if not filed pursuant to Rule
424(b), will not, and on the date of any filing pursuant to Rule 424(b)
and on the Closing Date and any settlement date, the Prospectus
(together with any supplement thereto) will not include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company and the Selling Stockholders make no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(3) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and has full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification.
(4) The Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock (including the
Option Securities) have been duly and validly authorized and issued and
are fully paid and nonassessable; the Securities being sold hereunder
by the Company have been duly and validly authorized, and, when issued
and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities have
been duly approved for quotation, subject to official notice of
issuance, on the Nasdaq National Market; the certificates for the
Securities and the Warrants are in valid and sufficient form; the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the
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Securities and, except as set forth in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in
the Company are outstanding.
(5) The Company does not have any subsidiaries, does not directly or
indirectly own any capital stock or other equity interests in any
corporation, partnership or other entity and is not a member of or a
participant in any partnership, joint venture or similar entity.
(6) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit thereto, which is not described or filed
as required.
(7) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms.
(8) The Company is not and, after giving effect to the offering and
sale of the Securities and the Warrants and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act").
(9) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated herein
and in the Prospectus.
(10) Neither the issue and sale of the Securities or the Warrants
nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will conflict
with, or result in a breach or violation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to, (A) the charter or by-laws of the Company, (B) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company is a party or bound or to
which its property is subject, or (C) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company of any
court, regulatory body, administrative agency, governmental
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body, arbitrator or other authority having jurisdiction over the
Company or any of its properties.
(11) No holder of securities of the Company has any right to the
registration of such securities under the Registration Statement.
(12) The consolidated financial statements and schedules of the
Company included in the Prospectus and the Registration Statement
present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the dates and
for the periods indicated, comply as to form with the applicable
accounting requirements of the Act and the rules and regulations
thereunder and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein). The selected
financial data set forth under the caption "Selected Financial Data" in
the Prospectus and Registration Statement fairly present, on the basis
stated in the Prospectus and the Registration Statement, the
information included therein.
(13) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or its property is pending or, to the best knowledge of the
Company, threatened that (A) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (B)
could reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto).
(14) The Company owns or leases all such properties as are necessary
to the conduct of its operations as presently conducted.
(15) The Company is not in violation or default of (A) any provision
of its charter or by-laws, (B) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is
a party or bound or to which its property is subject, or (C) any
statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its
properties.
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(16) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and delivered their report with respect to
the audited consolidated financial statements and schedules included in
the Prospectus, are independent public accountants with respect to the
Company within the meaning of the Act and the applicable published
rules and regulations thereunder.
(17) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the Warrant Agreement or
the issuance by the Company or sale by the Company of the Securities or
the Warrants.
(18) The Company has filed all foreign, Federal, state and local tax
returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto)) and has paid all taxes required
to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a material adverse effect
on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(19) No labor problem or dispute with the employees of the Company
exists or is threatened or imminent, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of
its principal suppliers or contractors, including TRW, Inc., iXL, Inc.
and Globix, Inc., in each case that could have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(20) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which it is engaged; all
policies of insurance and fidelity or surety bonds insuring the Company
or its business, assets, employees, or officers and directors are in
full force and effect; the Company is in compliance with the terms of
such policies and instruments in all material
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respects; and there are no claims by the Company under any such policy
or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; the Company has not
been refused any insurance coverage sought or applied for; and the
Company does not have any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(21) The Company possesses all licenses, certificates, permits and
other authorizations issued by the appropriate Federal, state or
foreign regulatory authorities necessary for the ownership or lease of
its properties and the conduct of its business, and the Company has not
received any notice of proceedings relating to the revocation or
modification of any such license, certificate, permit or authorization
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(22) The Company is not in violation of any Federal or state law or
regulation relating to occupational safety and health or to the
storage, handling or transportation of hazardous or toxic materials;
the Company has received all permits, licenses or other approvals
required of it under applicable Federal and state occupational safety
and health and environmental laws and regulations to conduct its
business, and the Company is in compliance with all terms and
conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not,
singly or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto).
