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3,000,000 Shares
INTERWORLD CORPORATION
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
August __, 1999
INVEMED ASSOCIATES LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
1. Introductory. InterWorld Corporation, a Delaware corporation
("Company"), proposes to issue and sell 3,000,000 shares (the "Firm Securities")
of its authorized and unissued Common Stock, $.01 par value, ("Common Stock") to
Invemed Associates LLC (the "Underwriter"). As part of the offering contemplated
by this Agreement, the Underwriter has agreed to reserve out of the Firm
Securities purchased by it under this Agreement, up to 275,000 shares, for sale
to the Company's directors, officers, employees and other parties associated
with the Company (collectively, "Participants"), as set forth in the Prospectus
(as defined herein) under the heading "Underwriter" (the "Directed Share
Program"). The Firm Securities to be sold by the Underwriter pursuant to the
Directed Share Program (the "Directed Shares") will be sold by the Underwriter
pursuant to this Agreement at the public offering price. Any Directed Shares not
orally confirmed for purchase by a Participant by the end of the business day on
which this Agreement is executed will be offered to the public by the
Underwriter as set forth in the Prospectus. The Company also proposes to issue
and sell to the Underwriter, at the option of the Underwriter, an aggregate of
not more than 450,000 additional shares (the "Optional Securities") of its
Common Stock, as set forth below. The Firm Securities and the Optional
Securities are herein collectively called the "Offered Securities".
The Company hereby agrees with the Underwriter as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) A registration statement (No. 333-79879) relating to the
Offered Securities, including a form of prospectus, has been
filed with the Securities and Exchange Commission
("Commission") and either (A) has been declared effective
under the Securities Act of 1933 ("Act") and is not proposed
to be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the
"initial registration statement") has been declared
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effective, either (A) an additional registration statement
(the "additional registration statement") relating to the
Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if
so filed, has become effective upon filing pursuant to such
Rule and the Offered Securities all have been duly registered
under the Act pursuant to the initial registration statement
and, if applicable, the additional registration statement or
(B) such additional registration statement is proposed to be
filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon
such filing the Offered Securities will all have been duly
registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the
Company does not propose to amend the initial registration
statement or if an additional registration statement has been
filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement
has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent amendment (if any)
to each such registration statement has been declared
effective by the Commission or has become effective upon
filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with
respect to the initial registration statement or, if filed
prior to the execution and delivery of this Agreement, the
additional registration statement means (A) if the Company has
advised the Underwriter that it does not propose to amend such
registration statement, the date and time as of which such
registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the
Commission or has become effective upon filing pursuant to
Rule 462(c), or (B) if the Company has advised the Underwriter
that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as
of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional
registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has
advised the Underwriter that it proposes to file one,
"Effective Time" with respect to such additional registration
statement means the date and time as of which such
registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial
registration statement or the additional registration
statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its
Effective Time including all information contained in the
additional registration statement (if any) and deemed to be a
part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and
including all information (if any) deemed to be a part of the
initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Initial
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Registration Statement". The additional registration
statement, as amended at its Effective Time, including the
contents of the initial registration statement incorporated by
reference therein and including all information (if any)
deemed to be a part of the additional registration statement
as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the
Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually
as a "Registration Statement". The form of prospectus relating
to the Offered Securities, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Act or (if no such filing is required) as included
in a Registration Statement is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this
Agreement: (A) on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement
conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission ("Rules
and Regulations") and did not include any untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed or will conform, in all material respects to the
requirements of the Act and the Rules and Regulations and did
not include, or will not include, any untrue statement of a
material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration
Statement (if any) is prior to the execution and delivery of
this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in
which the Prospectus is included, each Registration Statement
and the Prospectus will conform, in all material respects to
the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If
the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement: on
the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform
in all material respects to the requirements of the Act and
the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and
no Additional Registration Statement has been or will be
filed. The two preceding sentences do not apply to statements
in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the
Company by the Underwriter specifically for use therein, it
being understood and agreed that the only such information is
that described as such in Section 7(c) hereof.
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(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to
own or lease its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified
to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the condition
(financial or other), businesses, properties or results of
operations of the Company and its subsidiaries taken as a
whole ("Material Adverse Effect").
