Exhibit 1.1
5,000,000 SHARES
XXXXXXXXXXX.XXX, INC.
COMMON STOCK
(PAR VALUE $.001 PER SHARE)
UNDERWRITING AGREEMENT
APRIL ___, 1999
ING BARING XXXXXX XXXX LLC
XXXXX XXXXX XXXXXX & COMPANY, LLC
As Representatives of the
several Underwriters
c/o ING Baring Xxxxxx Xxxx LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTION. Xxxxxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters"), for which ING Baring Xxxxxx Xxxx LLC and
Xxxxx Xxxxx Xxxxxx & Company, LLC are acting as representatives (the
"Representatives"), and certain stockholders of the Company named in Schedule II
hereto (the "Selling Stockholders") severally propose to sell to the several
Underwriters, an aggregate of 5,000,000 shares of the Company's Common Stock,
par value $.001 per share (the "Common Stock"), of which 4,425,000 shares are to
be sold by the Company and 575,000 shares are to be sold by the Selling
Stockholders, each Selling Stockholder selling the amount set forth opposite
such Selling Stockholder's name in Schedule II hereto. The 4,425,000 shares of
Common Stock to be sold by the Company and the 575,000 shares to be sold by the
Selling Stockholders are collectively referred to herein as the "Firm Shares."
The Company and the Selling Stockholders also propose to issue and sell to the
several Underwriters an aggregate of not more than 750,000 additional shares of
Common Stock (the "Additional Shares"), if requested by the Underwriters in
accordance with Section 10. The Firm Shares and the Additional Shares are
collectively referred to herein as the "Shares." The Company and the Selling
Stockholders are hereinafter sometimes referred to as the "Sellers." The words
"you" and "your" refer to the Representatives of the Underwriters.
The Company and the Selling Stockholders hereby agree with the
several Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND JHC
LIMITED.
The Company and JHC Limited, a Bermuda corporation and one of
the Selling Stockholders ("JHC Limited"), jointly and severally, each represent,
warrant and agree with each of the Underwriters that:
(i) A registration statement on Form S-1 (File No.
333-73059) under the Securities Act of 1933, as amended (the "Act"),
with respect to the Shares, including a form of prospectus subject to
completion, has been prepared by the Company and filed with the
Securities and Exchange Commission (the "Commission"), and one or more
amendments to such registration statement may also have been so filed.
After the execution of this Agreement, the Company shall file with the
Commission either (A) if such registration statement, as it may have
been amended, has been declared by the Commission to be effective under
the Act, a prospectus in the form most recently included in an
amendment to such registration statement filed with the Commission (or,
if no such amendment shall have been filed, in such registration
statement), with such insertions and changes as are required by Rule
430A under the Act or permitted by Rule 424(b) under the Act as shall
have been provided to and approved by the Representatives prior to the
filing thereof, or (B) if such registration statement, as it may have
been amended, has not been declared by the Commission to be effective
under the Act, an amendment to such registration statement, including a
form of prospectus, a copy of which amendment has been furnished to and
approved by the Representatives prior to the filing thereof. As used in
this Agreement, the term "Registration Statement" means such
registration statement, as amended at the time when it was or is
declared effective, including all financial schedules and exhibits
thereto; the Registration Statement shall be deemed to include any
information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined) and shall also mean
any registration statement filed pursuant to Rule 462(b) under the Act;
the term "Preliminary Prospectus" means each prospectus subject to
completion contained in such registration statement or any amendment
thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto or
filed pursuant to Rule 424(a) under the Act at the time it was or is
declared effective); and the term "Prospectus" means the prospectus
first filed with the Commission pursuant to Rule 424(b) under the Act
or, if no prospectus is required to be filed pursuant to said Rule
424(b), such term means the prospectus included in the Registration
Statement.
(ii) The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus and has not
instituted or, to the Company's knowledge, threatened to institute any
proceedings with respect to such an order. When the Preliminary
Prospectus dated March 15, 1999 was filed with the Commission, and any
amendment thereto filed subsequent to such date, it (A) contained all
statements required to be stated therein in accordance with, and
complied in all material respects with the requirements of, the Act and
the rules and regulations of the Commission thereunder (the "Rules and
Regulations") and (B) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement
or any amendment thereto was or is
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declared effective, it (A) contained or will contain all statements
required to be stated therein in accordance with, and complied or will
comply in all material respects with the requirements of, the Act and
the Rules and Regulations and (B) did not or will not 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. When the
Prospectus and when any amendment or supplement thereto is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus or such
amendment or supplement is not required to be so filed, when the
Registration Statement and when any amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective)
and on the Closing Date (as defined in Section 4 hereof) and the Option
Closing Date (as defined in Section 10 hereof), the Prospectus, as
amended or supplemented at any such time, (A) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the Rules and Regulations and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary, the foregoing provisions of
this paragraph (ii) shall not apply to statements or omissions made in
any Preliminary Prospectus, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in
reliance upon, and in conformity with, information furnished in writing
to the Company by or on behalf of the Underwriters through the
Representatives expressly for use therein.
(iii) Each of the Company and its subsidiaries (the
"Subsidiaries") (A) is duly incorporated or organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation or organization, with full corporate power and corporate
authority to own or lease its properties and to conduct its business as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus); and (B) is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
conduct of its business or the ownership or lease of property requires
such qualification (except for those jurisdictions in which the failure
so to qualify has not had and will not have a Material Adverse Effect
(as hereinafter defined)). "Material Adverse Effect" means, when used
in connection with the Company or any of its Subsidiaries, any
development, change or effect that has a materially adverse effect on
the business, financial condition, results of operations or prospects
of the Company and its Subsidiaries taken as a whole.
(iv) The Company at the Closing will have the duly
authorized and validly outstanding capitalization set forth under the
caption "Capitalization" in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and will have
the adjusted capitalization set forth therein on the Closing Date,
based on the assumptions and adjustments set forth therein or
contemplated thereby. The securities of the Company conform in all
material respects to the descriptions thereof contained in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). The outstanding shares of Common Stock have
been duly authorized and validly issued by the Company and are fully
paid and nonassessable. Except as created hereby or referred to in the
Prospectus (or, if the
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Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding options, warrants, rights or
other arrangements requiring the Company or any Subsidiary at any time
to issue any capital stock. No holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or other
rights to subscribe for any of the Shares and neither the filing of the
registration statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to, the
registration of any securities of the Company, except as described in
the Registration Statement. The Shares have been duly authorized; on
the Closing Date or the Option Closing Date (as the case may be), after
payment therefor in accordance with the terms of this Agreement, (A)
the Firm Shares and the Additional Shares to be sold by the Company
hereunder will be validly issued, fully paid and nonassessable, and (B)
good title to the Shares will pass to the Underwriters on the Closing
Date or the Option Closing Date (as the case may be) free and clear of
any lien, encumbrance, security interest, or other claim whatsoever.
All the outstanding shares of capital stock of each Subsidiary has been
duly authorized and validly issued, are fully paid and nonassessable
and are owned directly by the Company, free and clear of any lien,
encumbrance, security interest or other claim whatsoever. The Company
has received, subject to notice of issuance, approval to have the
Shares quoted on the National Market System of the National Association
of Securities Dealers' Automated Quotation System and the Company knows
of no reason or set of facts which is likely to adversely affect such
approval.
(v) The financial statements and the related notes and
schedules thereto included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present in all material respects the
consolidated financial condition, results of operations, stockholders'
equity and cash flows of the Company and its Subsidiaries, on the one
hand, and CyberDiet, LLC, on the other hand, at the dates and for the
periods specified therein, subject in the case of interim periods to
normal year-end audit adjustments. Such financial statements and the
related notes and schedules thereto have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein) and
such financial statements as are audited have been examined by
Pricewaterhouse Coopers, who are independent accountants within the
meaning of the Act and the Rules and Regulations, as indicated in their
reports filed therewith. The financial data set forth under the
captions "Prospectus Summary - Summary Consolidated Financial Data,"
"Capitalization" and "Selected Consolidated Financial Data" in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) have been prepared on a basis consistent with
the financial statements of the Company and its Subsidiaries, on the
one hand, and CyberDiet, LLC, on the other hand, except as indicated
thereon. The pro forma consolidated financial statements of the Company
and its Subsidiaries and the related notes thereto included under the
caption "Unaudited Pro Forma Consolidated Financial Information" and
elsewhere in the Prospectus and in the Registration Statement present
fairly the information contained therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to
pro forma financial statements and have been properly presented on the
bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate
to
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give effect to the transaction and circumstances referred to therein.
No other pro forma financial information is required to be included in
the Registration Statement pursuant to Regulation S-X.
(vi) The Company and each of its Subsidiaries have filed
all necessary foreign, federal, state and local income, franchise and
other tax returns and have paid all taxes shown as due thereunder, and
the Company has no knowledge of any tax deficiency which might be
assessed against the Company or any of the Subsidiaries and which has
not been reserved for in accordance with GAAP, except where the failure
to do so or such deficiency would not have a Material Adverse Effect.
(vii) The Company and each of its Subsidiaries maintain
insurance of the types and in amounts which they reasonably believe to
be customary for their business in such amounts and with such
deductibles as is customary for companies similarly situated in the
same or similar business, all of which insurance is in full force and
effect. The Company has obtained a directors' and officers' insurance
policy in an amount and from such insurers as shall be reasonably
satisfactory to the Underwriters, such policy is in full force and
effect and names the Representatives as additional insureds thereunder.