(23) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations, (B) transactions
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are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain asset accountability, (C) access to assets is permitted only
in accordance with management's general or specific authorization, and
(D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(24) The Company has not taken, directly or indirectly, any action
designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(25) The Company owns or has obtained licenses for the patents,
patent applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
referenced or described in the Prospectus as being owned by or licensed
to it (collectively, the "Intellectual Property"). Except as set forth
in the Prospectus under the caption "o", (A) there are no rights of
third parties to any such Intellectual Property, (B) there is no
material infringement by third parties of any such Intellectual
Property, (C) there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company's rights in or to
any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim, (D) there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable
basis for any such claim, (E) there is no pending or threatened action,
suit, proceeding or claim by others that the Company infringes or
otherwise violates any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim, (F)
there is no U.S. patent or published U.S. patent application which
contains claims that dominate or may dominate any Intellectual Property
described in the Prospectus as being owned by or licensed to the
Company or that interferes with the issued or pending claims of any
such Intellectual Property, and (G) there is no prior art of which the
Company is aware that may render any U.S. patent held by the Company
invalid or any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark Office.
The Company owns, possesses, licenses or has other rights to use, on
reasonable terms, all Intellectual Property necessary for the conduct
of the
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Company's business as now conducted or as proposed in the Prospectus to
be conducted.
(26) The Company [has implemented] [is implementing] a
comprehensive, detailed program to analyze and address the risk that
the computer hardware and software used by it may be unable to
recognize and properly execute date-sensitive functions involving
certain dates prior to and any dates after December 31, 1999 (the "Year
2000 Problem"), and [has determined] [reasonably believes] that such
risk will be remedied on a timely basis without material expense and
will not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company;
and the Company believes, after due inquiry, that each supplier,
vendor, contractor or financial service organization used or served by
the Company has remedied or will remedy on a timely basis the Year 2000
Problem, except to the extent that a failure to remedy by any such
supplier, vendor, contractor, or financial service organization would
not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company.
The Company is in compliance with Release No. 33-7558 under the Act,
dated July 29, 1998, related to Year 2000 compliance.
(27) The Company does not maintain any plan or arrangement that is
subject to the provisions of, or that provides any benefits described
in, the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder.
(28) The Warrant Agreement has been duly authorized by the Company
and, when duly executed and delivered by the Company, will constitute a
valid and binding obligation of the Company enforceable in accordance
with its terms; the Warrants will conform in all material respects to
the description of the Warrants in the Prospectus and in the Warrant
Agreement; the Warrants to be issued and sold by the Company to the
Representatives pursuant to the Warrant Agreement have been duly and
validly authorized and, when duly executed, issued and delivered as
contemplated by the Warrant Agreement against payment therefor will be
duly and validly issued, fully paid and will constitute the valid and
binding obligations of the Company, entitled to the benefits of the
Warrant Agreement and enforceable in accordance with their terms.
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(29) When the Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Warrants will be exercisable for
shares of Common Stock of the Company ("Warrant Shares") in accordance
with their terms at any time or from time to time after -, 2000; the
Warrant Shares initially issuable upon the exercise of such Warrants
have been duly authorized and reserved for issuance upon such exercise
in accordance with the terms of the Warrants and, when issued upon such
exercise, will be validly issued, fully paid and nonassessable; and the
stockholders of the Company have no preemptive rights with respect to
the Warrant Shares.
Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(2) Each Selling Stockholder represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1(b).
(1) Such Selling Stockholder is the lawful owner of the Option
Securities underlying the option granted by such Selling Stockholder to
the several Underwriters pursuant to Section 2(b) hereof and upon
exercise of said option and payment for such Option Securities, as
provided herein, such Selling Stockholder will convey to the
Underwriters good and marketable title to such Option Securities, free
and clear of all liens, encumbrances, equities and claims whatsoever.