(d) Each subsidiary of the Company has been duly incorporated
and is an existing corporation in good standing under the laws
of the jurisdiction of its incorporation, with power and
authority (corporate and other) to own or lease its properties
and conduct its business as described in the Prospectus; and
each subsidiary of the Company is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not have a Material Adverse Effect; all of the issued
and outstanding capital stock of each subsidiary of the
Company has been duly authorized and validly issued and is
fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries; and the capital stock of
each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and
defects.
(e) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued, and are fully
paid and nonassessable and conform to the description thereof
contained in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to the Common
Stock.
(f) The Offered Securities have been duly authorized, and when
issued, delivered and paid for pursuant to this Agreement,
will be validly issued, fully paid and non-assessable, and
will conform to the description thereof contained in the
Prospectus.
(g) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company
and any person that would give rise to a valid claim against
the Company or the Underwriter for a brokerage commission,
finder's fee or other like payment in connection with this
offering.
(h) Except for the Amended and Restated Registration Rights
Agreement dated January 12, 1999, between the Company and the
holders of Series A Preferred Stock and Series B Preferred
Stock (the "Registration Rights Agreement"), there are no
contracts, agreements or understandings between the
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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 in the securities registered pursuant to a
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Act. No person has any registration rights
with respect to the registration statement covering the
Offered Securities.
(i) The Common Stock has been approved for quotation subject
to notice of issuance on the Nasdaq National Market.
(j) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is
required to be obtained or made by the Company for the
consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered
Securities, except such as have been obtained and made under
the Act, the Exchange Act and the rules and regulations of the
National Association of Securities Dealers, Inc. (the "NASD")
and such as may be required under state securities laws.
(k) The execution, delivery and performance of this Agreement,
and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (i) the
charter or by-laws of the Company or any subsidiary of the
Company, (ii) any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties
of the Company or any such subsidiary is subject, except for
any such breaches or defaults which, individually or in the
aggregate, would not have a Material Adverse Effect, or (iii)
any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any such subsidiary of the
Company or any of their properties except for any such
breaches or defaults which, individually or in the aggregate
would not have a Material Adverse Effect.
(l) This Agreement has been duly authorized, executed and
delivered by the Company.
(m) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them,
in each case free from liens, encumbrances and defects that
would materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under
valid and enforceable leases with no exceptions that would
materially interfere with the use made or to be made thereof
by them, except as enforcement thereof may be
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limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditors' rising generally or by general equitable
principles.
(n) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the
business now operated by them and have not received any notice
of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse
Effect.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is
imminent that could reasonably be expected to have a Material
Adverse Effect.
(p) The Company and its subsidiaries own, license, possess or
can acquire on reasonable terms, adequate trademarks, trade
names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual
property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice
of infringement of or conflict with asserted rights of others
with respect to any intellectual property rights that, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
(q) Except as disclosed in the Prospectus, neither the Company
nor any of its subsidiaries is in violation of any statute,
any rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to
the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any
real property contaminated with any substance that is subject
to any environmental laws, is liable for any off-site disposal
or contamination pursuant to any environmental laws, or is
subject to any claim relating to environmental laws, which
violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse
Effect; and the Company is not aware of any pending
investigation which might lead to such a claim.
(r) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings are, to the
Company's knowledge, threatened or contemplated.
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(s) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries as
of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements
have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a
consistent basis, and the schedules included in each
Registration Statement present fairly the information required
to be stated therein.
(t) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the
Prospectus there has been no material adverse change, nor any
development or event involving a prospective material adverse
change, in the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole, and there has been no dividend
or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(u) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.
(v) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section
517.075, Florida Statutes, and the Company agrees to comply
with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such
business.
(w) The Company has not offered, or caused the Underwriter to
offer, any offered Securities to any person pursuant to the
Directed Share Program with the specific intent to unlawfully
influence (i) a customer or supplier of the Company to alter
the customer's or supplier's level or type of business with
the Company or (ii) a trade journalist or publication to write
or publish favorable information about the Company or its
products.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Company, at a
purchase price of $________ per share, the Firm Securities.
