xxxxxxxxxxxxxx.xxx inc.
Class A Common Stock
(par value $.001 per share)
Underwriting Agreement
----------------------
May __, 1999
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxx Xxxxxx Inc.
Wit Capital Corporation
As representatives (the "Representatives") of the
several Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
xxxxxxxxxxxxxx.xxx Inc., a Delaware corporation (the "Company") proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
........ shares (the "Firm Shares") and, at the election of the Underwriters, up
to ........ additional shares (the "Optional Shares") of Class A Common Stock,
par value $.001 per share ("Stock") of the Company (the Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof being collectively called the "Shares") and to use the proceeds to make a
capital contribution in the capital of xxxxxxxxxxxxxx.xxx llc, a Delaware
limited liability company (the "Operating Company").
1. Each of the Company and the Operating Company, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-64211) and all
pre-effective amendments thereto (the "Initial Registration Statement") in
respect of the Shares has been filed with the Securities and Exchange Commission
(the "Commission"); the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to the Representatives,
and, excluding exhibits thereto, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such form; other
than a registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial Registration Statement has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the time it
was declared effective or such part of the Rule 462(b) Registration Statement,
if any, when it became or hereafter becomes effective, each as amended at the
time such part of the Initial Registration Statement became effective, is
hereinafter collectively called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary Prospectus
has been issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder, and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through or with the
consent of Xxxxxxx, Xxxxx & Co. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through or with the consent of Xxxxxxx, Sachs & Co.
expressly for use therein;
(d) Neither the Company nor the Operating Company has sustained since the
date of the latest audited financial statements included in the Prospectus any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or other than any loss or interference which
would not have a material adverse effect in the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
or the Operating Company (a "Material Adverse Effect"); and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or the Operating Company or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company or the Operating Company, otherwise than as set forth or
contemplated in the Prospectus or other than any change or development involving
a prospective change which would not have a Material Adverse Effect;
(e) The Company and the Operating Company have good title to all personal
property owned by them free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and the Operating Company;
and any real property and buildings held under lease by the Company and the
Operating Company are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and the Operating Company;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other
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jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect, and the Operating Company has been
duly formed and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require qualifications, except where the failure
to be so qualified would not have a Material Adverse Effect;
(g) Neither the Company nor the Operating Company has any subsidiary (as
such term is defined in the rules and regulations under the Act) except that
contemporaneously with the consummation of the transactions contemplated in this
agreement, the Operating Company will be a subsidiary of the Company;
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company (the
"Stock") have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Stock contained in the
Prospectus; the Operating Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued and outstanding limited liability
company interests (the "Membership Units") have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly or
indirectly by Xxxxxx & Xxxxx Inc. or Bertelsmann AG, free and clear of all
liens, encumbrances, equities and claims, and conform to the description of the
Membership Units contained in the Prospectus.
(i) The Shares have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued and fully paid and non-assessable and will conform to the description of
the Stock contained in the Prospectus;
(j) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or the Operating Company is a party
or by which the Company or the Operating Company is bound or to which any of the
property or assets of the Company or the Operating Company is subject, nor will
such action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company, any agreement among stockholders of the
Company, the Limited Liability Company Agreement of the Operating Company, or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or the Operating Company or any of
their properties except where such conflict, breach or violation would not have
a Material Adverse Effect and would not have the effect of preventing the
Company and the Operating Company from performing any of their respective
obligations under this agreement; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this Agreement,
except the registration under the Act of the Shares and such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(k) Neither the Company nor the Operating Company is in (i) violation of
its Certificate of Incorporation or By-laws, the Limited Liability Company
Agreement of the Operating Company or any agreement among shareholders of the
Company or members of the Operating Company, as the case may be, or in (ii)
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound except, with respect to subclause
