1
EXHIBIT 1.1
PFSWEB, INC.
3,100,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
December 1, 0000
XXXXXXXXX & XXXXX LLC
Xxxx Xxxxxxxx Xxxxxxx, a division of Xxxx Xxxxxxxx Incorporated
Xxxxxxxxx & Company, Inc.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
PFSweb, Inc., a Delaware corporation (herein called the Company),
proposes to issue and sell 3,100,000 shares of its authorized but unissued
Common Stock, $0.001 par value (herein called the Common Stock) (said 3,100,000
shares of Common Stock being herein called the Underwritten Stock). The Company
proposes to grant to the Underwriters (as hereinafter defined) an option to
purchase up to 465,000 additional shares of Common Stock (herein called the
Option Stock and with the Underwritten Stock herein collectively called the
Stock). The Common Stock is more fully described in the Registration Statement
and the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Stock by the several underwriters, for whom you are acting,
named in Schedule I hereto (herein collectively called the Underwriters, which
term shall also include any underwriter purchasing Stock pursuant to Section
3(b) hereof). You represent and warrant that you have been authorized by each of
the other Underwriters to enter into this Agreement on its behalf and to act for
it in the manner herein provided.
As part of the offering contemplated by this Agreement, Xxxxxxxxx &
Xxxxx LLC has agreed to reserve out of the Stock set forth opposite its name on
Schedule I to this Agreement, up to 217,000 shares, for sale to the Company's
employees, officers, directors and associates (collectively, "Participants"), as
set forth in the Prospectus under the heading "Underwriting"
--------
(1) Plus an option to purchase from the Company up to 465,000 additional shares
to cover over-allotments.
2
(the "Directed Share Program"). The Stock to be sold by Xxxxxxxxx & Xxxxx LLC
pursuant to the Directed Share Program (the "Directed Shares") will be sold by
Xxxxxxxxx & Xxxxx LLC pursuant to this Agreement at the public offering price.
Any Directed Shares not orally confirmed for purchase by any Participants by the
end of the first business day after the date on which this Agreement is executed
will be offered to the public by Xxxxxxxxx & Xxxxx LLC as set forth in the
Prospectus.
1. REGISTRATION STATEMENT. The Company has filed with the Securities
and Exchange Commission (herein called the Commission) a registration statement
on Form S-1 (No. 333-87657), including the related preliminary prospectus, for
the registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or the effectiveness of such amendment)
such prospectus as so supplemented or amended. The term Preliminary Prospectus
as used in this Agreement shall mean each preliminary prospectus included in
such registration statement prior to the time it becomes effective.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus and has consented to the use of such copies for the
purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND DAISYTEK.
(a) Each of the Company and Daisytek International Corporation, a
Delaware Corporation and parent of the Company ("Daisytek"), hereby jointly and
severally represents and warrants as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus and as
2
3
being conducted, and is duly qualified as a foreign corporation and in
good standing in all jurisdictions in which the character of the
property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so
qualified would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole). Daisytek has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation.
(ii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any materially adverse change in the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, other than as set
forth in the Registration Statement and the Prospectus, and since such
dates, except in the ordinary course of business, neither the Company
nor any of its subsidiaries has entered into any material transaction
not referred to in the Registration Statement and the Prospectus.
(iii) The Registration Statement has been declared effective
under the Securities Act, no post-effective amendment to the
Registration Statement has been filed as of the date of this Agreement
and no stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus is in
effect and no proceedings for that purpose have been instituted or are
pending or contemplated by the Commission.
(iv) The Registration Statement and the Prospectus comply, and
on the Closing Date (as hereinafter defined) and any later date on
which Option Stock is to be purchased, the Prospectus will comply, in
all material respects, with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder; on the
Effective Date, the Registration Statement did not contain any untrue
statement of a material fact and did not omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date the
Prospectus did not and, on the Closing Date and any later date on which
Option Stock is to be purchased, will not contain 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; provided, however, that
none of the representations and warranties in this subparagraph (iv)
shall apply to statements in, or omissions from, the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus.