(2) Such Selling Stockholder has not taken, directly or indirectly,
any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(3) Certificates in negotiable form for the Option Securities owned
by such Selling Stockholder have been placed in custody, for delivery
pursuant to the terms of this Agreement, under a Custody Agreement and
Power of Attorney duly authorized (if applicable), executed and
delivered by such Selling Stockholder, in the form heretofore furnished
to you (the "Custody Agreement") with -, as Custodian (the
"Custodian"); the Option Securities represented by the certificates so
held in custody for each Selling Stockholder are subject to the
interests hereunder of the Underwriters; the arrangements for custody
and delivery of such
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certificates, made by such Selling Stockholder hereunder and under the
Custody Agreement, are not subject to termination by any acts of such
Selling Stockholder, or by operation of law, whether by the death or
incapacity of such Selling Stockholder or the occurrence of any other
event; and if any such death, incapacity or any other such event shall
occur before the delivery of such Option Securities hereunder,
certificates for the Option Securities will be delivered by the
Custodian in accordance with the terms and conditions of this Agreement
and the Custody Agreement as if such death, incapacity or other event
had not occurred, regardless of whether or not the Custodian shall have
received notice of such death, incapacity or other event.
(4) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except
such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters and
such other approvals as have been obtained.
(5) None of the granting of the option to the several Underwriters
to purchase the Option Securities owned by such Selling Shareholder
pursuant to Section 2(b) hereof, the sale of such Option Securities
upon the exercise of said option or the consummation of any other of
the transactions herein contemplated by such Selling Stockholder or the
fulfillment of the terms hereof by such Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter or by-laws of such Selling
Stockholder or the terms of any indenture or other agreement or
instrument to which such Selling Stockholder or any of its subsidiaries
is a party or bound, or any judgment, order or decree applicable to
such Selling Stockholder or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Stockholder or any of its
subsidiaries.**/
Any certificate signed by any Selling Stockholder [or any
officer of any Selling Stockholder] and delivered to
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**/ Note: References to corporate concepts (e.g., charter, by-laws and
subsidiaries) to be deleted if all Selling Shareholders are natural persons.
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the Representatives or counsel for the Underwriters in connection with
the offering of the Securities shall be deemed a representation and
warranty by such Selling Stockholder, as to matters covered thereby, to
each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the
Company agrees to sell (i) to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a
purchase price of $- per share, the amount of the Underwritten
Securities set forth opposite such Underwriter's name in Schedule I
hereto and (ii) to each Representative, and each Representative agrees
to purchase from the Company, at a purchase price of $[0.01] per
Warrant, the amount of Warrants set forth opposite such
Representative's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling
Stockholders hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to shares of the Option
Securities at the same purchase price per share as the Underwriters
shall pay for the Underwritten Securities. Said option may be exercised
only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole
or in part at any time (but not more than once) on or before the 30th
day after the date of the Prospectus upon written or telegraphic notice
by the Representatives to the Selling Stockholders or to their
authorized representative as designated in the Custody Agreement
setting forth the number of shares of the Option Securities as to which
the several Underwriters are exercising the option and the settlement
date. Delivery of certificates for the shares of Option Securities, and
payment therefor, shall be made as provided in Section 3 hereof. The
maximum number of Option Securities which each Selling Stockholder
agrees to sell is set forth in Schedule II hereto. In the event that
the Underwriters exercise less than their full over-allotment option,
the number of Option Securities to be sold by each Selling Stockholder
listed on Schedule II hereto shall be, as nearly as practicable, in the
same proportion as the maximum number of Option Securities to be sold
by each Selling Stockholder and the total number of Option Securities
to be sold. The number of shares of the Option Securities to be
purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities, the Warrants and the Option Securities (if the
option provided for in Section 2(b) hereof shall have been exercised on
or before the third Business Day prior to the Closing Date) shall be
made at 10:00 AM, New York City time, on -, 1999, or
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at such time on such later date not more than three Business Days after
the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement between the Representatives and
the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the
Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives
of the respective aggregate purchase prices of the Securities being
sold by the Company and each of the Selling Stockholders to or upon the
order of the Company or the Selling Stockholders by wire transfer
payable in same day funds to the accounts specified by the Company and
the Selling Stockholders. Delivery of the Underwritten Securities and
the Option Securities shall be made through the facilities of The
Depository Trust Company unless the Representatives shall otherwise
instruct. Delivery of the Warrants shall be made to the Representatives
for the Representatives' own account against payment by the
Representatives of the purchase price thereof to or upon the order of
the Company by wire transfer payable in same day funds to an account
specified by the Company.