The Company will deliver the Firm Securities to you, against payment of
the purchase price in Federal (same day) funds by wire transfer to an account at
a bank acceptable to the Underwriter drawn to the order of the Company at the
office of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, at
10:00 A.M., New York time, on ________, 1999, or at such other time not later
than seven full business days thereafter as the Underwriter and the Company
determine, such time being herein referred to as the "First Closing Date." The
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certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as the Underwriter
requests and will be made available for checking and packaging at the office of
Invemed Associates LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, at least 24 hours
prior to the First Closing Date. If the Underwriter so elects, delivery of Firm
Securities may be made by credit to the accounts at The Depository Trust Company
designated by the Underwriter.
In addition, upon written notice from the Underwriter given to the
Company from time to time (but not more than twice) not more than 30 days
subsequent to the date of the Prospectus, the Underwriter may purchase all or
less than all of the Optional Securities at the purchase price per share to be
paid for the Firm Securities. The Company agrees to sell to the Underwriter the
number of shares of Optional Securities specified in such notice and the
Underwriter agrees to purchase such Optional Securities. Such Optional
Securities shall be purchased from the Company by the Underwriter only for the
purpose of covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time (but not more than twice) and to the extent not
previously exercised may be surrendered and terminated at any time upon notice
by the Underwriter to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by the
Underwriter but shall be not less than two full business days nor later than
five full business days after written notice of election to purchase Optional
Securities is given. The Company will deliver the Optional Securities being
purchased on each Optional Closing Date to the Underwriter, against payment of
the purchase price therefor in Federal (same day) funds by wire transfer to an
account at a bank acceptable to the Underwriter drawn to the order of the
Company, at the above office of Invemed Associates LLC, 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000. The certificates for the Optional Securities being purchased on
each Optional Closing Date will be in definitive form, in such denominations and
registered in such names as the Underwriter requests upon reasonable notice
prior to such Optional Closing Date and will be made available for checking and
packaging at the above office of Xxxxxx, Xxxxx & Bockius LLP at a reasonable
time in advance of such Optional Closing Date. If the Underwriter so elects,
delivery of Optional Securities may be made by credit to the account at The
Depository Trust Company designated by the Underwriter.
4. Offering by Underwriter. It is understood that the Underwriter
proposes to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
Underwriter that:
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(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this
Agreement, the Company will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (1)
(or, if applicable and if consented to by the Underwriter,
subparagraph (4)) of Rule 424(b) not later than the earlier of
(A) the second business day following the execution and
delivery of this Agreement or (B) the fifteenth business day
after the Effective Date of the Initial Registration
Statement. The Company will advise the Underwriter promptly of
any such filing pursuant to Rule 424(b). If the Effective Time
of the Initial Registration Statement is prior to the
execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of
the Offered Securities under the Act but the Effective Time
thereof has not occurred as of such execution and delivery,
the Company will file the additional registration statement
or, if filed, will file a post-effective amendment thereto
with the Commission pursuant to and in accordance with Rule
462(b) on or prior to 10:00 P.M., New York time, on the date
of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to the Underwriter, or
will make such filing at such later date as shall have been
consented to by the Underwriter.
(b) The Company will advise the Underwriter promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or
the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without the
Underwriter's consent, which shall not unreasonably be
withheld; and the Company will also advise the Underwriter
promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus
and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will
use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if
issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in
connection with sales by the Underwriter or dealer, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at
any time to amend the Prospectus to comply with the Act, the
Company will promptly notify the Underwriter of such event and
will promptly prepare and file with the Commission, at its own
expense, if delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue
of the Prospectus and at the expense of the Underwriter, if
delivery of a prospectus is required at any time after the
expiration of nine months after the time of issue of
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the Prospectus, an amendment or supplement which will correct
such statement or omission or an amendment which will effect
such compliance. Neither the Underwriter's consent to, nor
delivery of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make
generally available to its security holders an earnings
statement covering a period of at least 12 months beginning
after the Effective Date of the Initial Registration Statement
(or, if later, the Effective Date of the Additional
Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding
sentence, "Availability Date" means the 45th day after the end
of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Company will furnish to the Underwriter copies of each
Registration Statement (two of which will be signed and will
include all exhibits), each related preliminary prospectus,
and, so long as a prospectus relating to the Offered
Securities is required to be delivered under the Act in
connection with sales by the Underwriter or dealer, the
Prospectus and all amendments and supplements to such
documents, in each case in such quantities as the Underwriter
requests. The Prospectus shall be so furnished on or prior to
3:00 P.M., New York time, on the business day following the
later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All
other such documents shall be so furnished as soon as
available. Except as set forth in Section 5(c), the Company
will pay the expenses of printing and distributing to the
Underwriter all such documents.