(v) The authorized capital stock of the Company consists of
1,000,000 shares of Preferred Stock, $1.00 par value, of which no
shares are outstanding, and 40,000,000 shares of Common Stock, $0.001
par value, of which there are outstanding 17,405,000 shares (including
the Underwritten Stock plus the number of shares of Option Stock issued
on the date hereof) and such authorized capital stock conforms as to
legal matters
3
4
to the description thereof contained in the Prospectus; proper
corporate proceedings have been taken validly to authorize such
authorized capital stock; all of the outstanding shares of such capital
stock (including the Underwritten Stock and the shares of Option Stock
issued, if any) have been duly and validly issued and are fully paid
and nonassessable; any Option Stock purchased after the Closing Date,
when issued and delivered to and paid for by the Underwriters as
provided in this Agreement, will have been duly and validly issued and
be fully paid and nonassessable; and no preemptive rights of, or rights
of refusal in favor of, stockholders exist with respect to the Stock,
or the issue and sale thereof, pursuant to the Certificate of
Incorporation or Bylaws of the Company and there are no contractual
preemptive rights that have not been waived, rights of first refusal or
right of co-sale which exist with respect to the issue and sale of the
Stock. All the issued and outstanding capital stock of each of the
subsidiaries of the Company has been duly authorized and validly issued
and is fully paid and nonassessable, and is owned by the Company free
and clear of all liens, encumbrances and security interests, and no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in such subsidiaries are
outstanding.
(vi) The Stock to be issued and sold by the Company is
authorized for listing by the Nasdaq National Market.
(vii) The Company is not, and upon receipt and pending
application of the net proceeds from the sale of the Stock to be sold
by the Company in the manner described in the Prospectus will not be,
an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(viii) Each of the Master Separation Agreement, the Initial
Public Offering and Distribution Agreement, the Registration Rights
Agreement, the Tax Indemnification and Allocation Agreement, the
Transition Services Agreement, the Transaction Management Services
Agreement (collectively, the "Spin-off Agreements") and this Agreement
has been duly authorized, executed and delivered by the parties thereto
and each of the Spin-off Agreements is a valid and binding agreement of
such parties enforceable in accordance with its terms.
(ix) (1) This Agreement and the issue and sale by the Company
of the shares of Stock sold by the Company as contemplated herein and
(2) the Spin-off Agreements and the transactions contemplated therein,
in each case, do not and will not conflict with, or result in a breach
of, the Certificate of Incorporation or Bylaws of Daisytek, the Company
or any of their subsidiaries, or any agreement or instrument to which
Daisytek, the Company or any of their subsidiaries is a party or by
which any of the properties or assets of Daisytek, the Company or any
of their subsidiaries may be bound or affected, or any applicable law
or regulation, or any order, writ, injunction or decree, of any
jurisdiction, court or governmental instrumentality.
4
5
(x) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated in this Agreement, except such as have been
obtained under the Securities Act and such as may be required under
state securities or blue sky laws in connection with the purchase and
distribution of the Stock by the Underwriters, or for the consummation
of the transactions contemplated in the Spin-off Agreements.
(xi) The Company's pro forma combined financial statements and
notes forming part of the Registration Statement and the Prospectus (i)
were derived from historical financial statements appearing in the
Registration Statement and the Prospectus and (ii) are based on
assumptions that provide a reasonable basis for presenting the
significant effects of the transactions and events as described in the
Registration Statement and the Prospectus, the related pro forma
adjustments give appropriate effect to such assumptions; and the pro
forma columns reflect the proper allocation of such adjustments to the
historical financial statements.
(xii) The Company has not offered, or caused the Underwriters
to offer, Stock 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 business. The Registration Statement, the Prospectus and any
Preliminary Prospectus comply, and any further amendments or
supplements thereto will comply, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus or any
Preliminary Prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and no
authorization, approval, consent, license, order, registration or
qualification of or with any government, governmental instrumentality
or court other than such as have been obtained, is necessary under the
securities laws and regulations of foreign jurisdictions in which the
Directed Shares are offered outside the United States.