Each Selling Stockholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the several Underwriters of
the Option Securities to be purchased by them from such Selling
Stockholder and the respective Underwriters will pay any additional
stock transfer taxes involved in further transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Selling
Stockholders will deliver the Option Securities (at the expense of the
Company) to the Representatives on the date specified by the
Representatives (which shall be within three Business Days after
exercise of said option), against payment by the several Underwriters
through the Representatives thereof to or upon the order of the Selling
Stockholders by wire transfer payable in same day funds to the accounts
specified by the Selling Stockholders. Delivery of the Option
Securities shall be made through facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
If settlement for the Option Securities occurs after the Closing
Date, the Company and the Selling Stockholders will deliver to the
Representatives on the settlement date for the Option Securities, and
the obligation of the Underwriters to purchase the Option Securities
shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
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5. Agreements.
(1) The Company agrees with the several Underwriters that:
(1) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (i) when the Registration
Statement, if not effective at the Execution Time, shall have become
effective, (ii) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (iii) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
shall have been filed or become effective, (iv) of any request by the
Commission or its staff for any amendment of the Registration
Statement, or any Rule 462(b) Registration Statement, or for any
supplement to the Prospectus or of any additional information, (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued,
to obtain as soon as possible the withdrawal thereof.
(2) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
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shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the rules thereunder, the
Company promptly will (A) notify the Representatives of any such event,
(B) prepare and file with the Commission, subject to the second
sentence of Section 5(a)(i), an amendment or supplement which will
correct such statement or omission or effect such compliance and (C)
supply any supplemented Prospectus to you in such quantities as you may
reasonably request.
(3) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(4) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of each Preliminary Prospectus and
the Prospectus and any supplement thereto as the Representatives may
reasonably request.
(5) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities.
(6) The Company will not, for a period of one year following the
Execution Time, without the prior written consent of X.X. Xxxxxxxxx,
Towbin, offer, sell, contract to sell, pledge or otherwise dispose of
(or enter into any transaction which is designed to, or could be
expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise)
by the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish
or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of the rules promulgated under
Section 16 of the Exchange Act with respect to, any other shares of
Common Stock or any securities convertible into, or exchangeable for,
shares of Common Stock, or publicly announce an intention to effect any
such transaction; provided, however, that the Company may issue and
sell Common Stock pursuant to any employee stock option plan, stock
ownership plan or dividend reinvestment plan of the Company in effect
at the
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Execution Time and the Company may issue Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding at the
Execution Time.
(7) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
company to facilitate the sale or resale of the Securities.
(8) The Company and the Selling Stockholders jointly and severally
agree to pay the costs and expenses relating to the following matters:
(A) the preparation, printing or reproduction and filing with the
Commission of the Registration Statement (including financial
statements and exhibits thereto), each Preliminary Prospectus, the
Prospectus, and each amendment or supplement to any of them; (B) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus,
and all amendments or supplements to any of them, as may, in each case,
be reasonably requested for use in connection with the offering and
sale of the Securities; (C) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any
stamp or transfer taxes in connection with the original issuance and
sale of the Securities; (D) the printing (or reproduction) and delivery
of this Agreement, any blue sky memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (E) the registration of the Securities
under the Exchange Act and the listing of the Securities on the Nasdaq
National Market; (F) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws of
the several states (including filing fees and the reasonable fees and
expenses of counsel for the Underwriters relating to such registration
and qualification); (G) any filings required to be made with the
National Association of Securities Dealers, Inc. (including filing fees
and the reasonable fees and expenses of counsel for the Underwriters
relating to such filings); (H) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities; (I) the fees
and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company and the
Selling Stockholders; and (J) all other costs and expenses incident to
the performance by the Company and the Selling Stockholders of their
obligations hereunder. The Company and the Selling Stockholders may
agree, as among themselves and without limiting the rights of the
Underwriters under this
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Section 5(a)(viii), as to the respective amounts of such costs and
expenses for which they each shall be responsible.