(viii) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there is no pending action, suit, proceeding or
investigation or, to the Company's knowledge, threatened action, suit,
proceeding or investigation before or by any court, regulatory body or
administrative agency or any other governmental agency or body,
domestic or foreign, which (A) questions the validity of the capital
stock of the Company or this Agreement or of any action taken or to be
taken by the Company pursuant to or in connection with this Agreement,
(B) is required to be disclosed in the Registration Statement which is
not so disclosed (and such proceedings, if any, as are summarized in
the Registration Statement are accurately summarized in all material
respects), or (C) is reasonably likely to have a Material Adverse
Effect.
(ix) The Company has full legal right, corporate power
and corporate authority to enter into this Agreement and to consummate
the transactions provided for herein. This Agreement has been duly
authorized, executed and delivered by the Company and, assuming it is a
legally valid, binding and enforceable agreement of yours, constitutes
a legally valid, binding and enforceable agreement of the Company
enforceable against the Company in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of creditors'
rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the
public policy underlying such laws), and none of the Company's
execution or delivery of this Agreement, its performance hereunder, its
consummation of the transactions contemplated herein, its application
of the net proceeds of the offering in the manner set forth under the
caption "Use of Proceeds" or the conduct of its business as described
in the Prospectus (or, if the Prospectus is not in existence, the
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most recent Preliminary Prospectus), conflicts or will conflict with or
results or will result in any breach or violation of any of the terms
or provisions of, or constitutes or will constitute a default under,
causes or will cause (or permits or will permit) the maturation or
acceleration of any liability or obligation or the termination of any
right under, or result in the creation or imposition of any lien,
charge, or encumbrance upon, any property or assets of the Company or
any of its Subsidiaries pursuant to the terms of (A) the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, (B)
any indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note agreement or other material agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which any of them are or may be bound or to which any of their
respective property is or may be subject or (C) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of
its Subsidiaries of any government, arbitrator, court, regulatory body
or administrative agency or other governmental agency or body, domestic
or foreign, having jurisdiction over the Company, any of its
Subsidiaries or any of their respective activities or properties, and,
in the case of any matter under clause (B) or (C) above, which would
have or is reasonably likely to have a Material Adverse Effect.
(x) All executed agreements or copies of executed
agreements filed or incorporated by reference as exhibits to the
Registration Statement to which the Company or any of its Subsidiaries
is a party have been duly and validly authorized, executed and
delivered by the Company or such Subsidiary, as the case may be, and
constitute the legal, valid and binding agreements of the Company or
such Subsidiary, as the case may be, enforceable against each of them
in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of
creditors' rights generally, and general equitable principles relating
to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the
public policy underlying such laws). The descriptions in the
Registration Statement of contracts and other documents fairly present
such contracts and documents in all material respects, and there are no
contracts or other documents which are required by the Act or the Rules
and Regulations to be described in the Registration Statement or filed
as exhibits to the Registration Statement which are not described or
filed as required or incorporated therein by reference, and the
exhibits which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(xi) Subsequent to the most recent respective dates as
of which information is given in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), and
except as expressly contemplated therein, neither the Company nor any
of its Subsidiaries has incurred, other than in the ordinary course of
its business, any material liabilities or obligations, direct or
contingent, purchased any of its outstanding capital stock, paid or
declared any dividends or other distributions on its capital stock
(other than cumulative payable-in-kind dividends on its preferred
stock) or entered into any material transactions not in the ordinary
course of business, and there has been no material change in capital
stock (except for the exercise of options and warrants and the
conversion of preferred stock disclosed in the Prospectus and the sale
of shares issued or issuable upon the exercise of options and warrants
so disclosed) or debt
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or any material adverse change in the business, financial condition,
results of operations or prospects of the Company and its Subsidiaries
taken as a whole, except as indicated in the Prospectus (or such
Preliminary Prospectus). Neither the Company nor any of its
Subsidiaries (or the manner in which it or any of them conducts its
business) is in breach or violation of, or in default under, any term
or provision of (A) its certificate of incorporation or bylaws, (B) any
indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note agreement or other agreement or
instrument to which it is a party or by which it is or may be bound or
to which any of its property is or may be subject, or any indebtedness,
or (C) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of its Subsidiaries or of any
arbitrator, court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having jurisdiction
over the Company or any of its Subsidiaries or any of their respective
activities or properties, and, in the case of any matter under clause
(B) or (C) above, which would have or is reasonably likely to have a
Material Adverse Effect.
(xii) No labor disturbance by the employees of the
Company or any of its Subsidiaries exists or, to the best knowledge of
the Company, is imminent.
(xiii) Since its inception, the Company has not incurred
any material liability arising under or as a result of the application
of the provisions of the Act.
(xiv) (i) The Company and its Subsidiaries own or
possess valid and enforceable licenses for all inventions, patents,
patent applications, trademarks (registered or unregistered), trademark
applications, tradenames, copyrights, manufacturing processes,
formulae, trade secrets, know-how, and other intangible property and
assets (collectively, "Intellectual Property") used in the conduct of
their business now conducted as described in the Prospectus (except
where the failure to own or possess the same would not have a Material
Adverse Effect) and the Company does not know of any facts which would
form a reasonable basis for a claim that the Company or any of its
Subsidiaries do not own or possess valid and enforceable licenses for
all Intellectual Property necessary to the conduct of their business
proposed to be conducted as described in the Prospectus except where
the failure to own or possess the same would not have a Material
Adverse Effect; (ii) the Company has no knowledge that it or any of its
Subsidiaries lacks or will be unable to obtain any rights or licenses
to use any of the Intellectual Property necessary to conduct the
businesses now conducted or proposed to be conducted by them as
described in the Prospectus, except where the failure to obtain the
same would not have a Material Adverse Effect; (iii) the Company does
not know of any third parties who have or will be able to establish
rights to any of the Intellectual Property, other than the legitimate
rights of licensors; (iv) to the Company's knowledge, there is no
infringement by third parties of any of the Intellectual Property; (v)
the Company's use of the Intellectual Property does not infringe upon
the rights of any third party, except where the same would not have a
Material Adverse Effect; (vi) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's or any Subsidiary's rights of title or other
interest in or to any Intellectual Property, and the Company does not
know of any facts which would form a reasonable basis for any such
claim; (vii) there is no pending, or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
validity and scope of any Intellectual Property, and the Company does
not know of any facts which would form a reasonable basis for any such
claim; (viii) there is no pending or, to the
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Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company or any of its Subsidiaries infringe or
otherwise violate any patent, trademark, copyright, trade secret or
other proprietary right of others, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (ix)
neither the Company nor any of the Subsidiaries owns any patents, nor
are there any patent applications pending with the United States Patent
and Trademark Office or similar agency; and (x) there is no pending or,
to the Company's knowledge, threatened action, suit, proceeding or
claim by any current or former employee, consultant or agent of the
Company or any of its Subsidiaries seeking either ownership rights to
any invention or compensation from the Company or any of its
Subsidiaries for any invention made by such employee, consultant or
agent in the course of his/her employment with the Company or any of
its Subsidiaries, nor, to the Company's knowledge, can any such action,
suit, proceeding or claim, if instituted, be sustained.
(xv) No material consent, approval, authorization or
order of or filing with any court, regulatory body, administrative
agency or any other governmental agency or body, domestic or foreign,
is required for the performance by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby,
except such as have been or may be obtained under the Act or may be
required under state securities or Blue Sky laws in connection with the
Underwriters' purchase and distribution of the Shares.
(xvi) There are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such
securities under the Registration Statement (other than those that have
been disclosed in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), that have not been
waived with respect to the Registration Statement.
(xvii) Neither the Company nor any of its officers,
directors or affiliates (within the meaning of the Rules and
Regulations) has taken, directly or indirectly, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has constituted or which might in the future reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company, to facilitate the sale or resale
of the Shares or otherwise.
(xviii) Each of the Company and its Subsidiaries has
good title to, or valid and enforceable leasehold interests in, all
properties and assets owned or leased by it, free and clear of all
liens, encumbrances, security interests, claims, restrictions,
equities, claims and defects, except (A) such as are described in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), or such as do not
materially adversely affect the value of any of such properties or
assets taken as a whole and do not materially interfere with the use
made
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and proposed to be made of any of such properties or assets taken as a
whole, and (B) liens for taxes not yet due and payable. The Company
owns or leases all such properties as are necessary to its operations
as now conducted as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus); and the properties of the Company and its
Subsidiaries conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus). All the material leases and subleases of the Company and
its Subsidiaries, and under which the Company or any Subsidiary holds
properties or assets as lessee or sublessee, constitute valid leasehold
interests of the Company or such Subsidiary free and clear of any lien,
encumbrance, security interest or other claim whatsoever, are in full
force and effect, and neither the Company nor any Subsidiary is in
default in respect of any of the material terms or provisions of any
such material leases or subleases, and neither the Company nor any
Subsidiary has notice of any claim which has been asserted by anyone
adverse to the Company's or any of its Subsidiary's rights as lessee or
sublessee under either the material lease or sublease, or affecting or
questioning the Company's or any Subsidiary's right to the continued
possession of the leased or subleased premises under any such material
lease or sublease, which is reasonably likely to have a Material
Adverse Effect.