(ii), such default would not have a Material Adverse Effect;
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(l) The statements set forth in the Prospectus under the captions
"Corporate History and Recapitalization", "Description of Capital Stock and
Membership Units", insofar as they purport to constitute a summary of the terms
of the Stock and the Membership Units, under "Certain Transactions" and "Share
Eligible for Future Sale", insofar as they purport to describe the provisions of
the documents and arrangements referred to therein, and under the caption
"Underwriting", insofar as they purport to describe the provisions of the laws
and documents referred to therein, fairly describe, in all material respects,
the matters which they purport to describe and are accurate and complete in all
material respects;
(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or the Operating Company
is a party or of which any property of the Company or the Operating Company is
the subject which, if determined adversely to the Company or the Operating
Company, would individually or in the aggregate have a Material Adverse Effect;
and, to the best of the Company's and the Operating Company's knowledge, no such
proceedings have been threatened by governmental authorities or threatened by
others;
(n) The Company is not and, after giving effect to the offering and sale of
the Shares, will not be an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(o) BDO Xxxxxxx, LLP, who have certified certain financial statements of
the Company and the Operating Company, are independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder;
(p) Other than as set forth in the Prospectus, the Company and the
Operating Company own, possess or license, or can acquire or license on
reasonable terms, all patents, trademarks, servicemarks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
("Intellectual Property") necessary for their business as described in the
Prospectus and, to the Company's and the Operating Company's knowledge,
necessary in connection with the products and services under development, in
each case, to the knowledge of the Company and the Operating Company after due
inquiry, without any conflict with or infringement of the interests of others,
and have taken all reasonable steps necessary to secure interests in such
Intellectual Property from their contractors; except as set forth in the
Prospectus, the Company and the Operating Company are not aware of outstanding
options, licenses or agreements of any kind relating to the Intellectual
Property of the Company and the Operating Company which are required to be set
forth in the Prospectus, and, except as set forth in the Prospectus, neither the
Company nor the Operating Company is a party to or bound by any options,
licenses or agreements with respect to the Intellectual Property of any other
person or entity which are required to he set forth in the Prospectus; none of
the technology employed by the Company or the Operating Company has been
obtained or is being used by the Company or the Operating Company in violation
of any contractual fiduciary obligation binding on the Company or the Operating
Company or any of their respective directors or executive officers or, to the
Company's and the Operating Company's knowledge, any of their employees or
otherwise in violation of the rights of any persons, other than any violation
which would not have a Material Adverse Effect; except as disclosed in the
Prospectus, neither the Company nor the Operating Company has received any
written or, to the Company's and the Operating Company's knowledge, oral
communications alleging that the Company or the Operating Company has violated,
infringed or conflicted with, or, by conducting its business as set forth in the
Prospectus, would violate, infringe or conflict with any of the Intellectual
Property of any other person or entity other than any such violation,
infringement or conflict which would not have a Material Adverse Effect; neither
the execution nor delivery of this Agreement, nor the operation of the Company's
and the Operating Company's business by the employees of the Company and the
Operating Company, nor the conduct of the Company's and the Operating Company's
business as described in the Prospectus will result in any breach or violation
of the terms, conditions or provisions of, constitute a default under, any
material contract, covenant or instrument known to the Company and the Operating
Company under which any
4
of such employees is now obligated, other than any breach or violation which
would not have a Material Adverse Effect; and the Company and the Operating
Company have taken and will maintain reasonable measures to prevent the
unauthorized dissemination or publication of their confidential information and,
to the extent contractually required to do so, the confidential information of
third parties in their possession;
(q) The Company and the Operating Company maintain insurance of the types
and in the amounts generally deemed adequate for their business, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company and the Operating Company against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect, except as would not have a Material
Adverse Effect;
(r) There are no contracts, other documents or other agreements required to
be described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the rules and regulations thereunder
which have not been described or filed as required; the contracts so described
in the Prospectus are in full force and effect on the date hereof; and neither
the Company, the Operating Company nor, to the best of the Company's and the
Operating Company's knowledge, any other party is in breach of or default in any
material respect under any of such contracts; and
(s) The Company and the Operating Company have not been advised, and have
no reason to believe, that they are not conducting business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which they
are conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations, except where failure to be
so in compliance would not have a Material Adverse Effect.