(xiii) The information required to be set forth in the
Registration Statement in answer to Items 9, 10 and 11(c) of Form S-1
is accurately and adequately set forth therein in all material respects
or no response is required with respect to such Items, and the
description of the Company's stock option plans and the options granted
and which may be granted thereunder set forth in the Prospectus
accurately and fairly presents the information required to be shown
with respect to said plans and options to the extent required by the
Securities Act and the rules and regulations of the Commission
thereunder.
(xiv) There are no franchises, contracts, leases, documents or
legal proceedings, pending or threatened, which are of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement,
which are not described and filed as required.
5
6
(xv) There are no holders of securities of the Company having
rights to the registration of shares of Common Stock, or other
securities, because of the filing of the Registration Statement by the
Company, that have not waived such rights, or such rights have expired
by reason of lapse of time following notification of the Company's
intent to file the Registration Statement.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
3,100,000 of the Underwritten Stock to the several Underwriters and each of the
Underwriters agrees to purchase from the Company the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and purchased by the several Underwriters shall be $17.00 per share. In making
this Agreement, each Underwriter is contracting severally and not jointly;
except as provided in paragraphs (b) and (c) of this Section 3, the agreement of
each Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason 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 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such shares and portion on the terms herein
set forth. In any such case, either you or the Company shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to said Section 5 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company shall
make arrangements within the 24-hour periods stated above for the purchase of
all the shares of the Stock which the defaulting Underwriter or Underwriters
6
7
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph (b), and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase, severally and
not jointly, up to 465,000 shares in the aggregate of the Option Stock from the
Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made as provided in Section 5 hereof. The number of shares of the
Option Stock to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Stock, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover
page and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Stock filed by the Company
(insofar as such information relates to the Underwriters) constitutes the only
information furnished by the Underwriters to the Company for inclusion in the
Registration Statement, any Preliminary Prospectus, and the Prospectus, and you
on behalf of the respective Underwriters represent and warrant to the Company
that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 a.m., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000, at 7:00 a.m., San Francisco time, on the fourth business day after the
date of this Agreement, or at such time on such other day, not later than seven
full business days after such fourth business day, as shall be agreed upon in
writing by the Company and you. The
7
8
date and hour of such delivery and payment (which may be postponed as provided
in Section 3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Xxxxxx, Xxxx & Xxxxxxxx LLP,
0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, at 7:00 a.m., San Francisco time, on the
third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order by wire transfer in same day funds. Such payment shall
be made upon delivery of certificates for the Stock to you for the respective
accounts of the several Underwriters against receipt therefor signed by you.
Certificates for the Stock to be delivered to you shall be registered in such
name or names and shall be in such denominations as you may request at least one
business day before the Closing Date, in the case of Underwritten Stock, and at
least one business day prior to the purchase thereof, in the case of the Option
Stock. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at the offices of Lewco Securities
Corporation, 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the business day prior to
the Closing Date or, in the case of the Option Stock, by 3:00 p.m., New York
time, on the business day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose funds shall not have been
received by you on the Closing Date or any later date on which Option Stock is
purchased for the account of such Underwriter. Any such payment by you shall not
relieve such Underwriter from any of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND DAISYTEK. The Company and
Daisytek covenant and agree (and Daisytek shall cause the Company to covenant
and agree) as follows:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information
previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A and (ii) not file any amendment to
the Registration Statement or supplement to the Prospectus of which you
shall not previously have been advised and furnished with a copy or to
which you shall have reasonably objected in writing or which is not in
compliance with the Securities Act or the rules and regulations of the
Commission.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, (iii)
the institution or notice of intended institution of any action or
proceeding for that purpose, (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt
8
9
by it of notice of the initiation or threatening of any proceeding for
such purpose. The Company will make every reasonable effort to prevent
the issuance of such a stop order and, if such an order shall at any
time be issued, to obtain the withdrawal thereof at the earliest
possible moment.