(2) Each Selling Stockholder agrees with several Underwriters that:
(1) Such Selling Stockholder will not, for a period of one year
following the Execution Time, without the prior written consent of X.X.
Xxxxxxxxx, Towbin, offer, sell, contract to sell, pledge or otherwise
dispose of (or enter into any transaction which is designed to, or
could be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by such Selling Stockholder or by the Company or any
affiliate of the Company or any person in privity with the Company or
any affiliate of the Company) directly or indirectly, including the
filing (or participation in the filing) of a registration statement
with the Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position
within the meaning of the rules promulgated under Section 16 of the
Exchange Act with respect to, any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for such capital stock, or publicly announce an intention
to effect any such transaction, other than shares of Common Stock
disposed of as bona fide gifts approved by X.X. Xxxxxxxxx, Towbin.
(2) Such Selling Stockholder will not take any action designed to or
which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(3) Such selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Securities by an underwriter
or dealer may be required under the Act, of (A) any material change in
the Company's condition (financial or otherwise), prospects, earnings,
business or properties, (B) any change in information in the
Registration Statement or the Prospectus relating to such Selling
Stockholder or (C) any new material information relating to the Company
or relating to any matter stated in the Prospectus which comes to the
attention of such Selling Stockholder.
(4) Such Selling Stockholder will comply with the agreement
contained in Section 5(a)(viii).
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6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(1) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later time, the
Registration Statement will become effective not later than (i) 6:00 PM New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on such date or
(ii) 9:30 AM on the Business Day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or threatened.
(2) The Company shall have furnished to the Representatives the opinion
of Xxxxxxx Krooks Xxxx & Ball P.C., counsel for the Company, dated the Closing
Date and addressed to the Representatives, to the effect that:
(1) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has full corporate power and authority to own or lease, as the case may be,
and to operate its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which requires
such qualification;
(2) the Company's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock (including the Option Securities) have
been duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold hereunder by the Company have been
duly and validly authorized, and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Company has been notified
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by the Nasdaq National Market that the Securities are duly approved for
quotation, subject to official notice of issuance, on the Nasdaq
National Market; the certificates for the Securities are in valid and
sufficient form; and the holders of outstanding shares of capital stock
of the Company are not entitled to preemptive or other rights to
subscribe for the Securities; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
(3) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or its property of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the
Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required;
(4) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto
pursuant to Rule 424(b), has been made in the manner and within the
time period required by Rule 424(b); to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and the
Prospectus (other than the financial statements and other financial
information contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act and the rules thereunder; and such counsel has
no reason to believe that on the Effective Date or at the Execution
Time the Registration Statement contains or contained any untrue
statement of a material fact or omits or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus as of its date and on the
Closing Date included or includes any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the financial
statements and other financial information contained therein, as to
which such counsel need not express an opinion);
(5) this Agreement has been duly authorized, executed and delivered
by the Company;
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(6) the Company is not and, after giving effect to the offering and
sale of the Securities and the Warrants and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company"
as defined in the Investment Company Act;
(7) no consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated in this Agreement
and in the Prospectus and such other approvals (specified in such opinion)
as have been obtained;
(8) neither the issue and sale of the Securities and the Warrants,
nor the consummation of any other of the transactions herein contemplated
nor the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, (A) the charter or
by-laws of the Company, (B) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition or covenant or instrument to which the Company is a
party or bound or to which its property is subject, or (C) any statute,
law, rule, regulation, judgment, order or decree applicable to the Company
of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any
of its properties;
(9) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement; and
(10) the Warrant Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms; the Warrant Agreement
and the Warrants conform in all material respects to the descriptions
thereof contained in the Prospectus; the Warrants have been duly and
validly authorized, executed, issued and delivered and constitute the valid
and binding obligations of the Company, entitled to the benefits of the
Warrant Agreement and enforceable in accordance with their terms; the
certificates for the Warrants are in valid and sufficient form; the
Warrants are exercisable for the Warrant Shares in accordance with their
terms; the Warrant Shares initially issuable upon the exercise of the
Warrants have been duly authorized and reserved for issuance upon such
exercise and, when issued upon such exercise, will be validly issued, fully
paid and
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nonassessable; and the stockholders of the Company have no preemptive
rights with respect to the Warrant Shares.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York, the
General Corporation Law of the State of Delaware or the Federal laws of the
United States, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. References to the Prospectus in
this paragraph (b) include any supplements thereto at the Closing Date.