(f) The Company will use its reasonable best efforts to
qualify the Offered Securities for sale under the laws of such
jurisdictions in the United States as the Underwriter
designates and to continue such qualifications in effect so
long as required for the distribution of the Offered
Securities.
(g) During the period 5 years hereafter, the Company will
furnish to the Underwriter (i) as soon as practicable after
the end of each fiscal year, a copy of its annual report to
stockholders for such year, and (ii) as soon as available, a
copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Securities
Exchange Act of 1934 or mailed to stockholders.
(h) For a period of 180 days after the date of the initial
public offering of the Offered Securities, the Company will
not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or file with the Commission a
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registration statement under the Act relating to, any
additional shares of its Common Stock or securities or other
rights convertible into or exchangeable or exercisable for any
shares of its Common Stock, or publicly disclose the intention
to make any such offer, sale, contract to sell, pledge,
disposition or filing, without the prior written consent of
the Underwriter, except (i) issuances of Common Stock pursuant
to the conversion or exchange of convertible or exchangeable
securities or the exercise of warrants outstanding on the date
hereof, (ii) grants of employee stock options pursuant to the
terms of the Company's Amended and Restated 1996 Stock Option
Plan (the "Option Plan") and rights to purchase shares under
the Company's Employee Stock Purchase Plan, (iii) issuances of
Common Stock pursuant to the exercise of options granted under
the Option Plan, provided that the Company shall have received
from the person to whom the Common Stock shall be issued upon
such exercise an agreement in substantially the same form and
containing substantially the same provisions as the agreements
specified in Section 5(j) hereof, (iv) issuances of Common
Stock to the stockholders of another entity in connection with
the acquisition of such entity by the Company, or to another
entity in connection with the acquisition of substantially all
of the assets of such entity, and (v) the filing by the
Company of a registration statement on Form S-8 to register
the shares of Common Stock issuable under the Option Plan and
the Company's Employee Stock Purchase Plan. Without limiting
the foregoing, the Company shall not amend the Registration
Rights Agreement so as to allow for the exercise of any
registration rights within 180 days of the Effective Date.
(i) The Company agrees with the Underwriter that the Company
will pay all expenses incident to the performance of the
obligations of the Company under this Agreement, for any
filing fees and other expenses (including reasonable fees and
disbursements of counsel) in connection with qualification of
the Offered Securities for sale under the laws of such
jurisdictions as the Underwriter designates pursuant to
paragraph (f) above and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable
fees and disbursements of counsel to the Underwriter in
connection with, the review by the NASD of the Offered
Securities, for any travel expenses of the Company's officers
and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective
purchasers of the Offered Securities and for expenses incurred
in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the
Underwriter.
(j) The Company shall, prior to or concurrently with the
execution of this Agreement, deliver an agreement executed by
each of the directors and officers of the Company and each
other shareholder and each holder of options of the Company to
the effect that such person will not without the prior written
consent of Invemed Associates LLC during the period commencing
on the date such person signs such agreement and ending 180
days after the date of the Prospectus (i) offer, sell,
contract to sell, pledge, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any securities or
other rights convertible into or exchangeable or exercisable
for
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any shares of Common Stock or publicly disclose the intention
to make any such offer, sale, contract to sell, pledge, or
disposition, (ii) enter into any swap or other arrangement
that transfers, in whole or in part, all or a portion of the
economic consequences of ownership of shares of any Common
Stock (regardless of whether any of the transactions described
in clause (i) or (ii) is to be settled by the delivery of
Common Stock, or such other securities, in cash or otherwise)
or (iii) make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable
for Common Stock; provided that such agreement shall not apply
to sales of the Offered Securities or sales of shares or
Common Stock purchased in the public trading markets; provided
further that any such person may exercise options to purchase
Common Stock granted under the Option Plan and may transfer
Common Stock or securities or other rights convertible into or
exchangeable or exercised for shares of Common Stock pursuant
to a bona fide gift to, or for the benefit of, directly or
indirectly, such person's children, grandchildren or spouse
for estate planning purposes; and provided further that any
such gift is made other than on a securities exchange or in
the over-the-counter market and that any such transferee
executes and delivers to you an agreement in substantially the
same form and containing substantially the same provisions as
in the agreement executed by such director, officer or
shareholder.