(c) The Company will (i) on or before the Closing Date,
deliver to you a signed copy of the Registration Statement as
originally filed and of each amendment thereto filed prior to the time
the Registration Statement becomes effective and, promptly upon the
filing thereof, a signed copy of each post-effective amendment, if any,
to the Registration Statement (together with, in each case, all
exhibits thereto unless previously furnished to you) and will also
deliver to you, for distribution to the Underwriters, a sufficient
number of additional conformed copies of each of the foregoing (but
without exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as possible deliver to you and send to
the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably
request, and (iii) thereafter from time to time during the period in
which a prospectus is required by law to be delivered by an Underwriter
or dealer, likewise send to the Underwriters as many additional copies
of the Prospectus and as many copies of any supplement to the
Prospectus and of any amended prospectus, filed by the Company with the
Commission, as you may reasonably request for the purposes contemplated
by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event
relating to or affecting the Company, or of which the Company shall be
advised in writing by you, shall occur as a result of which it is
necessary, in the opinion of counsel for the Company or of counsel for
the Underwriters, to supplement or amend the Prospectus in order to
make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser of the Stock, the
Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the
Prospectus as so supplemented or amended will not contain 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 existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the
Stock by the Underwriters and during such period, the Underwriters
shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the
Company in writing of the proposed variation, and, if in the opinion
either of counsel for the Company or of counsel for the Underwriters
such proposed variation requires that the Prospectus be supplemented or
amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended prospectus
setting forth such variation. The Company authorizes the Underwriters
and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance
with the applicable provisions of the Securities Act and the applicable
rules and regulations thereunder for such period.
9
10
(e) Prior to the filing thereof with the Commission, the
Company will submit to you, for your information, a copy of any
post-effective amendment to the Registration Statement and any
supplement to the Prospectus or any amended prospectus proposed to be
filed.
(f) The Company will cooperate, when and as requested by you,
in the qualification of the Stock for offer and sale under the
securities or blue sky laws of such jurisdictions as you may designate
and, during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, in keeping such qualifications
in good standing under said securities or blue sky laws; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will,
from time to time, prepare and file such statements, reports, and other
documents as are or may be required to continue such qualifications in
effect for so long a period as you may reasonably request for
distribution of the Stock.
(g) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who
may so request in writing, copies of all periodic and special reports
furnished to stockholders of the Company and of all information,
documents and reports filed with the Commission (including the Report
on Form SR required by Rule 463 of the Commission under the Securities
Act).
(h) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the
Effective Date, the Company will make generally available to its
security holders an earnings statement in accordance with Section 11(a)
of the Securities Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, including
all costs and expenses incident to (i) the preparation, printing and
filing with the Commission and the National Association of Securities
Dealers, Inc. of the Registration Statement, any Preliminary Prospectus
and the Prospectus, (ii) the furnishing to the Underwriters of copies
of any Preliminary Prospectus and of the several documents required by
paragraph (c) of this Section 6 to be so furnished, (iii) the printing
of this Agreement and related documents delivered to the Underwriters,
(iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this
Section 6, (v) the furnishing to you and the Underwriters of the
reports and information referred to in paragraph (g) of this Section 6
and (vi) the printing and issuance of stock certificates, including the
transfer agent's fees.
(j) The Company agrees to reimburse you, for the account of
the several Underwriters, for blue sky fees and related disbursements
(including counsel fees and disbursements and cost of printing
memoranda for the Underwriters) paid by or for the account of the
Underwriters or their counsel in qualifying the Stock under state
securities or blue sky laws and in the review of the offering by the
NASD.
10
11
(k) The Company and Daisytek agree that, without the prior
written consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters,
neither the Company nor Daisytek will, for a period of 180 days
following the commencement of the public offering of the Stock by the
Underwriters, directly or indirectly, (i) sell, offer, contract to
sell, make any short sale, pledge, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any
shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire
Common Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or
ownership of Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Stock to be sold to the Underwriters
pursuant to this Agreement and (B) options to purchase Common Stock
granted under the stock option plans of the Company, all as described
in "Management -- PFSweb Stock Option and Incentive Plans -- Employee
Stock Option Plan and - Non-Employee Director Compensation; Stock
Option and Retainer Plan" in the Preliminary Prospectus.