(3) The Company shall have furnished to the Representatives the opinion
of XxXxxxx Xxxxxx Xxxxxxxx Xxxx & Hand, LLP, special intellectual property
counsel for the Company, dated the Closing Date and addressed to the
Representatives, to the effect that:
(1) the statements set forth in the Prospectus under the headings
["Risk Factors--We are dependent on intellectual property and face a risk
of infringement claims." and "Business--Intellectual Property"] fairly and
accurately present the matters contained therein with respect to the
Intellectual Property owned by, or licensed to, the Company; and
(2) to the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or its
Intellectual Property of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the Prospectus.
In rendering such opinion, such counsel may rely as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Prospectus in this paragraph (c) include
any supplements thereto at the Closing Date.
(4) The Selling Stockholders shall have furnished to the
Representatives the opinion of *, counsel for the Selling Stockholders, dated
the Closing Date and addressed to the Representatives, to the effect that:
(1) this Agreement and the Custody Agreement have been duly
[authorized,] executed and delivered by the Selling Stockholders, the
Custody Agreement is valid and binding on the Selling Stockholders and each
Selling Stockholder has full legal right and authority to sell, transfer
and deliver in the
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manner provided in this Agreement and the Custody Agreement the Option
Securities underlying the option granted by such Selling Stockholder to
the several Underwriters pursuant to Section 2(b) hereof;
(2) the delivery by each Selling Stockholder to the several
Underwriters of certificates for the Option Securities underlying the
option granted by such Selling Stockholder to the several Underwriters
pursuant to Section 2(b) hereof upon exercise of said option and
against payment therefor as provided herein, will pass good and
marketable title to such Option Securities to the several Underwriters,
free and clear of all liens, encumbrances, equities and claims
whatsoever;
(3) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by any
Selling Stockholder of the transactions contemplated herein, except
such as may be have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters and
such other approvals (specified in such option) as have been obtained;
and
(4) none of the granting of the option to the several
Underwriters to purchase the Option Securities owned by such Selling
Shareholder pursuant to Section 2(b) hereof, the sale of such Option
Securities upon the exercise of said option or the consummation of any
other of the transactions herein contemplated by any Selling
Stockholder or the fulfillment of the terms hereof by any Selling
Stockholder will conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws of the
Selling Stockholder or the terms of any indenture or other agreement or
instrument known to such counsel and to which any Selling Stockholder
or any of its subsidiaries is a party or bound, or any judgment, order
or decree known to such counsel to be applicable to any Selling
Stockholder or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over any Selling Stockholder or any of its subsidiaries.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York, the
General Corporation Law of the State of Delaware or the Federal laws
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of the United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the
Underwriters, and (B) as to matters of fact, to the extent they deem
proper, on certificates of a Selling Stockholder [or responsible officers
of a Selling Stockholder] and public officials.
(5) The Representatives shall have received from Cravath, Swaine &
Xxxxx, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related matters
as the Representatives may reasonably require, and the Company and each
Selling Stockholder shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(6) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus, any
supplements to the Prospectus and this Agreement and that:
(1) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(2) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(3) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
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(7) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by such Selling Stockholder [or by
the Chairman of the Board or the President and the principal financial or
accounting officer of such Selling Stockholder], dated the Closing Date, to
the effect that the signer or signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that the representations and warranties
of such Selling Stockholder in this Agreement are true and correct in all
material respects on and as of the Closing Date to the same effect as if
made on the Closing Date.