(xix) Neither the Company nor any Subsidiary has
violated any applicable environmental, safety, health or similar law
applicable to the business of the Company, nor any federal or state law
relating to discrimination in the hiring, promotion, or pay of
employees, nor any applicable federal or state wages and hours law, nor
any provisions of ERISA or the rules and regulations promulgated
thereunder, the consequences of which violation is reasonably likely to
have a Material Adverse Effect.
(xx) Each of the Company and its Subsidiaries hold and
at the Closing Date and any later Option Closing Date, as the case may
be, will hold, all franchises, licenses, permits, approvals,
certificates and other authorizations from federal, state and foreign
and other governmental or regulatory authorities necessary to the
ownership, leasing and operation of their properties or required for
the present conduct of business, and such franchises, licenses,
permits, approvals, certificates and other governmental authorizations
are in full force and effect and the Company and its Subsidiaries are
in compliance therewith in all material respects except where the
failure so to hold, obtain, maintain or comply with would not have a
Material Adverse Effect.
(xxi) Each of the Company and its Subsidiaries is not
(i) in violation of its certificate of incorporation or bylaws, or (ii)
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any bond, debenture, note
or other evidence of indebtedness, or (iii) in default in the
performance or observance of any contract, indenture, mortgage, loan
agreement joint venture or other agreement or instrument to which it is
a party or by which its or any of its properties are bound, or (iv) in
violation of any law, order, rule, regulation, writ, injunction,
judgment or decree of any court of government agency or body to which
the Company or any of its Subsidiaries is subject, in each case under
clause (ii), (iii) or (iv) where the same would have or is reasonably
likely to have a Material Adverse Effect.
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(xxii) The Company and its Subsidiaries are (i) in
compliance with any and all applicable United States, foreign, state
and local environmental laws, rules, regulations, treaties, statutes
and codes promulgated by any and all governmental authorities relating
to the protection of human health and safety, the environment or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct their
business as currently conducted, and (iii) are in compliance with all
terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive
required permit licenses or other approvals would not, individually or
in the aggregate, have a Material Adverse Effect. No action,
proceeding, revocation proceeding, writ, injunction or claim is pending
against the Company or its Subsidiaries or, to the Company's knowledge,
threatened against the Company or its Subsidiaries relating to the
Environmental Laws or to their activities involving Hazardous Materials
which has had, or is reasonably likely to have, a Material Adverse
Effect. "Hazardous Materials" means any material or substance (i) that
is prohibited or regulated by any environmental law, rule, regulation,
order, treaty, statute or code promulgated by any governmental
authority, or any amendment or modification thereto, or (ii) that has
been designated or regulated by any governmental authority as
radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment. The Company and its Subsidiaries have
not engaged in the generation, use, manufacture, transportation or
storage of any Hazardous Materials on any of their properties or former
properties, except where such use, manufacture, transportation or
storage is in compliance in all material respects with Environmental
Laws. The Company and its Subsidiaries have not disposed of any, and to
the Company's knowledge, no parties other than the Company and its
Subsidiaries have disposed of, Hazardous Materials on any of their
properties or on properties formerly owned or leased by them during the
time of such ownership or lease, except in material compliance with
Environmental Laws. To the Company's knowledge, no spills, discharges,
releases, deposits, emplacements, leaks or disposal of any Hazardous
Materials have occurred on or under or have emanated from any of the
Company's or its Subsidiaries' properties or former properties during
the time of the ownership or lease thereof by the Company or a
Subsidiary except in compliance with Environmental Laws and except as
disclosed in the Prospectus, the Company has no knowledge of any
spills, discharges, releases, deposits, emplacements, leaks or disposal
of any Hazardous Materials that have occurred on or under or have
emanated from any of the Company's or Subsidiaries' properties or
former properties prior to the Company's or Subsidiaries' ownership or
lease thereof.
(xxiii) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company or any
Subsidiary to or for the benefit of any of the officers or directors of
the Company or any of the members of the families of any of them that
are required to be disclosed in the Registration Statement and the
Prospectus that are not so disclosed.
(xxiv) The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; and (ii) transactions
are recorded as necessary to permit preparation of financial statements
in
10
conformity with generally accepted accounting principles and to
maintain accountability for assets.
(xxv) The Company and its Subsidiaries have not at any
time during the last five years (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
foreign, United States or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by applicable law.
(xxvi) The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(xxvii) Each certificate signed by any officer of the
Company and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
(xxviii) All internal computer systems and each
Constituent Component (as defined below) of those systems and all
computer-related products and each Constituent Component of those
products of the Company and each of its Subsidiaries will not be
affected by the Year 2000 Problem. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software
used by the Company or any of the Subsidiaries 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. "Constituent Component" means all software
(including operating systems, programs, packages and utilities),
firmware, hardware, networking components, and peripherals provided as
part of the configuration.
(xxix) The Company has timely and properly filed with
the Commission all reports and other documents required to have been
filed by it with the Commission pursuant to the Act, the Rules and
Regulations and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except that it filed late certain reports on Form
10-QSB for the quarters ended on or before June 30, 1998 and except as
set forth in the report on Form 10-KSB for the year ended December 31,
1998.
(xxx) No relationship, direct or indirect, exists
between or among the Company or any of its Subsidiaries on the one
hand, and the directors, officers, stockholders, customers or suppliers
of the Company or any of its Subsidiaries on the other hand, which is
required by the Act to be described in the Registration Statement or
the Prospectus which is not so described.
11
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder, severally and not jointly, represents and warrants to
each Underwriter that:
(i) Such Selling Stockholder is the lawful owner of the
Shares to be sold by such Selling Stockholder pursuant to this
Agreement and has, and on the Closing Date will have, good and clear
title to such Shares, free of all restrictions on transfer, liens,
encumbrances, security interests, equities and claims whatsoever.
(ii) Such Selling Stockholder has, and on the Closing
Date will have, full legal right, power and authority, and all
authorization and approval required by law, to enter into this
Agreement, the Custody Agreement signed by such Selling Stockholder and
[Standard Registrar & Transfer Agency], as Custodian, relating to the
deposit of the Shares to be sold by such Selling Stockholder (the
"Custody Agreement") and the Power of Attorney of such Selling
Stockholder appointing certain individuals as such Selling
Stockholder's attorneys-in-fact (the "Attorneys") to the extent set
forth therein, relating to the transactions contemplated hereby and by
the Registration Statement and the Custody Agreement (the "Power of
Attorney") and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder in the manner provided herein and
therein.
(iii) This Agreement has been duly authorized, executed
and delivered by or on behalf of such Selling Stockholder.
(iv) The Custody Agreement of such Selling Stockholder
has been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms.
(v) The Power of Attorney of such Selling Stockholder
has been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding instrument of such Selling
Stockholder, enforceable in accordance with its terms, and, pursuant to
such Power of Attorney, such Selling Stockholder has, among other
things, authorized the Attorneys, or any one of them, to execute and
deliver on such Selling Stockholder's behalf, this Agreement and any
other document that they, or any one of them, may deem necessary or
desirable in connection with the transactions contemplated hereby and
thereby and to deliver the Shares to be sold by such Selling
Stockholder pursuant to this Agreement.
(vi) Upon delivery of and payment for the Shares to be
sold by such Selling Stockholder pursuant to this Agreement, good and
clear title to such Shares will pass to the Underwriters, free of all
restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever.
(vii) The execution, delivery and performance of this
Agreement and the Custody Agreement and Power of Attorney of such
Selling Stockholder by or on behalf of such Selling Stockholder, the
compliance by such Selling Stockholder with all the provisions hereof
and thereof and the consummation of the transactions contemplated
hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may
12
be required under the securities or Blue Sky laws of the various
states), (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the organizational documents of
such Selling Stockholder, if such Selling Stockholder is not an
individual, or any indenture, loan agreement, mortgage, lease or other
material agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any property of such
Selling Stockholder is bound or (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over
such Selling Stockholder or any property of such Selling Stockholder.
(viii) The information in the Registration Statement
under the caption "Principal and Selling Stockholders" which
specifically relates to such Selling Stockholder does not, and will not
on the Closing Date, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph shall not apply to statements or omissions
made in any Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or supplement
thereto in reliance upon, and in conformity with, information furnished
in writing to the Company by or on behalf of the Underwriters through
the Representatives expressly for use therein.
(ix) If there is any change in the information referred
to in Section 3(ix), such Selling Stockholder will immediately notify
you of such change.
(x) Each certificate signed by or on behalf of such
Selling Stockholder and delivered to the Underwriters or counsel for
the Underwriters shall be deemed to be a representation and warranty by
such Selling Stockholder to the Underwriters as to the matters covered
thereby.
4. PURCHASE, SALE AND DELIVERY OF THE SHARES AND LOCK-UP
AGREEMENTS. On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, (i) the Company agrees to sell 4,425,000 Firm Shares, (ii) each Selling
Stockholder agrees, severally and not jointly, to sell the number of Firm Shares
set forth opposite its name in Schedule II hereto, and (iii) each Underwriter
agrees, severally and not jointly, to purchase from each Seller at a purchase
price of $___ per Share the number of Firm Shares (subject to adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Firm Shares to be sold by such Seller as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto
bears to the total number of Firm Shares in Schedule I.