(l) If at any time during the 25-day period after the
Registration Statement becomes effective any rumor, publication or
event relating to or affecting the Company shall occur as a result of
which in your opinion the market price for the Stock has been or is
likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising
the Company to the effect set forth above, forthwith prepare, consult
with you concerning the substance of, and disseminate a press release
or other public statement, reasonably satisfactory to you, responding
to or commenting on such rumor, publication or event.
(m) The Company agrees to use its best efforts to complete the
divestiture of the Company from Daisytek as described in the
Registration Statement and the Prospectus.
(n) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date
of the effectiveness of the Registration Statement. The Company will
direct the transfer agent to place stop transfer restrictions upon such
securities for such period of time. Furthermore, the Company will
comply with all securities and other laws, rules and regulations
applicable to it in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
(o) The Company agrees to pay, or reimburse if paid by the
Underwriters, all reasonable fees and disbursements of counsel incurred
by the Underwriters in connection with the Directed Share Program and
stamp duties, similar taxes or duties or other taxes, if any, incurred
by the Underwriters in connection with the Directed Share Program.
11
12
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Company and Daisytek jointly and severally agrees to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Securities Exchange
Act of 1934, as amended (herein called the Exchange Act), or the common law or
otherwise, and each of the Company and Daisytek jointly and severally agrees to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the indemnity agreements of the Company and
Daisytek contained in this paragraph shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any Underwriter
for use in any Preliminary Prospectus or the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto.
Further, each of the Company and Daisytek jointly and severally agrees
to indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Securities Exchange
Act, or the common law or otherwise, and each of the Company and Daisytek
jointly and severally agrees to reimburse each such Underwriter and controlling
person for any legal or other expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
prospectus wrapper material prepared by or with the consent of the Company for
distribution in foreign jurisdictions in connection with the Directed Share
Program attached to the Prospectus or any Preliminary Prospectus, or caused by
12
13
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein, when considered in
conjunction with the Prospectus or any applicable Preliminary Prospectus, not
misleading; (ii) caused by the failure of any Participant to pay for and accept
delivery of the shares which, immediately following the effectiveness of the
Registration Statement, were subject to a properly confirmed agreement to
purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program; provided, however, that, neither the Company nor
Daisytek shall be responsible under this subparagraph (iii) for any 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
any Underwriter.
The indemnity agreements of each of the Company and Daisytek contained
in this section 7(a) and the representations and warranties of the Company and
Daisytek contained in Section 2 hereof shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his
own behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, from and against any and all losses, claims, damages
or liabilities, joint or several, to which such indemnified parties or any of
them may become subject under the Securities Act, the Exchange Act, or the
common law or otherwise and to reimburse each of them for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or any prospectus wrapper material prepared by or with the
consent of the Underwriters for distribution in foreign jurisdictions in
connection with the Directed Share Program attached to the Prospectus or any
Preliminary Prospectus or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of such indemnifying Underwriter for use in the Registration
Statement or the Prospectus (or any prospectus wrapper material attached
thereto) or any such amendment thereof or supplement thereto. The indemnity
agreement of each Underwriter contained in this
13
14
paragraph (b) shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any indemnified party and shall
survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be
14
15
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified 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 paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock 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 each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and Daisytek, taken together, and the Underwriters shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Stock received by the Company and the total underwriting discount
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the Stock. 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 each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it
15
16
may have hereunder or otherwise (except as specifically provided in paragraph
(c) of this Section 7).