(t) The Company and the Operating Company have reviewed their operations
and any third parties with which the Company or the Operating Company has a
material relationship to evaluate the extent to which the business or operations
of the Company or the Operating Company will be affected by the Year 2000
Problem. As a result of such review, the Company and the Operating Company have
no reason to believe, and do not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference with
their businesses or operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods occurring
after December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $................, the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at the purchase price per share set
forth in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction, the numerator of which is the maximum number
of Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to ................... Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
5
Optional Shares may be exercised only by written notice from the Representatives
to the Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be purchased
and the date on which such Optional Shares are to be delivered, as determined by
the Representatives but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless the Representatives and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by the Representatives of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered
in such names as Xxxxxxx, Xxxxx & Co. may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by
or on behalf of the Company to Xxxxxxx, Sachs & Co., for the account
of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Xxxxxxx,
Sachs & Co. at least forty-eight hours in advance. The Company will
cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the
Time of Delivery (as defined below) with respect thereto at the office
of Xxxxxxx, Xxxxx & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York
City time, on ............., 19.. or such other time and date as
Xxxxxxx, Sachs & Co. and the Company may agree upon in writing, and,
with respect to the Optional Shares, 9:30 a.m., New York time, on the
date specified by Xxxxxxx, Xxxxx & Co. in the written notice given by
Xxxxxxx, Sachs & Co. of the Underwriters' election to purchase such
Optional Shares, or such other time and date as Xxxxxxx, Xxxxx & Co.
and the Company may agree upon in writing. Such time and date for
delivery of the Firm Shares is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Shares, if
not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a
"Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross receipt for the Shares and any additional
documents requested by the Underwriters pursuant to Section 7(j)
hereof, will be delivered at the offices of Xxxxxxxx & Xxxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX, 00000 (the "Closing Location"), and the
Shares will be delivered at the Designated Office, all at such Time of
Delivery. A meeting will be held at the Closing Location at
.......p.m., New York City time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of
this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated
by law or executive order to close.
5. Each of the Company and the Operating Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be
disapproved by the Representatives promptly after reasonable notice
thereof; to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
6
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or prospectus, of the suspension
of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as the Representatives may reasonably
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and
if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in
order to comply with the Act, to notify the Representatives and upon
their request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of
the Shares at any time nine months or more after the time of issue of
the Prospectus, upon their request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies
as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to securityholders of the Company
as soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act), an earnings statement of the
Company and its subsidiaries (which need not be audited) complying
with Section 11(a) of the Act and the rules and regulations thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, the Company and the Operating Company will not offer,
sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially
similar to the Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the
right to receive, Stock or any such substantially similar securities
(other than pursuant to employee stock option plans existing on, or
upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement), or any
limited liability company interest, except
7
the interest in the Operating Company to be purchased by the Company
as described in the Prospectus, without the prior written consent of
the Representatives; provided, however, that the Company's ability to
convert the Company's oustanding shares of Class B Common Stock and
Class C Common Stock into shares of Class A Common Stock, or to
exchange Membership Units for shares of Class A Common Stock in
accordance with the provisions of its Certificate of Incorporation
shall not be limited by the foregoing;
(f) To furnish or make available, whether in hard copy or
electronic form, to stockholders of the Company as soon as practicable
after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the
end of each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable
detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish or make available, whether in hard
copy or electronic form, to you copies of all reports or other
communications (financial or other) furnished to stockholders of the