(k) In connection with the Directed Share Program, the
Underwriter will notify the Company in writing as to which
Participants will need to be restricted under the rules of the
NASD from sale, transfer, assignment, pledge or hypothecation
for a period of three months following the date of the
effectiveness of the Registration Statement. The Company will
direct the transfer agent to place stop transfer restrictions
upon such Participants' Directed Shares for such period of
time.
6. Conditions of the Obligations of the Underwriter. The obligations of
the Underwriter to purchase and pay for the Firm Securities on the First Closing
Date and the Optional Securities to be purchased on each Optional Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Underwriter shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and
delivery of this Agreement, shall be on or prior to the date
of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time),
of PricewaterhouseCoopers LLP confirming that they are
independent public accountants within the meaning of the Act
and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included in the
Registration Statements comply as to form in all
material respects with the applicable accounting
requirements of the Act and the related published
Rules and Regulations;
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(ii) they have performed the procedures specified by
the American Institute of Certified Public
Accountants for a review of interim financial
information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on
the unaudited financial statements included in the
Registration Statements;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available
interim financial statements of the Company,
inquiries of officials of the Company who have
responsibility for financial and accounting matters
and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements
included in the Registration Statements do
not comply as to form in all material
respects with the applicable accounting
requirements of the Act and the related
published Rules and Regulations or any
material modifications should be made to
such unaudited financial statements for them
to be in conformity with generally accepted
accounting principles;
(B) at the date of the latest available
balance sheet read by such accountants, or
at a subsequent specified date not more than
three business days prior to the date of
this Agreement, there was any change in the
capital stock or any increase in short-term
indebtedness or long-term debt of the
Company and its consolidated subsidiaries
or, at the date of the latest available
balance sheet read by such accountants,
there was any decrease in consolidated net
current assets or net assets, as compared
with amounts shown on the latest balance
sheet included in the Prospectus;
(C) for the period from the closing date of
the latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such
accountants there were any decreases, as
compared with the corresponding period of
the previous year and with the period of
corresponding length ended the date of the
latest income statement included in the
Prospectus, in consolidated net sales or net
operating income or in the total or per
share amounts of consolidated net income; or
(D) except in all cases set forth in clauses
(B) and (C) above for changes, increases or
decreases which the Prospectus discloses
have occurred or may occur or which are
described in such letter; and
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(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and
other financial information contained in the
Registration Statements (in each case to the extent
that such dollar amounts, percentages and other
financial information are derived from the general
accounting records of the Company and its
subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly
from such records by analysis or computation) with
the results obtained from inquiries, a reading of
such general accounting records and other procedures
specified in such letter and have found such dollar
amounts, percentages and other financial information
to be in agreement with such results, except as
otherwise specified in such letter.
For purposes of this subsection, (i) if the
Effective Time of the Initial Registration Statement
is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the
initial registration statement as proposed to be
amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii)
if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to
such execution and delivery, "Registration
Statements" shall mean the Initial Registration
Statement and the additional registration statement
as proposed to be filed or as proposed to be amended
by the post-effective amendment to be filed shortly
prior to its Effective Time, and (iii) "Prospectus"
shall mean the prospectus included in the
Registration Statements.
(b) The Company shall have received from
PricewaterhouseCoopers LLP (and furnished to the Underwriter)
a review report with respect to Management's Discussion and
Analysis of Financial Condition and Results of Operations of
the Company for the fiscal years ending 1996, 1997 and 1998
and for the three-month period ending March 31, 1999, and the
corresponding period for the prior fiscal year, each in
accordance with Statement on Standards for Attestation
Engagements No. 8 issued by the Auditing Standards Board of
the American Institute of Certified Public Accountants.
(c) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later
than 10:00 P.M., New York time, on the date of this Agreement
or such later date as shall have been consented to by the
Underwriter. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution
and delivery of this Agreement, such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date
of this Agreement or, if earlier, the time the Prospectus is
printed and distributed to the Underwriter, or shall have
occurred at such later date as shall have been consented to by
the
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Underwriter. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this
Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to such Closing Date, no
stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the
Company or the Underwriter, shall be contemplated by the
Commission.