Delivery of certificates, and payment of the purchase price,
for the Firm Shares shall be made at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx
LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other location as shall be
agreed upon by the Company and the Representatives. Such delivery and payment
shall be made at 10:00 a.m., New York City time, on __________, 1999 or at such
other time and date not more than ten business days thereafter as shall be
agreed upon by the Representatives and the Company. The time and date of such
delivery and payment are herein called the "Closing Date." Delivery of the
certificates for the
13
Firm Shares 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 purchase price for the Firm Shares by wire transfer of
immediately available funds to an account designated to the Representatives by
the Company and the Selling Stockholders in writing at least two business days
preceding the Closing Date. The certificates for the Shares to be so delivered
will be in definitive, fully registered form, will bear no restrictive legends
and will be in such denominations and registered in such names as the
Representatives shall request, not less than two full business days prior to the
Closing Date. The certificates for the Firm Shares will be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging not later than 9:30 a.m., New
York time on the business day prior to the Closing Date.
Each Seller will not, directly or indirectly, without the
prior written consent of the Representatives, directly or indirectly offer,
sell, solicit an offer to buy, make any short sale, pledge, grant any option to
purchase, contract to sell, or otherwise dispose of or transfer (collectively, a
"Disposition") of any shares of Common Stock (including, without limitation,
shares of Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and
Exchange Commission) or any securities convertible into or exercisable or
exchangeable for, or any rights to purchase or acquire, shares of Common Stock
now owned or hereafter acquired, for a period of 180 days after the date hereof,
except (i) pursuant to this Agreement; (ii) as a bona fide gift or gifts,
provided the donee or donees thereof agree in writing to be bound by this
restriction, (iii) as a distribution to partners, beneficiaries or stockholders
of the undersigned, provided that the distributees thereof agree in writing to
be bound by the terms of this restriction or (iv) upon death, by will or
pursuant to the laws of descent and distribution.
5. PUBLIC OFFERING OF THE SHARES. It is understood that the
Underwriters propose to make a public offering of the Shares at the price and
upon the other terms set forth in the Prospectus.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees
with each of the Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto to become effective as
promptly as practicable. If required, the Company will file the
Prospectus and any amendment or supplement thereto with the Commission
in the manner and within the time period required by Rule 424(b) under
the Act. During any time when a prospectus relating to the Shares is
required to be delivered under the Act, the Company (A) will use its
best efforts to comply with all requirements imposed upon it by the Act
and the Rules and Regulations to the extent necessary to permit the
continuance of sales of or dealings in the Shares in accordance with
the provisions hereof and of the Prospectus, as then amended or
supplemented, and (B) will not file with the Commission the prospectus
or the amendment referred to in the third sentence of Section 2(a)(i)
hereof, any amendment or supplement to such prospectus or any amendment
to the Registration Statement of which the Representatives shall not
previously have been advised and furnished with a copy a reasonable
period of time prior
14
to the proposed filing and as to which filing the Representatives shall
not have given their consent.
(ii) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Representatives (A) when
the Registration Statement, as amended, has become effective; if the
provisions of Rule 430A promulgated under the Act will be relied upon,
when the Prospectus has been filed in accordance with said Rule 430A
and when any post-effective amendment to the Registration Statement
becomes effective; (B) of any request made by the Commission for
amending the Registration Statement, for supplementing any Preliminary
Prospectus or the Prospectus or for additional information, or (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or the institution or threat of any investigation or proceeding
for that purpose, and will use its best efforts to prevent the issuance
of any such order and, if issued, to obtain the lifting thereof as soon
as possible.
(iii) The Company will use its best efforts to (A)
arrange for the qualification of the Shares for offer and sale under
the state securities or blue sky laws of such jurisdictions as the
Representatives may designate, (B) continue such qualifications in
effect for as long as may be necessary to complete the distribution of
the Shares, and (C) make such applications, file such documents and
furnish such information as may be required for the purposes set forth
in clauses (A) and (B); provided, however, that the Company shall not
be required to qualify as a foreign corporation or file a general or
unlimited consent to service of process in any such jurisdiction.
(iv) The Company consents to the use of the Prospectus
(and any amendment or supplement thereto) by the Underwriters and all
dealers to whom the Shares may be sold, in connection with the offering
or sale of the Shares and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection therewith.
If, at any time when a prospectus relating to the Shares is required to
be delivered under the Act, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading, or if it becomes
necessary at any time to amend or supplement the Prospectus to comply
with the Act or the Rules and Regulations, the Company promptly will so
notify the Representatives and, subject to Section 6(i) hereof, will
prepare and file with the Commission an amendment to the Registration
Statement or an amendment or supplement to the Prospectus which will
correct such statement or omission or effect such compliance, each such
amendment or supplement to be reasonably satisfactory to counsel to the
Underwriters.
(v) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning on the day
after the end of the fiscal quarter of the Company during which the
effective date of the Registration Statement occurs (90 days in the
event that the end of such fiscal quarter is the end of the Company's
fiscal
15
year), the Company will make generally available to its security
holders, in the manner specified in Rule 158(b) of the Rules and
Regulations, and to the Representatives, an earnings statement which
will be in the detail required by, and will otherwise comply with, the
provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required by the
Act or the Rules and Regulations, covering a period of at least 12
consecutive months after the effective date of the Registration
Statement.
(vi) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a
Registrar (which may be the same entity as the Transfer Agent) for its
Common Stock.
(vii) The Company will furnish, without charge, to the
Representatives or on the Representatives' order, at such place as the
Representatives may designate, copies of each Preliminary Prospectus,
the Registration Statement and any pre-effective or post-effective
amendments thereto (two of which copies will be signed and will include
all financial statements and exhibits) and the Prospectus, and all
amendments and supplements thereto, in each case as soon as available
and in such quantities as the Representatives may reasonably request.
(viii) The Company will cause the Shares to be duly
included for quotation on the National Association of Securities
Dealers Automated Quotations National Market System prior to the
Closing Date and will use reasonable commercial efforts to maintain
such listing.
(ix) Neither the Company nor any of its officers or
directors, nor affiliates of any of them (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action
designed to, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any
securities of the Company in violation of applicable law.
(x) The Company will apply the net proceeds of the
offering received by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(xi) The Company will timely file all such reports,
forms or other documents as may be required from time to time, under
the Act, the Rules and Regulations, the Exchange Act, and the rules and
regulations thereunder, and all such reports, forms and documents filed
will comply as to form and substance with the applicable requirements
under the Act, the Rules and Regulations, the Exchange Act and the
rules and regulations thereunder.
(xii) To use its reasonable commercial efforts to do and
perform all things required or necessary to be done and performed under
this Agreement by the Company prior to the Closing Date or any Option
Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
(xiii) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Shares, to
file a Rule 462(b) Registration Statement
16
with the Commission registering the Shares not so covered in compliance
with Rule 462(b) by 10:00 p.m., New York City time, on the date of this
Agreement and to pay to the Commission the filing fee for such Rule
462(b) Registration Statement at the time of the filing thereof or to
give irrevocable instructions for the payment of such fee pursuant to
Rule 111(b) under the Act.
7. EXPENSES.
(a) If the transactions contemplated in this Agreement
are not consummated because any condition to the obligations of the Underwriters
set forth in Section 8 hereof is not satisfied or the Underwriters terminate
this Agreement pursuant to Section 12 hereof, the Company will pay, and hereby
agrees to indemnify each Underwriter against, all fees and expenses incident to
the performance of the obligations of the Sellers under this Agreement,
including, but not limited to, (i) fees and expenses of accountants and counsel
for the Company and the Selling Stockholders, (ii) all out-of-pocket costs and
expenses incurred in connection with the preparation, duplication, printing,
filing, delivery and shipping of copies of the Registration Statement and any
pre-effective or post-effective amendments thereto, any Preliminary Prospectus
and the Prospectus and any amendments or supplements thereto (including postage
costs related to the delivery by the Underwriters of any Preliminary Prospectus
or Prospectus, or any amendment or supplement thereto), this Agreement, the
Agreement Among Underwriters, any Selected Dealer Agreement, Underwriters'
Questionnaire, Underwriters' Power of Attorney, and all other documents in
connection with the transactions contemplated herein, including the cost of all
copies thereof, (iii) out-of-pocket fees and expenses relating to qualification
of the Shares under state securities or blue sky laws, including the cost of
preparing and mailing the preliminary and final blue sky memoranda and filing
fees and reasonable disbursements and fees of counsel and other related
expenses, if any, in connection therewith, (iv) filing fees of the Commission
and the NASD relating to the Shares, (v) any fees and expenses in connection
with the quotation of the Shares on the National Association of Securities
Dealers Automated Quotations National Market System, (vi) costs and expenses
incident to the preparation, issuance and delivery to the Underwriters of any
certificates evidencing the Shares, including transfer agent's and registrar's
fees and any applicable transfer taxes incurred in connection with the delivery
to the Underwriters of the Shares to be sold by the Sellers pursuant to this
Agreement, (vii) out-of-pocket costs and expenses incident to any meetings with
prospective investors in the Shares (other than as shall have been specifically
approved by the Representatives to be paid for by the Underwriters) and (viii)
out-of-pocket costs and expenses of advertising relating to the offering of the
Shares (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters).
(b) If the purchase of the Shares as herein contemplated
is not consummated for any reason other than the Underwriters' default under
this Agreement or other than by reason of Section 12(a), the Company shall
reimburse the several Underwriters for their out-of-pocket expenses (including
reasonable counsel fees and disbursements) in connection with any investigation
made by them, and any preparation made by them in respect of marketing of the
Shares or in contemplation of the performance by them of their obligations
hereunder.