(8) At the Execution Time and at the Closing Date, KPMG Peat Marwick
LLP shall have furnished to the Representatives letters, dated respectively
as of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants of the Company within the meaning of the Act and the applicable
published rules and regulations adopted by the Commission thereunder and
stating in effect that:***/
(1) in their opinion the audited financial statements and financial
statement schedules included in the Registration Statement and the
Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations adopted by the Commission;
----------
***/ Note: This section is drafted on the assumption that there will not be
any unaudited interim first quarter financial statements included in the
Prospectus; if first quarter financial statements are included, this section
will need to be revised accordingly to cover such statements.
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(2) on the basis of a reading of the latest unaudited financial
statements made available by the Company; carrying out certain specified
procedures (but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of the minutes
of the meetings of the stockholders, directors and the audit and compensation
committees of the Company; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the Company as to
transactions and events subsequent to December 31, 1998, nothing came to their
attention which caused them to believe that:
(1) with respect to the period subsequent to December 31, 1998, there
were any changes, at a specified date not more than five days prior to the
date of the letter, in the total liabilities of the Company or capital
stock of the Company or increases in the stockholders' deficit of the
Company or decreases in working capital (or increases in working capital
deficit, as the case may be) of the Company as compared with the amounts
shown on the December 31, 1998, consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period from January
1, 1999 to such specified date there were any decreases, as compared with
the corresponding period in the preceding year in revenues or gross profit,
or for the period from January 1, 1999 to such specified date there were
any increases, as compared with the corresponding period in the preceding
year, in loss from operations or net loss or in per share amounts of net
loss of the Company, except in all instances for changes or increases or
decreases set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the Representatives; or
(2) the information included in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301 (Selected Financial
Data), Item 302 (Supplementary Financial Information) and Item 402
(Executive Compensation) is not in conformity with the applicable
disclosure requirements of Regulation S-K; and
(3) they have performed certain other specified procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Registration Statement and the Prospectus,
including the information set forth under the captions ["Summary Financial
Information", "Dilution",
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"Capitalization", "Selected Financial Data", "Management's Discussion
and Analysis of Financial Condition and Results of Operations", "Business",
"Management", and "Certain Transactions"] in the Prospectus, agrees with
the accounting records of the Company, excluding any questions of legal
interpretation.
References to the Prospectus in this paragraph (h) include any
supplement thereto at the date of the letter.
(9) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (h) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto) the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto).
(10) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from each
officer, director stockholder and option holder of the Company addressed to the
Representatives.
(11) The Company shall have caused the Securities to be eligible for
trading on the Nasdaq National Market upon issuance, and satisfactory evidence
thereof shall have been provided to the Representatives.
(12) At the time of Closing, the Company shall have executed and
delivered the Warrant Agreement to the Representatives.
(13) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives
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and counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cravath, Swaine & Xxxxx, counsel for the
Underwriters, at Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the
Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Selling
Stockholder to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through X.X. Xxxxxxxxx, Towbin on 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 proposed
purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company and each of the
Selling Stockholders jointly and severally agree to indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement for the registration of the Securities
as originally filed or in any amendment thereof, or in any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arise out of or are based upon any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Common Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered above, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company and the Selling Stockholders will not be
liable in any such case to the extent that any such loss,
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claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein and (ii) such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
director, officer, employee or agent of such Underwriter or any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the Securities that are the subject thereof
if such person did not receive a copy of the Prospectus (or the Prospectus as
supplemented) excluding documents incorporated therein by reference at or prior
to the confirmation of the sale of such Securities to such person in any case
where such delivery is required under the Act and any untrue statement or
omission of a material fact contained in any Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as supplemented). This indemnity
agreement will be in addition to any liability which the Company or the Selling
Stockholders may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each Selling Stockholder, to
the same extent as the foregoing indemnity from the Company and the Selling
Stockholders to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have. The
Company and each Selling Stockholder acknowledge that the statements set forth
[in the last paragraph of the cover page regarding delivery of the Securities
and under the heading "Underwriting"] constitute the only information furnished
in writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
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indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Selling Stockholders, jointly and
severally, and the Underwriters severally agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, the Selling Stockholders and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and by the Underwriters on the other from the
offering of the Securities; provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Selling Stockholders, jointly and severally, and the Underwriters severally
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Selling
Stockholders
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on the one hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses) as set forth on the cover page of the Prospectus, benefits received by
each Selling Stockholder shall be deemed to be equal to the aggregate purchase
price of the Option Securities sold by such Selling Stockholder and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions as set forth on the cover page of the
Prospectus. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
provided by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The liability of each Selling Stockholder under such Selling
Stockholder's representations and warranties contained in Section 1 hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the aggregate purchase price of the
Option Securities sold by such Selling Stockholder to the Underwriters. The
Company and the Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated
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severally to take up and pay for (in the respective proportions which the amount
of Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of
Securities set forth in Schedule I hereto, the remaining Underwriters shall have
the right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not purchase
all the Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter, the Selling Stockholders or the Company. In the event
of a default by any Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company, the Selling
Stockholders and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or the Nasdaq National Market, (ii) a banking moratorium shall
have been declared either by Federal or New York State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Stockholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Stockholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancelation of this Agreement.