(d) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or
any development or event involving a prospective change, in
the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries
taken as a whole which, in the judgment of the Underwriter, is
material and adverse and makes it impractical or inadvisable
to proceed with completion of the public offering or the sale
of and payment for the Offered Securities; (ii) any suspension
or limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the
over-the-counter market; (iii) any banking moratorium declared
by U.S. Federal or New York authorities; or (iv) any outbreak
or escalation of major hostilities in which the United States
is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency
if, in the judgment of the Underwriter, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes
it impractical or inadvisable to proceed with completion of
the public offering or the sale of and payment for the Offered
Securities.
(e) The Underwriter shall have received an opinion, dated such
Closing Date, of X'Xxxxxxxx, Graev & Karabell, LLP, counsel
for the Company, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws
of the State of Delaware, with corporate power and
authority to own its properties and conduct its
business as described in the Prospectus; and the
Company is duly qualified to do business as a foreign
corporation in good standing in all other
jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to be so
qualified would not have Material Adverse Effects;
(ii) The Offered Securities delivered on such Closing
Date (assuming issuance and delivery against payment
therefor in accordance with the terms hereof) and all
other outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued,
are fully paid and nonassessable and conform to the
description thereof contained in the
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Prospectus; and the stockholders of the Company have
no statutory preemptive rights or, to such counsel's
knowledge, similar rights with respect to the Common
Stock;
(iii) To the best of the knowledge of such counsel,
the grant of all outstanding options and the issuance
of all outstanding warrants have been duly
authorized, and such options and warrants have been
validly issued;
(iv) Except for the Registration Rights Agreement
there are no contracts, agreements or understandings
known to such counsel 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 in the securities
registered pursuant to the Registration Statement or
in any securities being registered pursuant to any
other registration statement filed by the Company
under the Act. To such counsel's knowledge, no person
has any registration rights with respect to a
Registration Statement covering the Offered
Securities;
(v) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or
any court is required to be obtained or made by the
Company for the consummation of the transactions
contemplated by this Agreement in connection with the
sale of the Offered Securities, except such as have
been obtained and made under the Act or the Exchange
Act and the rules and regulations of the NASD and
such as may be required under state securities laws;
(vi) The execution, delivery and performance of this
Agreement and the consummation of the transactions
herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or
constitute a default under the charter or by-laws of
the Company or any subsidiary of the Company, any
statute, any rule, regulation or, to such counsel's
knowledge, order of any governmental agency or body
or any court having jurisdiction over the Company or
any subsidiary of the Company or any of their
properties, or, to such counsel's knowledge, any
material agreement or instrument to which the Company
or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which
any of the properties of the Company or any such
subsidiary is subject;
(vii) The Initial Registration Statement was declared
effective under the Act as of the date and time
specified in such opinion, the Additional
Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if
determinable) specified in such opinion, the
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Prospectus either was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified
in such opinion on the date specified therein or was
included in the Initial Registration Statement or the
Additional Registration Statement (as the case may
be), and, to the knowledge of such counsel, no stop
order suspending the effectiveness of a Registration
Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or
are pending or contemplated under the Act, and each
Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their
respective effective or issue dates, complied as to
form in all material respects with the requirements
of the Act and the Rules and Regulations; the
descriptions in the Registration Statements and
Prospectus of statutes, legal and governmental
proceedings and contracts and other documents are
accurate and fairly present the information required
to be shown; and such counsel does not know of any
legal or governmental proceedings required to be
described in a Registration Statement or the
Prospectus which are not described as required or of
any contracts or documents of a character required to
be described in a Registration Statement or the
Prospectus or to be filed as exhibits to a
Registration Statement which are not described and
filed as required; it being understood that such
counsel need express no opinion as to the financial
statements or other financial data contained in the
Registration Statements or the Prospectus; and
(viii) This Agreement has been duly authorized,
executed and delivered by the Company.