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation
of each Underwriter to purchase and pay for the Shares set forth opposite the
name of such Underwriter
17
in Schedule I and to purchase its pro rata portion of the Shares offered by the
Selling Stockholders in Schedule II is subject to the representations and
warranties of the Company, JCH Limited and the Selling Stockholders herein that
are qualified by reference to a Material Adverse Effect or materiality being
true and correct, and the representations and warranties that are not so
qualified being true and correct in all material respects, as of the date hereof
and as of the Closing Date as if they had been made on and as of the Closing
Date; the accuracy on and as of the Closing Date of the statements of officers
of the Company made pursuant to the provisions hereof; the performance by the
Sellers on and as of the Closing Date of their covenants and agreements
hereunder; and the following additional conditions:
(a) If the Company has elected to rely on Rule 430A
under the Act, the Registration Statement shall have been declared effective,
and the Prospectus (containing the information omitted pursuant to Rule 430A)
shall have been filed with the Commission not later than the Commission's close
of business on the second business day following the date hereof or such later
time and date to which the Representatives shall have consented; if the Company
does not elect to rely on Rule 430A, the Registration Statement shall have been
declared effective not later than 11:00 A.M., New York time, on the date hereof
or such later time and date to which the Representatives shall have consented;
if the Company is required to file a Rule 462(b) Registration Statement after
the effectiveness of this Agreement, such 462(b) Registration Statement shall
become effective by 10:00 p.m. New York City time, on the date of this
Agreement; if required, in the case of any changes in or amendments or
supplements to the Prospectus in addition to those contemplated above, the
Company shall have filed such Prospectus as amended or supplemented with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act; no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto shall have been issued, and no proceedings
for that purpose shall have been instituted or, to the knowledge of the Company
or the Representatives, shall be threatened by the Commission.
(b) The Registration Statement, or any amendment
thereto, shall not contain an untrue statement of fact which is material, or
omit to state a fact which is material and is required to be stated therein or
is necessary to make the statements therein not misleading, and the Prospectus,
or any supplement thereto, shall not contain an untrue statement of fact which
is material, or omit to state a fact which is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives
shall have received from counsel to the Underwriters, such opinion or opinions
with respect to the issuance and sale of the Firm Shares, the Registration
Statement and the Prospectus and such other related matters as the
Representatives reasonably may request and such counsel shall have received such
documents and other information as they request to enable them to pass upon such
matters.
(d) On the Closing Date, the Underwriters shall have
received the opinions, dated the Closing Date, of (i) Golenbock, Eiseman, Assor
& Xxxx, counsel to the Company ("Company Counsel"), (ii) Xxxxxxx Xxxx & Xxxxxxx,
special counsel to JHC Limited, (iii) Xxxxx, White & Xxxxxxxx, special counsel
to Xxxxxx Xxxxxxx, (iv) Shearman & Sterling, special counsel to Xxxxxxx & X.
Xxxxxxxxxxxx, Inc., and (v) such other opinions with respect to
18
the Subsidiaries incorporated in Bermuda and Canada (the "Significant
Subsidiaries") in the forms attached hereto as Xxxxxxxx X-0, X-0 and A-3,
respectively, addressed to the Underwriters.
(e) On or prior to the Closing Date, counsel to the
Underwriters shall have been furnished such documents and certificates as they
may reasonably require in order to evidence the accuracy, completeness or
satisfaction of any of the representations or warranties of the Company, or
conditions herein contained.
(f) On the Closing Date, the Representatives shall have
received a letter from the Pricewaterhouse Coopers LLP addressed to the Company
and the Underwriters, dated the Closing Date, confirming that it is an
independent accountant with respect to the Company within the meaning of the Act
and the Rules and Regulations thereunder and based upon the procedures described
in its letter delivered to you concurrently with the execution of this Agreement
(herein called the "Original Letter"), but carried out to a date not more than
three days prior to the Closing Date, (i) confirming that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date; and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter that are necessary to reflect any
changes in the facts described in the Original Letter since the date of such
letter, or to reflect the availability of more recent financial statements, data
or information. The letter shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company which, in your reasonable judgment, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. All such letters shall be in a form reasonably satisfactory to
the Underwriters and their counsel.
(g) On the Closing Date, the Underwriters shall have
received a certificate of the Company, dated the Closing Date, signed on its
behalf by the principal executive officer and the principal financial or
accounting officer of the Company, to the effect that each of such persons has
carefully examined the Registration Statement and the Prospectus and that:
(i) The representations and warranties of the Company in
this Agreement that are qualified by reference to a Material Adverse
Effect or materiality are true and correct, and the representations and
warranties that are not so qualified are true and correct in all
material respects, as if made on and as of the Closing Date, and the
Company has complied with all agreements and covenants and satisfied
all conditions contained in this Agreement on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best knowledge
of each of such persons, are threatened under the Act and any and all
filings required by Rule 424 and Rule 430A have been timely made;
(iii) The Registration Statement and Prospectus contain
all statements and information required to be included therein, the
Registration Statement does not include any untrue statement of a
material fact or omit to state any material fact required
19
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
and neither the Prospectus nor any Preliminary Prospectus includes or
included 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, in light of the circumstances under which
they were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
up to and on the Closing Date, neither the Company nor any of the
Subsidiaries has incurred any material adverse change to the business,
financial condition, results of operations or prospects of the Company
and its Subsidiaries taken as a whole; neither the Company nor any of
the Subsidiaries has sustained any material loss or damage to its
property or assets, whether or not insured; and there has not occurred
any event required to be set forth in an amended or supplemented
Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the
date of the certificate.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus up to and
on the Closing Date, there has not been (i) any change or decrease specified in
the letter or letters referred to in paragraph (f) of this Section 8 or (ii) any
change, or any development involving a prospective change, in the business or
properties of the Company or its Subsidiaries which change or decrease in the
case of clause (i) or change or development in the case of clause (ii) is so
material and adverse as to make it impractical or inadvisable in the
Representatives' reasonable judgment to proceed with the public offering or the
delivery of the Shares as contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any
jurisdiction designated by you pursuant to Section 6(iii)(A) hereof has been
issued on or prior to the Closing Date and no proceedings for that purpose have
been instituted or to the knowledge of the Company, are threatened.
(j) The Representatives shall have received from each
person identified on Appendix B attached hereto an agreement to the effect that
such person will not, directly or indirectly, without the prior written consent
of the Representatives, offer, sell, grant any option to purchase or otherwise
dispose (or announce any offer, sale, grant of an option to purchase or other
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock for a period of 180
days after the date of this Agreement.
(k) All the representations and warranties of each
Selling Stockholder contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on the Closing Date and
you shall have received on the Closing Date a certificate dated the Closing Date
from each Selling Stockholder to such effect and to the effect that such Selling
Stockholder has complied with all of the agreements and satisfied all of the
20
conditions herein contained and required to be complied with or satisfied by
such Selling Stockholder on or prior to the Closing Date.
(l) You shall have received on the Closing Date, a
certificate of each Selling Stockholder who is not a U.S. Person (as defined
under applicable U.S. federal tax legislation) to the effect that such Selling
Stockholder is not a U.S. Person, which certificate may be in the form of a
properly completed and executed United States Treasury Department Form W-8 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(m) The Company shall have furnished the Underwriters
with such further certificates or documents consistent with the foregoing as you
or counsel for the Underwriters may reasonably request. All opinions,
certificates, letters and documents to be furnished by the Company will comply
with the provisions hereof only if they are reasonably satisfactory in all
material respects to the Underwriters and to counsel for the Underwriters. The
Company shall furnish the Underwriters with conformed copies of such opinions,
certificates, letters and documents in such quantities as you reasonably
request. The certificates delivered under this Section 8 shall constitute
representations, warranties and agreements of the Company, as to all matters set
forth therein as fully and effectively as if such matters had been set forth in
Sections 2 and 3 of this Agreement.
(n) The Shares have been duly authorized for quotation
on the National Association of Securities Dealers Automated Quotation National
Market System, subject to notice of issuance at the time of purchase.
9. INDEMNIFICATION.
(a) The Company and JHC Limited, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several (and actions in respect thereof), to which such
Underwriter or such controlling person may become subject, under the Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, or any blue sky
application or other document executed by the Company specifically for the
purpose of qualifying, or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify, any or all
of the Shares under the securities or blue sky laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), 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 not misleading, and will reimburse, as
incurred, such Underwriter or such controlling persons for any legal or other
expenses incurred by such Underwriter or such controlling persons in connection
with investigating, defending or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Company and JHC Limited will not be liable in any such case to
the extent that any such loss, claim, damage, liability or
21
action arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with information furnished in writing to the
Company on behalf of such Underwriter through the Representatives expressly for
use therein; and provided, further, that such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage, liability or action purchased Shares
which are the subject thereof to the extent that any such loss, claim, damage,
liability or action (i) results from the fact that such Underwriter failed to
send or give a copy of the Prospectus (as amended or supplemented) to such
person at or prior to the confirmation of the sale of such Shares to such person
in any case where such delivery is required by the Act and (ii) arises out of or
is based upon an untrue statement or omission of a material fact contained in
such Preliminary Prospectus that was corrected in the Prospectus (as amended and
supplemented), unless such failure resulted from non-compliance by the Company
with Section 6(vii) hereof. Notwithstanding the foregoing, the aggregate
liability of JHC Limited pursuant to this paragraph (a) shall be limited to an
amount equal to the proceeds (after deducting underwriting discounts and
commissions) received by JHC Limited from the Underwriters for the sale of the
Shares sold by JHC Limited hereunder.