(e) Neither the Company nor Daisytek will, without the prior written
consent of each Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act is a party to
such claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of such Underwriter and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after the
date of this Agreement trading in the Common Stock shall have been suspended, or
if there shall have occurred (i) the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, (ii) any
outbreak of hostilities or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
calamity, crisis or change in economic or political conditions in the financial
markets of the United States would, in the Underwriters' reasonable judgment,
make the offering or delivery of the Stock impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market, or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation by, any court, legislative body,
agency or other governmental authority which in the Underwriters' reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company, (v) declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Underwriters' reasonable opinion has a
material adverse effect on the securities markets in the United States. If this
Agreement shall be terminated pursuant to this Section 8, there shall be no
liability of the Company or Daisytek to the Underwriters and no liability of the
Underwriters to the Company or Daisytek; provided, however, that in the event of
any such termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company and Daisytek under this Agreement, including all
costs and expenses referred to in paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company of all its obligations to be performed hereunder at
or prior to the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be, and to the following further conditions:
16
17
(a) The Registration Statement shall have become effective;
and no stop order suspending the effectiveness thereof shall have been
issued and no proceedings therefor shall be pending or threatened by
the Commission.
(b) The legality and sufficiency of the sale of the Stock
hereunder and the validity and form of the certificates representing
the Stock, all corporate proceedings and other legal matters incident
to the foregoing, and the form of the Registration Statement and of the
Prospectus (except as to the financial statements contained therein),
shall have been approved at or prior to the Closing Date by Xxxxxx,
Xxxx & Xxxxxxxx LLP, counsel for the Underwriters.
(c) You shall have received from Xxxxx & Samson, P.A., counsel
for the Company and Daisytek, an opinion, addressed to the Underwriters
and dated the Closing Date, covering the matters set forth in Annex A
hereto, and if Option Stock is purchased at any date after the Closing
Date, an additional opinion from such counsel, addressed to the
Underwriters and dated such later date, confirming that the statements
expressed as of the Closing Date in such opinion remain valid as of
such later date.
(d) You shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus
were true and correct and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein,
respectively, not misleading, (ii) since the Effective Date, no event
has occurred which should have been set forth in a supplement or
amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which
it originally became effective and the Prospectus contained therein,
there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the
business, properties, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, and,
since such dates, except in the ordinary course of business, neither
the Company nor any of its subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form
in which it originally became effective and the Prospectus contained
therein, (iv) neither the Company nor any of its subsidiaries has any
material contingent obligations which are not disclosed in the
Registration Statement and the Prospectus, (v) there are not any
pending or known threatened legal proceedings to which the Company or
any of its subsidiaries is a party or of which property of the Company
or any of its subsidiaries is the subject which are material and which
are not disclosed in the Registration Statement and the Prospectus,
(vi) there are not any franchises, contracts, leases or other documents
which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, (vii) the
representations and warranties of the Company herein are true and
correct in all material respects as of the Closing Date or any later
date on which Option Stock is to be purchased, as the case may be, and
(viii) there has not been any material change in the market for
securities in general or in political, financial or economic conditions
from those reasonably foreseeable as to render it impracticable in your
reasonable judgment to
17
18
make a public offering of the Stock, or a material adverse change in
market levels for securities in general (or those of companies in
particular) or financial or economic conditions which render it
inadvisable to proceed.
(e) You shall have received on the Closing Date and on any
later date on which Option Stock is purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the
President and the Chief Financial Officer of the Company, stating that
the respective signers of said certificate have carefully examined the
Registration Statement in the form in which it originally became
effective and the Prospectus contained therein and any supplements or
amendments thereto, and that the statements included in clauses (i)
through (vii) of paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from Xxxxxx Xxxxxxxx LLP, a letter
or letters, addressed to the Underwriters and dated the Closing Date
and any later date on which Option Stock is purchased, confirming that
they are independent public accountants with respect to the Company
within the meaning of the Securities Act and the applicable published
rules and regulations thereunder and based upon the procedures
described in their 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 business days prior to the
Closing Date or such later date on which Option Stock is purchased (i)
confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or
such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in
the Original Letter which are necessary to reflect any changes in the
facts described in the Original Letter since the date of the Original
Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company or any of its
subsidiaries which, in your sole judgment, makes it impractical or
inadvisable to proceed with the public offering of the Stock or the
purchase of the Option Stock as contemplated by the Prospectus.