Company, and to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and are consolidated in reports furnished to
stockholders of the Company generally or to the Commission);
(h) To use the net proceeds received by the Company from the sale
of the Shares pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of
issuance, for quotation the Shares on the National Association of
Securities Dealers Automated Quotations National Market System
("NASDAQ");
(j) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
6. The Company and the Operating Company covenant and agree with the
several Underwriters that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey (iv) all fees and expenses
8
in connection with listing the Shares on the NASDAQ; (v) the filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Shares;
(vi) the cost of preparing stock certificates; (vii) the cost and charges of any
transfer agent or registrar; and (viii) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Operating Company herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Operating
Company shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to
rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have become effective by 10:00 P.M., Washington, D.C. time, on the
date of this Agreement; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of each
such opinion is attached as Annex II(a) hereto), dated such Time of
Delivery, with respect to the Company and the matters covered in
paragraphs (i), (ii), (vii), (xi) and (xiii) of subsection (c) below
as well as such other related matters as you may reasonably request,
and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, counsel for
the Company, shall have furnished to you their written opinion (a
draft of such opinion is attached as Annex II(b) hereto), dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to
own, lease and operate its properties and carry on its business
as described in the Prospectus; and based solely on a certificate
of the Secretary of the State of Delaware, the Operating Company
is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware, and has
all requisite limited liability company power and authority to
own, lease and operate its properties and carry on its business
as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and, all of the issued shares of capital
stock of the Company, (including the Shares being delivered at
such Time of Delivery) have been duly authorized, validly issued,
fully paid and nonassessable and have not been issued in
violation of any preemptive rights pursuant to law or in the
Company's Amended and Restated Certificate of Incorporation or
any agreement between stockholders, and conform in all material
respects to the description of the Stock contained in the
Prospectus. The Operating Company has an authorized
9
capitalization as set forth in the Prospectus and all of the
outstanding Membership Units (including the Membership Units
being issued at such Time of Delivery), are duly authorized,
validly issued and fully paid and have not been issued in
violation of the Limited Liability Company Agreement; and conform
to the description of the Membership Units contained in the
Prospectus;
(iii) Based solely on certificates of the Secretaries of
State of the applicable jurisdictions, the Company and the
Operating Company have been duly qualified or admitted to
transact business, and are in good standing as a foreign
corporation or limited liability company, respectively, in each
jurisdiction set forth on Exhibit _ to such counsel's opinion;
(iv) The real property and buildings held under lease by the
Company and the Operating Company are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and the
Operating Company (in giving the opinion in this clause, such
counsel may state that no examination of record titles for the
purpose of such opinion has been made, and that they are relying
upon a general review of the titles of the Company and the
Operating Company, upon opinions of local counsel and abstracts,
reports and policies of title companies rendered or issued at or
subsequent to the time of acquisition of such property by the
Company or the Operating Company, upon opinions of counsel to the
lessors of such property and, in respect to matters of fact, upon
certificates of officers of the Company or the Operating Company,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions,
abstracts, reports, policies and certificates);
(v) Except as set forth in the Prospectus, to such counsel's
knowledge, there is no action, proceeding, investigation or claim
pending or overtly threatened before any court, arbitrator or
administrative or governmental agency to which the Company or the
Operating Company is a party or of which any property of the
Company or the Operating Company is the subject which, if
determined adversely to the Company or the Operating Company
would have a Material Adverse Effect; and, to the knowledge of
such counsel, no such actions, proceedings, investigations or
claims are threatened;
(vi) The Company has all necessary corporate power and
authority to execute, deliver and perform its obligations under
the Agreement. The Company has taken all necessary corporate
action to execute, deliver and perform its obligations under the
Agreement, and the Agreement has been validly executed and
delivered by, and constitutes the legal, valid and binding
obligation of, the Company, enforceable against it in accordance
with its terms. The Operating Company has all necessary limited
liability company power and authority to execute, deliver and
perform its obligations under the Agreement. The Operating
Company has taken all necessary limited liability company action
to execute, deliver and perform its obligations under the
Agreement, and the Agreement has been validly executed and
delivered by, and constitutes the legal, valid and binding
obligation of, the Operating Company, enforceable against it in