The indemnity agreement in this paragraph (a) shall be in
addition to any liability which the Company and JHC Limited may otherwise have.
(b) Each of the Selling Stockholders, severally and not
jointly, agree to indemnify and hold harmless each Underwriter and each person,
if any, who controls such Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several (and actions in respect thereof), to
which such Underwriter or such controlling person may become subject, under the
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions arise
out of or are based (i) upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto; or (ii) upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements not misleading, in the case
of subparagraphs (i) and (ii) above to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and conformity with written information
furnished to the Company or such Underwriter by such Selling Stockholder,
directly or through such Selling Stockholder's representatives, specifically for
use in the preparation thereof; or (iii) in whole or in part upon any inaccuracy
in the representations and warranties of the Selling Stockholders contained
herein; or (iv) in whole or in part upon any failure of the Selling Stockholders
to perform their respective obligations hereunder or under law, and will
reimburse, as incurred, such Underwriter or such controlling persons for any
legal or other expenses incurred by such Underwriter or such controlling persons
in connection with investigating, defending or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in any of such documents in reliance upon and
in conformity with information furnished in writing to the Company on behalf of
such Underwriter
22
through the Representatives expressly for use therein; and provided, further,
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, claim, damage, liability or action (i) results from the fact
that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act and (ii) arises out of or is based upon an untrue statement or
omission of a material fact contained in such Preliminary Prospectus that was
corrected in the Prospectus (as amended and supplemented), unless such failure
resulted from non-compliance by the Company with Section 6(vii) hereof.
Notwithstanding the foregoing, the aggregate liability of any Selling
Stockholder pursuant to this paragraph (b) shall be limited to an amount equal
to the proceeds (after deducting underwriting discounts and commissions)
received by such Selling Stockholder from the Underwriters for the sale of the
Shares sold by such Selling Stockholder hereunder.
The indemnity agreement in this paragraph (b) shall be in
addition to any liability which the Selling Stockholders may otherwise have.
(c) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, each Seller Stockholder and each person, if any, who
controls such Selling Stockholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities (and actions in respect thereof) to which the Company or any Selling
Stockholder or any such director, officer, or controlling person may become
subject, under the Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement thereto
or in any Blue Sky Application, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements 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 reliance upon and in
conformity with information furnished in writing by that Underwriter through the
Representatives to the Company expressly for use therein; and will reimburse, as
incurred, all legal or other expenses reasonably incurred by the Company or any
Selling Stockholder or any such director, officer, controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. The Company, JHC Limited and the Selling Stockholders
acknowledge that the statements with respect to the public offering of the
Shares set forth under the heading "Underwriting" has been furnished by the
Underwriters to the Company expressly for use therein and constitutes the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus. The indemnity agreement contained in this paragraph
(c) shall be in addition to any liability which the Underwriters may otherwise
have.
23
(d) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 9, notify such indemnifying party or
parties 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 paragraph (a), (b) or (c) of this
Section 9 or to the extent that the indemnifying party was not adversely
affected by such omission. In case any such action is brought against an
indemnified party and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties against which a claim is
to be made will be entitled to participate therein and, to the extent that it or
they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided however, that if the defendants
in any such action include both the indemnified party and the indemnifying party
and the indemnified party has 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, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of such counsel,
the indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses (other than the reasonable costs of
investigation) subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party has employed such
counsel in connection with the assumption of such different or additional legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the indemnifying party has not employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party.
(e) If the indemnification provided for in this Section
9 is unavailable or insufficient to hold harmless an indemnified party under
paragraph (a), (b) or (c) above in respect of any losses, claims, damages,
expenses 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) (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the Sellers, on
the one hand, and the Underwriters, on the other hand, from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Sellers, on the one hand, and the Underwriters, on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Sellers, 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 of the Shares (before deducting
expenses) bear to the total underwriting discounts received by the Underwriters
hereunder, in each case as set forth in the table on the cover page of the
Prospectus. 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
24
fact relates to information supplied by the Company, the Selling Stockholders or
the Underwriters, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. 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 paragraph (e) 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 paragraph (e), the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Shares purchased by the Underwriters hereunder. The Underwriters' obligations to
contribute pursuant to this paragraph (e) are several in proportion to their
respective underwriting obligations, and not joint. 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 paragraph (e), (i) each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter and (ii) each director of the Company, each
officer of the Company who has signed the Registration Statement, and each
person, if any, who controls the Company or a Selling Stockholder within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company, subject in each case to this
paragraph (e). Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect to which a claim for contribution may be made against another party
or parties under this paragraph (e), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any other obligation (x) it or they may have hereunder or otherwise than under
this paragraph (e) or (y) to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying party may
otherwise have.
(f) Each Selling Stockholder hereby designates
Xxxxxxxxxxx.xxx, Inc., 00 Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx XX 12, Bermuda, as
its authorized agent, upon which process may be served in any action which may
be instituted in any state or federal court in the State of New York by any
Underwriter, any director or officer of any Underwriter or any person
controlling any Underwriter asserting a claim for indemnification or
contribution under or pursuant to this Section 9, and each Selling Stockholder
will accept the jurisdiction of such court in such action, and waives, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent or
given to such Selling Stockholder at the address for notices specified herein.
10. RIGHT TO INCREASE OFFERING. At anytime during a period of
30 days from the date of the Prospectus, the Underwriters, by no less than two
business days' prior notice to the Company may designate a closing (which may be
concurrent with, and part of, the closing on the Closing Date with respect to
the Firm Shares or may be a second closing held on a date subsequent to the
Closing Date, in either case such date shall be referred to herein as the
"Option Closing Date") at which the Underwriters may purchase all or less than
all of the Additional Shares in accordance with the provisions of this Section
10 at the purchase price per share to be
25
paid for the Firm Shares. In no event shall the Option Closing Date be later
than 10 business days after written notice of election to purchase Additional
Shares is given.
The Company agrees to sell to the several Underwriters on the
Option Closing Date the number of Additional Shares specified in such notice and
the Underwriters agree, severally and not jointly, to purchase such Additional
Shares on the Option Closing Date. If the Underwriters elect to purchase all of
the 375,000 Additional Shares to be sold by the Company, the Selling
Stockholders agree to sell to the several Underwriters on the Option Closing
Date the number of Additional Shares specified in such notice to be sold by the
Selling Stockholders, on a pro rata basis between the Selling Stockholders, and
the Underwriters agree, severally and not jointly, to purchase such Additional
Shares from the Selling Stockholders on the Option Closing Date.
All such Additional Shares shall be purchased for the account
of each Underwriter in the same proportion as the number of Firm Shares set
forth opposite the name of such Underwriter in Column (3) of Schedule I bears to
the total number of Firm Shares in Schedule I (subject to adjustment by you to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the Firm
Shares.
No Additional Shares shall be sold or delivered unless the
Firm Shares previously have been, or simultaneously are, sold and delivered. The
right to purchase the Additional Shares or any portion thereof may be
surrendered and terminated at any time upon notice by you to the Company.
Except to the extent modified by this Section 10, all
provisions of this Agreement relating to the transactions contemplated to occur
on the Closing Date for the sale of the Firm Shares shall apply, mutatis
mutandis, to the Option Closing Date for the sale of the Additional Shares.
11. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, JHC Limited, the Selling
Stockholders, and the Underwriters, respectively, 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 the Underwriters, and will survive
delivery of and payment for the Shares. Any successors to the Underwriters shall
be entitled to the indemnity, contribution and reimbursement agreements
contained in this Agreement.
12. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at 11:00 A.M.,
New York time on the first business day following the date hereof, or at such
earlier time after the Registration Statement becomes effective as the
Representatives, in their sole discretion, shall release the Shares for the sale
to the public unless prior to such time the Representatives shall have received
written notice from the Company that it elects that this Agreement shall not
become effective, or the Representatives shall have given written notice to the
Company that the Representatives on behalf of the Underwriters elect that this
Agreement shall not become effective; PROVIDED,
26
HOWEVER, that the provisions of this Section and of Section 7 and Section 9
hereof shall at all times be effective. For purposes of this Section 12(a), the
Shares to be purchased hereunder shall be deemed to have been so released upon
the earlier of notification by the Representatives to securities dealers
releasing such Shares for offering or the release by the Representatives for
publication of the first newspaper advertisement which is subsequently published
relating to the Shares.
(b) This Agreement (except for the provisions of
Sections 7 and 9 hereof) may be terminated by the Representatives by notice to
the Company that it has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or the Option Closing Date, or if any representation or
warranty of the Company, JHC Limited or the Selling Stockholders is not accurate
in any respect or if the covenants, agreements or conditions of, or applicable
to the Company, JHC Limited and the Selling Stockholders herein contained have
not been complied with in any respect or satisfied within the time specified on
the Closing Date or the Option Closing Date, respectively, or if prior to the
Closing Date or the Option Closing Date:
(i) the Company or any of its Subsidiaries shall have
sustained a loss by strike, fire, flood, accident or other calamity of
such a character as to interfere materially with the conduct of the
business and operations of the Company and its Subsidiaries takes as a
whole regardless of whether or not such loss was insured;
(ii) trading in the Common Stock shall have been
suspended by the Commission or the National Association of Securities
Dealers Automated Quotations National Market System or trading in
securities generally on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotations National Market
System shall have been suspended or a material limitation on such
trading shall have been imposed or minimum or maximum prices shall have
been established on any such exchange or market system;
(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an
outbreak or escalation of any other insurrection or armed conflict
involving the United States; or
(v) there shall have been a material adverse change in
(A) general economic, political or financial conditions or (B) the
present or prospective business or condition (financial or other) of
the Company and its Subsidiaries taken as a whole that, in each case,
in the Representatives' judgment makes it impracticable or inadvisable
to make or consummate the public offering, sale or delivery of the
Shares on the terms and in the manner contemplated in the Prospectus
and the Registration Statement.