(g) You shall have received from Xxxxxx Xxxxxxxx LLP a letter
stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's financial
statements as at March(degree)31, 1999, did not disclose any weakness
in internal controls that they considered to be material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the
qualification referred to in paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold
by the Company shall have been duly authorized for listing by the
Nasdaq National Market upon official notice of issuance.
18
19
(j) On or prior to the Closing Date, you shall have received
from all directors, officers, and beneficial holders of more than 5% of
the outstanding Common Stock agreements, in form reasonably
satisfactory to Xxxxxxxxx & Xxxxx LLC, stating that without the prior
written consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters,
such person or entity will not, for a period of 180 days following the
commencement of the public offering of the Stock by the Underwriters,
directly or indirectly, (i) sell, offer, contract to sell, make any
short sale, pledge, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any shares of Common Stock
or any securities convertible into or exchangeable or exercisable for
or any rights to purchase or acquire Common Stock or (ii) enter into
any swap or other agreement that transfers, in whole or in part, any of
the economic consequences or ownership of Common Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or
otherwise.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company or
Daisytek to the Underwriters and without liability of the Underwriters to the
Company or Daisytek; provided, however, that (i) in the event of such
termination, the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (i), (j) and (o) of Section 6 hereof, and (ii) if this Agreement is
terminated by you because of any refusal, inability or failure on the part of
the Company or Daisytek to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of the
Company to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company by giving notice
to you. Any such termination shall be without liability of the Company or
Daisytek to the Underwriters and without liability of the Underwriters to the
Company or Daisytek; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company and Daisytek under
19
20
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of Daisytek, the Company and the several Underwriters and,
with respect to the provisions of Section 7 hereof, the several parties (in
addition to Daisytek, the Company and the several Underwriters) indemnified
under the provisions of said Section 7, and their respective personal
representatives, successors and assigns. Nothing in this Agreement is intended
or shall be construed to give to any other person, firm or corporation any legal
or equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Stock from any
of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Xxxxxxxxx & Xxxxx LLC, Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company or Daisytek, shall be
mailed, telegraphed or delivered to the Company's office, 000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx, Xxxxx 00000, Attention: Xxxx X. Xxxxxx. All notices given by
telegraph shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or Daisytek or their respective directors or officers, and (c)
delivery and payment for the Stock under this Agreement; provided, however, that
if this Agreement is terminated prior to the Closing Date, the provisions of
paragraph (k) of Section 6 hereof all be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.
20
21
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement among the Company,
Daisytek and the several Underwriters in accordance with its terms.
Very truly yours,
PFSWEB, INC.
By
-------------------------------
Name:
Title:
DAISYTEK INTERNATIONAL CORPORATION
By
-------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
Xxxx Xxxxxxxx Xxxxxxx, a division of Xxxx Xxxxxxxx Incorporated
Xxxxxxxxx & Company, Inc.
By Xxxxxxxxx & Xxxxx LLC
By
-----------------------------
Name
---------------------------
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
22
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
Xxxxxxxxx & Xxxxx LLC 1,275,000
LEAD MANAGER (1) 1,275,000
Xxxx Xxxxxxxx Xxxxxxx, a division of Xxxx Xxxxxxxx Incorporated 701,250
Xxxxxxxxx & Company, Inc. 573,750
CO-MANAGER (2) 1,275,000
Xxxxxx X. Xxxxx & Co. Incorporated 50,000
Baldwin, Anthony, XxXxxxxx 50,000
X. X. Xxxxxxxx & Co. 50,000
First Southwest Company 50,000
McDonald Investments Inc. 50,000
The Xxxxxxxx-Xxxxxxxx Company, LLC 50,000
Xxxxxxx Xxxxxx Xxxxx 50,000
Southwest Securities, Inc. 50,000
Xxxxxxxx Inc. 50,000
Xxxxxx Xxxxxxx Xxxxxx Gull 50,000
X.X. Xxxxxxx and Company 50,000
UNDERWRITER (11) 550,000
TOTAL (14) 3,100,000
23
ANNEX A
FORM OF OPINION OF XXXXX & XXXXXX, P.A.