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12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed and confirmed to them, care of X.X. Xxxxxxxxx, Towbin,
Swiss Bank Tower, 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000
(fax no.: (212) * ); or, if sent to the Company, will be mailed, delivered or
telefaxed and confirmed to it at [address], attention of [name] (fax no.: * );
or, if sent to the Selling Stockholders, will be mailed, delivered or telefaxed
and confirmed to them, care of [name], [address], attention of [name] (fax no.:
* ).
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
XXXXX Online, Inc.
By: _________________________
Name:
Title:
[Selling Stockholder]
By: _________________________
Name:
[Title:]
[Selling Stockholder]
By: _________________________
Name:
[Title:]
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
X.X. Xxxxxxxxx, Towbin
By: __________________________
Name:
Title:
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For itself, Xxxxxxxxxx & Co. Inc. and the other several
Underwriters named in Schedule I to the foregoing
Agreement.
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SCHEDULE I
----------
NUMBER OF SHARES NUMBER OF WARRANTS
UNDERWRITERS TO BE PURCHASED TO BE PURCHASED
------------ --------------- ---------------
X.X. Xxxxxxxxx, Towbin . . . . . . * *
Xxxxxxxxxx & Co. Inc. . . . . . . * *
--------- ---------
Total . . . . . . . . .
========= =========
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SCHEDULE II
-----------
MAXIMUM NUMBER OF OPTION
SELLING STOCKHOLDERS: SECURITIES TO BE SOLD
--------------------- ---------------------
[name]
[address, fax no.]............
[name]
[address, fax no.]............
Total.......................
=======
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EXHIBIT A
[Letterhead of officer, director, shareholder or option
holder of XXXXX Online, Inc.]
XXXXX Online, Inc.
Public Offering of Common Stock
*, 1999
X.X. Xxxxxxxxx, Towbin
Xxxxxxxxxx & Co. Inc.
c/o X.X. Xxxxxxxxx, Towbin
Swiss Bank Tower
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between XXXXX Online,
Inc., a Delaware corporation (the "Company"), and [each of] you as
representatives of the Underwriters named therein, relating to an underwritten
public offering (the "Offering") of Common Stock, $.001 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of X.X. Xxxxxxxxx, Towbin, offer, sell, contract to sell, pledge or
otherwise dispose of (or enter into any transaction which is designed to, or
could be expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise) by you or
by the Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company) directly or indirectly, including the
filing (or participation in the filing) of a registration statement with the
Securities and Exchange Commission in respect of, or establish or increase a put
equivalent
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2
position or liquidate or decrease a call equivalent position within
the meaning of the rules promulgated under Section 16 of the Securities Exchange
Act of 1934 with respect to, any shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for such capital
stock, or publicly announce an intention to effect any such transaction, for a
period of one year after the date of this Agreement, other than shares of Common
Stock disposed of as bona fide gifts approved by X.X. Xxxxxxxxx, Towbin.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
[Signature of officer, director,
shareholder or option holder]
[Name and address of officer,
director, shareholder or
option holder]