accordance with its terms;
(vii) The execution, delivery and performance of the
Agreement by the Company, and compliance by it therewith
(including the issuance and sale of the Shares being delivered at
such Time of Delivery), do not and will not (a) conflict with,
constitute a default under or violate (1) any provision of the
Amended and Restated Certificate of Incorporation or Amended and
Restated By-laws or any agreement between stockholders, (2) any
provision of any material applicable law, rule or regulation,
other than federal and state securities and blue sky laws, as to
which we express no opinion, (3) to such counsel's knowledge, any
judgment, order, writ, injunction or decree to which it is
subject, or (4) any material
10
agreement, contract or instrument known to us to which the
Company is a party or by which it is bound, or (b) result in or
require the creation or imposition of any security interest or
lien upon any of the Company's properties pursuant to any
material agreement, contract or instrument known to us to which
the Company is a party or by which it is bound. For purposes of
the foregoing, we have assumed that the only material agreements
are (insert a list of those agreements listed as exhibits to the
Registration Statement);
(viii) The execution, delivery and performance by the
Operating Company of the Agreement, and compliance by it
therewith, do not and will not (a) conflict with, constitute a
default under or violate (1) any provision of the Certificate of
Formation or Second Amended and Restated Limited Liability
Company Agreement, (2) any provision of any material applicable
law, rule or regulation, other than federal and state securities
and blue sky laws, as to which we express no opinion, (3) to such
counsel's knowledge, any judgment, order, writ, injunction or
decree to which it is subject, or (4) any material agreement,
contract or instrument known to us to which the Operating Company
is a party or by which it is bound, or (b) result in or require
the creation or imposition of any security interest or lien upon
any of the Operating Company's properties pursuant to any
material agreement, contract or instrument known to us to which
the Operating Company is a party or by which it is bound. For
purposes of the foregoing, we have assumed that the only material
agreements are (insert a list of those agreements listed as
exhibits to the Registration Statement);
(ix) The Company is not required to obtain any consent,
approval, certificate, license, permit, waiver, authorization of,
or declaration, filing or registration with, any governmental
authority in connection with or as a condition to the execution,
delivery or performance by the Company of the Agreement
(including the issuance and sale of the Shares being delivered at
such Time of Delivery) or the consummation by the Company of the
transactions contemplated thereby, except for the filings and
other actions required pursuant to the Securities Act of 1933, as
amended, and the rules and regulations thereunder, and except for
the other federal and state securities or blue sky laws, as to
which we express no opinion;
(x) Neither the Company nor the Operating Company is in
violation of its Certificate of Incorporation or By-laws, the
Limited Liability Company Agreement of the Operating Company or
any agreement between stockholders of the Company, as the case
may be, or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;
(xi) To such counsel's knowledge, the statements set forth
in the Prospectus under the captions "Corporate History and
Recapitalization," and "Description of Capital Stock and
Membership Units," insofar as they purport to constitute a
summary of the terms of the Stock and the Membership Units of the
Operating Company and under the caption "Certain Transactions,"
insofar as they purport to describe the provisions of the
documents and arrangements referred to therein, are accurate,
complete and fair in all material respects;
(xii) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended;
(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company
prior to such time of delivery (except as to financial statements
and related notes, financial and accounting data and supporting
11
schedules included therein, as to which we express no opinion),
comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulations promulgated
thereunder; In addition, such counsel has participated in the
preparation of the Registration Statement and the Prospectus and,
although such counsel assumes no responsibility for the accuracy
and completeness of the Registration Statement and Prospectus,
except for those statements referred to in subsection (xi) of
this Section 7(c), nothing has come to such counsel's attention
which causes such counsel to believe that, as of its effective
date, the Registration Statement or any further amendment thereto
made by the Company prior to such Time of Delivery (other than
the financial statements and related notes, financial and
accounting data and supporting schedules included therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus or
any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related notes, financial and accounting data and
supporting schedules included therein, as to which such counsel
need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading or that, as of such
Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery (other than the
financial statements and related notes, financial and accounting
data and supporting schedules included therein, as to which such
counsel need express no opinion) contains an untrue statement of
a material fact 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; and they do not know
of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement or the
Prospectus which are not filed or described as required.