Such counsel shall also state that it has no reason
to believe that any part of a Registration Statement or any
amendment thereto, as of its effective date, contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; or that the
Prospectus or any amendment or supplement thereto, as of its
issue date or as of such Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits to
state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(f) The Underwriter shall have received an opinion, dated such
Closing Date, of Xxxxxxxx, Rackman & Xxxxxxx, P.C., patent
counsel for the Company, to the effect that:
(i) Such counsel has no knowledge of any reason that
any patent of the Company is not valid and has no
knowledge of any reason why any patents that may
issue from applications for patents filed by the
Company with the United States Patent and Trademark
Office would not be valid;
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(ii) To the knowledge of such counsel, the Company is
not infringing or otherwise violating any patents,
trade secrets, know-how or proprietary rights or
techniques of others and there is no pending, or, to
the knowledge of such counsel, threatened action,
suit, proceeding or claim by others that the Company
has infringed or otherwise violated any patents,
licensing rights, licensing or royalty arrangements
or agreements, trade secrets or know-how and
proprietary rights;
(iii) To the knowledge of such counsel, there is no
infringement on the part of any third party of any
patent, application for patent, trade secret,
know-how or other proprietary right of the Company,
and there is no pending or, to the knowledge of such
counsel, threatened action, suit, proceeding or claim
by others challenging the validity or scope of any
patent or application for patent by the Company;
(iv) To the knowledge of such counsel, the statements
in the Registration Statements and Prospectus and any
amendments and supplements thereto under the captions
"Risk Factors--Our proprietary rights may not be
fully protected, and we may be subject to
intellectual property infringement claims by others"
and "Business--Proprietary Rights," insofar as such
statements constitute a summary of the Company's
patents, applications for patents and proprietary
technology, are in all material respects accurate
descriptions of the legal matters, documents and
proceedings relating thereto; and
(v) Such counsel has reviewed the statements in the
Registration Statements and Prospectus and any
amendments and supplements thereto under the captions
"Risk Factors--Our proprietary rights may not be
fully protected, and we may be subject to
intellectual property infringement claims by others"
and "Business--Proprietary Rights," and such counsel
has no reason to believe that as of their respective
effective dates, such portions of the Registration
Statement or any amendment thereto contained or
contains any untrue statement of a material fact or
omitted or omits to state any material fact required
to be stated therein or necessary to make the
statements therein not misleading or that as of its
issue date or such Closing Date, such portions of the
Prospectus or any amendment or supplement thereto
contained or contains any untrue statement of a
material fact or omitted or omits to state any
material fact necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading.
(g) The Underwriter shall have received an opinion, dated such
Closing Date of Xxx Xxxxxxx-Xxxxx, Vice President, Legal
Affairs of the Company, to the effect that she has no reason
to believe that any part of a Registration Statement or
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any amendment thereto, as of its effective date, contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; or that the
Prospectus or any amendment or supplement thereto, as of its
issue date or as of such Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits 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; and she does not know of
any legal or governmental proceedings required to be described
in a Registration Statement or the Prospectus which are not
described as required or of any contracts or documents of a
character required to be described in a Registration Statement
or the Prospectus or to be filed as exhibits to a Registration
Statement which are not described and filed as required; it
being understood that she need express no opinion as to the
financial statements or other financial data contained in the
Registration Statements or the Prospectus.
(h) The Underwriter shall have received from Xxxxxx, Xxxxx &
Bockius LLP, counsel for the Underwriter, such opinion or
opinions, dated such Closing Date, with respect to the
incorporation of the Company, the validity of the Offered
Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the
Underwriter may reasonably request, and the Company shall have
furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(i) The Underwriter shall have received a certificate, dated
such Closing Date, of the President and the Chief Financial
Officer of the Company in which such officers, shall state on
behalf of the Company that: the representations and warranties
of the Company in this Agreement are true and correct; the
Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to their knowledge, are contemplated by the Commission; the
Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was
filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b)
under the Act, prior to the time the Prospectus was printed
and distributed to the Underwriter; and, subsequent to the
respective dates of the most recent financial statements in
the Prospectus, there has been no material adverse change, nor
any development or event involving a prospective material
adverse change, in the condition (financial or other),
business, properties or results of operations of the Company
and its subsidiaries taken as a whole except as set forth in
or contemplated by the Prospectus or as described in such
certificate.
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(j) The Company shall have delivered to you the agreements
specified in Section 5(j) hereof which agreements shall be in
full force and effect on the Closing Date.
(k) The Underwriter shall have received a letter, dated such
Closing Date, of PricewaterhouseCoopers LLP which meets the
requirements of subsection (a) of this Section, except that
the specified date referred to in such subsection will be a
date not more than three business days prior to such Closing
Date for the purposes of this subsection.
(l) The Company will furnish the Underwriter with such
conformed copies of such opinions, certificates, letters and
documents as the Underwriter reasonably requests.