(c) Termination of this Agreement under this Section 12
or Section 14 after the Firm Shares have been purchased by the Underwriters
hereunder shall be applicable
27
only to the Additional Shares. Termination of this Agreement shall be without
liability of any party to any other party other than as provided in Sections 7
and 9 hereof.
13. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes
payable in connection with the transfer of the Shares to be sold by such Selling
Stockholder to the Underwriters.
(b) To do and perform all things to be done and
performed by such Selling Stockholder under this Agreement prior to the Closing
Date and to satisfy all conditions precedent to the delivery of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement.
14. SUBSTITUTION OF UNDERWRITERS. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 8 or
12 hereof) to purchase and pay for (a) in the case of the Closing Date, the
number of Firm Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to you of such Firm Shares in accordance with the terms hereof or
(b) in the case of the Option Closing Date, the number of Additional Shares
agreed to be purchased by such Underwriter or Underwriters upon tender to you of
such Additional Shares in accordance with the terms hereof, and the number of
such Shares shall not exceed 10% of the Firm Shares or Additional Shares
required to be purchased on the Closing Date or the Option Closing Date, as the
case may be, then each of the non-defaulting Underwriters shall purchase and pay
for (in addition to the number of such Shares which it has severally agreed to
purchase hereunder) that proportion of the number of Shares which the defaulting
Underwriter or Underwriters shall have so failed or refused to purchase on such
Closing Date or Option Closing Date, as the case may be, which the number of
Shares agreed to be purchased by such non-defaulting Underwriter bears to the
aggregate number of Shares so agreed to be purchased by all such non-defaulting
Underwriters on such Closing Date or Option Closing Date, as the case may be. In
such case, you shall have the right to postpone the Closing Date or the Option
Closing Date, as the case may be, to a date not exceeding seven full business
days after the date originally fixed as such Closing Date or the Option Closing
Date, as the case may be, pursuant to the terms hereof in order that any
necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made.
If one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8 or 12 hereof) to purchase and pay
for (a) in the case of the Closing Date, the number of Firm Shares agreed to be
purchased by such Underwriter or Underwriters upon tender to you of such Firm
Shares in accordance with the terms hereof or (b) in the case of the Option
Closing Date, the number of Additional Shares agreed to be purchased by such
Underwriter or Underwriters upon tender to you of such Additional Shares in
accordance with the terms hereof, and the number of such Shares shall exceed 10%
of the Firm Shares or Additional Shares required to be purchased by all the
Underwriters on the Closing Date or the Option Closing Date, as the case may be,
then (unless within 48 hours after such default arrangements to your
satisfaction shall have been made
28
for the purchase of the defaulted Shares by an Underwriter or Underwriters) and
subject to the provisions of Section 12(b) hereof, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or on the part
of the Company or the Selling Stockholders except as otherwise provided in
Sections 7 and 9 hereof. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this paragraph. Nothing
in this Section 14, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
15. NOTICES. All communications hereunder shall be in writing
and if sent to the Representatives shall be mailed or delivered or telegraphed
and confirmed by letter or telecopied and confirmed by letter to c/o ING Baring
Xxxxxx Xxxx LLC at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Syndicate Department or, if sent to the Company, shall be mailed or delivered or
telegraphed and confirmed to the Company at 00 Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx
XX 12, Bermuda, or if sent to JHC Limited, c/o Xxxxxx X. Xxxxxxxx, 00 Xxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxxx XX 12, Bermuda, or if sent to the Selling
Stockholders, to Xxxxxx X. Xxxxxxxx, Attorney-in-Fact, at 00 Xxxx Xxxxxx, 0xx
Xxxxx, Xxxxxxxx XX 12, Bermuda, in each case with a copy to Xxxxxxxx X. Xxxx,
Esq., Golenbock, Eiseman, Assor & Xxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
16. SUCCESSORS. This Agreement shall inure to the benefit of
and be binding upon the Company, JHC Limited, the Selling Stockholders and each
Underwriter and the Company's, JHC Limited's, the Selling Stockholders' and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representations, warranties, indemnities and
contribution agreements of the Company, JHC Limited and the Selling Stockholders
contained in this Agreement shall also be for the benefit of any person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and except that the Underwriters'
indemnity and contribution agreements shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement, any person or persons, if any, who control the Company
or the Selling Stockholders within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Shares from the Underwriters
will be deemed a successor because of such purchase.
17. APPLICABLE LAW; JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to the choice of law or conflict of law principles
thereof. Each party hereto consents to the jurisdiction of each court in which
any action is commenced seeking indemnity or contribution pursuant to Section 9
above and agrees to accept, either directly or through an agent, service of
process of each such court.
18. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
29
If the foregoing correctly sets forth our understanding,
please indicate the Underwriters' acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
XXXXXXXXXXX.XXX, INC.
By:
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE II HERETO, ACTING
SEVERALLY
By:
-------------------------------
Attorney-in-fact
JHC LIMITED
By:
-------------------------------
Xxxxxx X. Xxxxxxxx
Chief Executive Officer
Accepted as of the date first above written:
ING BARING XXXXXX XXXX LLC
By: ING Baring Xxxxxx Xxxx LLC Acting on its own
behalf and as one of the Representatives of the
several Underwriters referred to in the
foregoing Agreement
By:
-------------------------------
Title:
-------------------------------
30
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated ______________, 1999
(2)
(1) Maximum Number (3)
Number of Firm of Additional Aggregate Maximum
Shares to be Shares to be Number of Shares
Purchased from Purchased from to be Purchased
NAME the Company the Company from the Company
---- ----------- ----------- ----------------
ING Baring Xxxxxx Xxxx LLC.............
Xxxxx Xxxxx Xxxxxx & Company, LLC .....................
Total.................................................. 5,000,000 375,000 5,375,000
--------- ------- ---------
--------- ------- ---------
SCHEDULE II
SELLING STOCKHOLDERS
(2)
(1) Maximum Number (3)
Number of Firm of Additional Aggregate Maximum
Shares to be Sold Shares to be Number of Shares
to the Sold to the to be Sold to the
NAME AND ADDRESS Underwriters Underwriters Underwriters
---------------- ------------ ------------ ------------
JHC Limited 375,000 250,000 625,000
------- ------- -------
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx XX 12
Bermuda
Xxxxxx Xxxxxxx 100,000 125,000 225,000
------- ------- -------
000 Xxxxxxxxxx Xxxxxx
Xxxxx-Xxxxx
X. Xxxxxx
Xxxxxx X0X 0X0
Xxxxxxx and X. Xxxxxxxxxxxx, Inc. 100,000 100,000
------- ------- -------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Total.................................................. 575,000 375,000 950,000
------- ------- -------
------- ------- -------
APPENDIX A-1
OPINION OF COUNSEL TO THE COMPANY
(a) Each of the Company and each Significant Subsidiary
is a corporation, validly existing and in good standing under the laws of the
state or other jurisdiction of its incorporation. The Company has all requisite
corporate power and corporate authority to own or lease its properties and to
conduct its business as described in the Prospectus; based on the business of
the Company and each Significant Subsidiary as described in the Registration
Statement, each Significant Subsidiary has all requisite corporate power and
corporate authority to own or lease its properties and to conduct its business
as described in such minute books;
(b) The authorized capital stock of the Company is as
set forth under the caption "Capitalization" in the Prospectus; the issued and
outstanding shares of the Company's capital stock have been duly authorized and
validly issued by the Company, are fully paid and nonassessable and, to the
knowledge of such counsel, have not been issued in violation of any preemptive
right arising under the Delaware General Corporation Law or, to such counsel's
knowledge, similar rights that entitle or will entitle any person to acquire any
shares of capital stock of the Company upon the issuance and sale of Shares of
the Company, which rights have not been waived, or in violation of any co-sale
right, registration right, right of first refusal or other similar right;
(c) All of the outstanding shares of capital stock of
each Significant Subsidiary have been duly authorized and validly issued and are
fully paid and non-assessable, are owned by the Company, directly or indirectly,
through one or more subsidiaries, and, to the knowledge of such counsel, are
free and clear of any pledge, lien, security interest, encumbrance, or claim;
(d) The Company has duly authorized the issuance and
sale of the Shares to be sold by it hereunder on the Closing Date; such Shares,
when issued and delivered by the Company and paid for in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and will
conform in all material respects to the description thereof contained in the
Prospectus and will be sold free and clear of any pledge, lien, security
interest, encumbrance or claim, and, to the knowledge of such counsel, not in
violation of or subject to any preemptive right, co-sale right, right of first
refusal or similar rights that entitle or will entitle any person to acquire any
shares of capital stock of the Company upon the issuance and sale of Shares of
the Company which rights have not previously been waived, in connection with the
purchase or sale of any of the Shares;
(e) The Registration Statement has been declared
effective under the Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required by Rule
424(b) and any required filing of an abbreviated registration statement pursuant
to Rule 462(b) of the Rules and Regulations has been made in the manner and
within the time period required by such rule 462(b); and to such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and to such counsel's
knowledge, no proceedings for that
purpose have been instituted or are pending or, to the knowledge of such
counsel, are threatened under the Act;
(f) The Registration Statement, as amended, and the
Prospectus and, if any, each amendment and supplement thereto (except for the
financial statements and notes thereto, schedules and other data or information
of an accounting, financial or statistical nature included therein, as to which