(d) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, BDO Xxxxxxx, LLP shall have furnished to you a
letter or letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to you, to the effect set forth in
Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a
draft of the form of letter to be delivered on the effective date of
any post-effective amendment to the Registration Statement and as of
each Time of Delivery is attached as Annex I(b) hereto);
(e) (i) Neither the Company nor the Operating Company shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or the
Operating Company or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and the Operating Company, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the
12
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof, and until to the date of
settlement of the last purchase of Optional Shares, there shall not
have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the Exchange; (ii) a
suspension or material limitation in trading in the Company's
securities on the Exchange; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, if the effect of any such event specified
in this Clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares being delivered at such Time of Delivery on
the terms and in the manner contemplated in the Prospectus;
(g) The Shares to be sold at such Time of Delivery shall have
been duly listed, subject to notice of issuance, on the Exchange;
(h) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of Xxxxxx & Xxxxx,
Bertelsmann AG, B&X.xxx Holding Corp. and XXX.XX Online, Inc. and each
of Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxx,
Xxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxx,
substantially to the effect set forth in Subsection 5(e) hereof in
form and substance satisfactory to you;
(i) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
(k) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery,
as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, as to
the matters set forth in subsections (a) and (e) of this Section and
as to such other matters as you may reasonably request; and
8. (a) Each of the Company and the Operating Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and the Operating Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company and the
Operating Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact
13
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment 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,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Xxxxxxx, Xxxxx
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the
14
Company on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Operating Company under this
Section 8 shall be in addition to any liability which any of them may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
and to each person, if any, who controls the Company within the meaning of the
Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, the
Representatives may in their discretion arrange for the Representatives or
another party or other parties to purchase such Shares on the terms contained
herein. If within forty-eight hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Shares, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, the Representatives notify the Company that the
Representatives have so arranged for the purchase of such Shares, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Shares, you or the Company shall have the right to postpone such Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees to
file promptly any amendments to the Registration Statement or the Prospectus
which in your opinion may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this Agreement
with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
15
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares) shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Operating Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any officer or director or controlling person of
the Company, and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company and the Operating Company shall not then be under any liability to any
Underwriter except as provided in Sections 6 and 8 hereof; but, if for any other
reason, any Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through the Representatives
for all out-of-pocket expenses approved in writing by the Representatives,
including fees and disbursements of counsel, incurred by the Underwriters in
making preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company and the Operating Company shall then be under no
further liability to any Underwriter except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, the Representatives shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by Xxxxxxx, Xxxxx & Co. on behalf of the
Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxx Xxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Operating Company and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16
16. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with you the understanding of the
Representatives, please sign and return to us five counterparts hereof, and upon
the acceptance hereof by the Representatives, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement between each of the Underwriters and the Company. It is understood
that the acceptance by the Representatives of this letter on behalf of each of
the Underwriters is pursuant to the authority set forth in a form of Agreement
among Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
xxxxxxxxxxxxxx.xxx inc.
By:................................
Name:
Title:
xxxxxxxxxxxxxx.xxx llc
By:................................
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxx Xxxxxx Inc.
Wit Capital Corporation
By: Xxxxxxx, Sachs & Co.
By:
------------------------------
Name:
Title:
For themselves and as representatives of the several Underwriters.
17
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- ---------------
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxx Barney Inc.
Wit Capital Corporation
Total
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and the Operating Company within the meaning of
the Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company and the
Operating Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been
furnished to the representatives of the Underwriters (the
"Representatives") and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon
copies of which have been separately furnished to the Representatives
and on the basis of specified procedures including inquiries of
officials of the Company and the Operating Company who have
responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to
in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, nothing came to their
attention that cause them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Operating Company for the two most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such two fiscal years of the Operating Company;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and the Operating Company,
inspection of the minute books of the Company and the Operating
Company since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of the Company and
the Operating Company responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe
that:
A-1
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus, as applicable, do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations, or (ii) any material modifications should be made to
the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus for them to be in conformity
with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus, as applicable, do not
agree with the corresponding items in the unaudited consolidated
financial statements from which such data and items were derived,
and any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial
statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the
basis for the audited consolidated financial statements included
in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus, as applicable, do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock and members' equity, as the case may
be, (other than issuances of capital stock and membership units
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated long-term debt of
the Company and the Operating Company, or any decreases in
consolidated net current assets, stockholders' equity or members'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts or per membership unit amounts, as the case may be,
of consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in
each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting
A-2
an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from
the general accounting records of the Company and the Operating
Company, which appear in the Prospectus, or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and the Operating Company and have found them to be in
agreement.
A-3