The Underwriter may in its sole discretion waive compliance with any conditions
to the obligations of the Underwriter hereunder, whether in respect of an
Optional Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless the
Underwriter against any losses, claims, damages or
liabilities, joint or several, to which the Underwriter may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment
or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Underwriter for any legal
or other expenses reasonably incurred by the Underwriter in
connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein, it
being understood and agreed that the only such information
furnished by the Underwriter consists of the information
described as such in subsection (c) below; and provided
further, that with respect to any untrue statement or alleged
untrue statement in or omission or alleged omission from any
preliminary prospectus, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of the
Underwriter in connection with the assertion of any such
losses, claims, damages or liabilities by a person who
purchased the Offered Securities, to the extent that a
prospectus relating to such Offered
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Securities was required to be delivered by the Underwriter
under the Act in connection with such purchase, and any such
loss, claim, damage or liability of the Underwriter results
from the fact that there was not sent or given to such person,
at or prior to the written confirmation of the sale of such
Offered Securities to such person, a copy of the Prospectus if
the Company had previously furnished copies thereof to the
Underwriter.
The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the
Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or
investigating any such action or claim) related to, arising
out of, or in connection with the Directed Share Program,
other than losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to
have resulted from the bad faith or gross negligence of the
Underwriter.
(b) Insofar as the foregoing indemnity agreement, or the
representations and warranties contained in Section 2, may
permit indemnification for liabilities under the Act of any
person who is an Underwriter or a partner or controlling
person of an Underwriter within the meaning of Section 15 of
the Act and who, at the date of this Agreement, is a director,
officer or controlling person of the Company, the Company has
been advised that in the opinion of the Commission such
provisions may contravene Federal public policy as expressed
in the Act and may therefore be unenforceable. In the event
that a claim for indemnification under such agreement or such
representations and warranties for any such liabilities
(except insofar as such agreement provides for the payment by
the Company of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such a person, the
Company will submit to a court of appropriate jurisdiction
(unless in the opinion of counsel for the Company the matter
has already been settled by controlling precedent) the
question of whether or not indemnification by it for such
liabilities is against public policy as expressed in the Act
and therefore unenforceable, and the Company will be governed
by the final adjudication of such issue.
(c) The Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, 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 therein not misleading, in
each
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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
written information furnished to the Company by the
Underwriter specifically for use therein, and will reimburse
any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such
information furnished by the Underwriter consists of the name
of the Underwriter and the fourth, seventh, eleventh and last
paragraphs and the second and third sentences of the fifteenth
paragraph under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under subsection (a) or (c)
above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or
(c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims
that are the subject matter of such action.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified
party under subsection (a) or (c) above, then each
indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a)
or (c) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the
one hand and the Underwriter on the other from the offering of
the Offered Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriter on
the other in connection with the statements or
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omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company
on the one hand and the Underwriter on the other shall be
deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and
commissions received by the Underwriter. The relative fault
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the
Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this
subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim
which is the subject of this subsection (e). Notwithstanding
the provisions of this subsection (e), the Underwriter shall
not be required to contribute any amount in excess of the
amount by which the total price at which the Offered
Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages
which the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(d) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to
each person, if any, who controls the Underwriter within the
meaning of the Act; and the obligations of the Underwriter
under this Section shall be in addition to any liability which
the Underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each director of the Company, to
each officer of the Company who has signed a Registration
Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If for any reason the purchase of the
Offered Securities by the Underwriter is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 and the respective obligations of the Company and the Underwriter
pursuant to Section 7 shall remain in effect, and if any Offered Securities have
been purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of the
Offered Securities by the Underwriter is not consummated for
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any reason other than solely because of the occurrence of any event specified in
clause (ii), (iii) or (iv) of Section 6(d), the Company will reimburse the
Underwriter for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by it in connection with the offering of the
Offered Securities.
9. Notices. All communications hereunder will be in writing and, if
sent to the Underwriter, will be mailed, delivered or telegraphed and confirmed
to the Underwriter, Invemed Associates LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000-0000, Attention: Xxxxxxxx X. Xxxxxx - Executive Vice President, or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at InterWorld Corporation, 000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Xxx Xxxxxxx-Xxxxx.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement among the Company and the
Underwriter in accordance with its terms.
Very truly yours,
INTERWORLD CORPORATION
By............................
[Insert title]
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above
written.
INVEMED ASSOCIATES LLC
By.................................
[Insert title]
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