such counsel need not express any opinion), as of their respective effective or
issue dates, comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations;
(g) To the knowledge of such counsel, there are no
contracts or documents to which the Company or any Subsidiary is a party which
are required by the Act to be filed as exhibits to the Registration Statement
which are not filed as required by the Act and the Rules and Regulations;
(h) To the knowledge of such counsel, there is not
pending or threatened against the Company or any Subsidiary any action, suit,
proceeding or investigation before or by any court, regulatory body, or
administrative agency or any other governmental agency or body, domestic or
foreign, of a character required to be disclosed in the Registration Statement
or the Prospectus which is not disclosed therein;
(i) The statements set forth under the headings
"Description of Capital Stock", "Shares Eligible for Future Sale", and "Risk
Factors-Shares Eligible for Future Sale", and statements in response to Items 14
and 15 of Part II of the Registration Statement, in each case insofar as such
statements constitute a summary of the legal matters, documents or proceedings
referred to therein, provide a fair summary of such legal matters, documents and
proceedings in all material respects;
(j) The Company has all requisite corporate right,
power, and authority to enter into this Agreement and to consummate the
transactions provided for herein; this Agreement has been duly authorized,
executed and delivered by the Company and JHC Limited;
(k) None of the Company's execution or delivery of this
Agreement, its performance hereof, and its consummation of the transactions
contemplated herein conflicts with or results in any breach or violation of any
of the terms or provisions of, or constitutes a default under, the terms of the
certificate of incorporation or by-laws of the Company; the terms of any
indenture, mortgage, deed of trust, voting trust agreement, stockholder's
agreement, note agreement or other agreement or instrument to which the Company
or any of its Subsidiaries is a party filed as an exhibit to the Registration
Statement; any statute, rule or regulation of any state or Federal regulatory
body or administrative agency or other governmental agency or body, or to such
counsel's knowledge, any judgment, order or decree of any state or Federal
government, arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, having such jurisdiction over the Company, any of
its subsidiaries or their respective properties, except that with regard to this
paragraph (l), no opinion is expressed as to state securities or Blue Sky laws
or any rules or regulations thereunder;
2
(l) No consent, approval, authorization or order of any
state or Federal court, regulatory body or administrative agency or other state
or Federal governmental agency or body, has been or is required for the
Company's performance of this Agreement or the consummation of the transactions
contemplated hereby, except (1) such as have been obtained under the Act or may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution by the Underwriters of the Shares, it being understood
that no opinion is expressed with respect to state securities or Blue Sky laws
and (2) such as have been made or obtained under the Act;
(m) All holders of securities of the Company who, to
such counsel's knowledge, have rights to cause the Company to register shares of
Common Stock or other securities because of the filing of the Registration
Statement by the Company have waived such rights, such rights have expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement or such rights have been satisfied in accordance with
their respective terms, in each case except as disclosed in the Prospectus;
(n) No transfer taxes under the laws of the State of New
York are required to be paid in connection with the sale or delivery to the
Underwriters of the Firm Shares or the Additional Shares which have not been
paid;
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, representatives of the independent accountants for the Company,
representatives of the Underwriters and representatives of counsel for the
Underwriters, at which conferences the contents of the Registration Statement
and the Prospectuses and related matters were discussed and, although such
counsel may state that it has not independently checked or verified and is not
passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectuses (other than with respect to the opinions set forth in paragraph (g)
above, on the basis of the foregoing (relying as to materiality upon discussions
with, and representations and opinions of, officers and other representatives of
the Company), such counsel has no reason to believe that the Registration
Statement, on the effective date thereof 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 contained therein, in light of the
circumstances under which they were made, not misleading or that the Prospectus,
on the date thereof or on the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no view with
respect to the financial statements and notes thereto, the schedules and other
data or information of an accounting, financial or statistical nature included
in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and or other written statements of public
officials and, as to matters involving the application of laws of any
jurisdiction other than the State of New York or the United States or the
General Corporation law of the State of Delaware, solely on the opinions of
local counsel, and, as to matters relating
3
to JHC Limited or any of the Selling Stockholders, solely on opinions of counsel
to JHC Limited and such Selling Stockholders.
References to the Registration Statement and the Prospectus in
such opinion shall include any amendment or supplement thereto at the date of
such opinion.
4
APPENDIX A-2
OPINION OF COUNSEL TO EACH SELLING STOCKHOLDER
(a) Each Selling Stockholder is the lawful owner of the
Shares to be sold by such Selling Stockholder pursuant to this Agreement and has
good and clear title to such Shares, free of all restrictions on transfer,
liens, encumbrances, security interests, equities and claims whatsoever;
(b) Each Selling Stockholder has full legal right, power
and authority, and all authorization and approval required by law, to enter into
this Agreement and the Custody Agreement and the Power of Attorney of such
Selling Stockholder and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder in the manner provided herein and therein;
(c) The Custody Agreement of each Selling Stockholder
has been duly authorized, executed and delivered by such Selling Stockholder and
is a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms;
(d) The Power of Attorney of each Selling Stockholder
has been duly authorized, executed and delivered by such Selling Stockholder and
is a valid and binding instrument of such Selling Stockholder, enforceable in
accordance with its terms, and, pursuant to such Power of Attorney, such Selling
Stockholder has, among other things, authorized the Attorneys, or any one of
them, to execute and deliver on such Selling Stockholder's behalf this Agreement
and any other document they, or any one of them, may deem necessary or desirable
in connection with the transactions contemplated hereby and thereby and to
deliver the Shares to be sold by such Selling Stockholder pursuant to this
Agreement;
(e) Upon delivery of and payment for the Shares to be
sold by each Selling Stockholder pursuant to this Agreement, good and clear
title to such Shares will pass to the Underwriters, free of all restrictions on
transfer, liens, encumbrances, security interests, equities and claims
whatsoever; and
The execution, delivery and performance of this Agreement and
the Custody Agreement and Power of Attorney of each Selling Stockholder by such
Selling Stockholder, the compliance by such Selling Stockholder with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby do not (A) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (B) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
organizational documents of such Selling Stockholder, if such Selling
Stockholder is not an individual, or any indenture, loan agreement, mortgage,
lease or other agreement or instrument known to such counsel to which such
Selling Stockholder is a party or by which any property of such Selling
Stockholder is bound or (C) violate or conflict with any applicable law or any
rule, regulation, or to such counsel's knowledge, any judgment, order or decree
of any court or any governmental body or agency having jurisdiction over such
Selling Stockholder or any property of such Selling Stockholder.
5
APPENDIX A-3
OPINION OF COUNSEL TO EACH SIGNIFICANT SUBSIDIARY
(a) The Significant Subsidiary is a corporation, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Based on the business of the Company and the Significant
Subsidiary as described in the Registration Statement, the Significant
Subsidiary has all requisite corporate power and corporate authority to own or
lease its properties and to conduct its business as described in such
Registration Statement;
(b) Based solely upon a review of the stock ledger or
register and the minute books of the Significant Subsidiary on __________, 1999,
the share capital of the Significant Subsidiary is _________, all of which are
registered in the name of the Company, have been duly authorized and validly
issued and are fully paid and non-assessable, and to the knowledge of such
counsel, are owned by the Company, free and clear of any pledge, lien, security
interest, encumbrance or claim;
(c) Neither the execution or delivery of this Agreement
by the Company, nor the performance by the Company of its obligations
thereunder, will violate the certificate of incorporation or by-laws of the
Significant Subsidiary; or any applicable law, rule or regulation of any
regulatory body or administrative agency or other governmental agency or body in
the jurisdiction of incorporation of the Significant Subsidiary, or to such
counsel's knowledge any judgment, order or decree of any government, arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body in the jurisdiction of incorporation of the Significant Subsidiary, having
such jurisdiction over the Significant Subsidiary.
(d) No order, consent, approval, license, authorization
or validation of or exemption by any government or public body or authority of
the jurisdiction of incorporation of the Significant Subsidiary or any
sub-division thereof is required to authorize or is required in connection with
the execution, delivery, performance and enforcement of this Agreement.
(e) It is not necessary to ensure the enforceability in
the jurisdiction of incorporation of the Significant Subsidiary of this
Agreement that it be registered in any register kept by, or filed with, any
governmental authority or regulatory body in the jurisdiction of incorporation
of the Significant Subsidiary.
In rendering any such opinion, such counsel may rely, as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and public officials.
0
XXXXXXXX X
List of Persons Subject to Lockups
JHC Limited
Xxxxxx X. Xxxxxxxx
Xxx Xxxxxxxxx
Xxxxxx Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxx & Co., LLC
Xxxx Xxxxxxxx
Xxxxx Xxxx
Xxxxxxx & X. Xxxxxxxxxxxx, Inc.
Xxxxx & Company IV, L.P.
Transatlantic Venture Fund C.V.
Xxxxx Xxx
Xxxxxx Xxxxx