COUNSEL FOR THE COMPANY AND DAISYTEK
We have acted as counsel to PFSweb, Inc., a Delaware corporation (the
"Company") and Daisytek International Corporation, a Delaware corporation
("Daisytek"), in connection with the issuance and sale by the Company of
3,100,000 shares of its authorized but unissued Common Stock, $0.001 par value
(the "Common Stock") (said 3,100,000 shares of Common Stock being herein called
the "Underwritten Stock") and the to grant to the Underwriters (as hereinafter
defined) an option to purchase up to 465,000 additional shares of Common Stock
(herein called the "Option Stock" and with the Underwritten Stock herein
collectively called the "Stock") pursuant to an Underwriting Agreement dated
December 1, 1999 (the "Underwriting Agreement") by and among the Company,
Daisytek, Xxxxxxxxx & Xxxxx LLC, Xxxx Xxxxxxxx Xxxxxxx, a division of Xxxx
Xxxxxxxx Incorporated, and Xxxxxxxxx & Company, Inc., as Representatives of the
several underwriters named in Schedule A thereto (collectively, the
"Underwriters").
This opinion is being furnished to you pursuant to Sections 9(c) of the
Underwriting Agreement. Capitalized terms used and not otherwise defined herein
shall have the respective meanings set forth in the Underwriting Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Underwriting
Agreement, (ii) the Registration Statement, (iii) the Preliminary Prospectus and
the Prospectus, (iv) the Amended and Restated Certificate of Incorporation of
the Company (the "Amended and Restated Certificate"); (vi) the Amended and
Restated By-laws of the Company (the "By-laws"); (v) resolutions of the Board of
Directors of the Company and Daisytek; (vi) a specimen certificate for the
Common Stock; and (vii) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such records of the Company and such agreements, certificates, and receipt of
public officials, certificates of officers or representatives of the Company and
others, and such other documents, certificates and records as we have deemed
necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to any facts material
to the opinions expressed herein, we have relied to the extent we deemed
appropriate upon the representations and warranties of the Company and Daisytek
contained in the Underwriting Agreement, certificates of state authorities and
public officials and statements and representations of officers of the Company
and Daisytek.
A-24
24
We are authorized to practice law in the State of New Jersey and we do
not purport to be experts in, or to express any opinion hereunder concerning any
law other than the laws of the State of New Jersey, the General Corporation Law
of the State of Delaware (the "GCL") and federal law as of the date hereof. To
the extent any documents, agreements or transactions as to which we express our
opinion hereunder, or any of the parties thereto, are governed by the laws of
other jurisdictions, we have assumed, without investigation and without
expressing any opinion thereon, that the laws of such other jurisdictions are
the same as the laws of the State of New Jersey.
Our opinions are limited to the specific issues addressed herein and
are limited in all respects to existing laws and facts as of the date hereof. We
disclaim any responsibility to advise you of any change to such laws or facts
which may occur after the date hereof.
Based upon and subject to the foregoing and the limitations set forth
below, we are of the opinion or advise you that:
(i) each of the Company and its U.S. subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, is duly qualified
as a foreign corporation and in good standing in each state of the United
States of America in which its ownership or leasing of property requires
such qualification (except where the failure to be so qualified would not
have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole), and has full corporate power and authority to own or
lease its properties and conduct its business as described in the
Registration Statement; all the issued and outstanding capital stock of
each of the U.S. subsidiaries of the Company has been duly authorized and
validly issued and is fully paid and nonassessable, and is owned by the
Company free and clear of all liens, encumbrances and security interests,
and to the best of our knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests
in such subsidiaries are outstanding; Daisytek has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation;
(ii) the authorized capital stock of the Company consists of 1,000,000
shares of Preferred Stock, $1.00 par value, and 40,000,000 shares of Common
Stock, $0.01 par value, of which, based upon our review of the Company's
minute book, stock ledger and other applicable records, there are no shares
of Preferred Stock outstanding and there are outstanding 17,405,000 shares
of Common Stock (including the Underwritten Stock plus the number of shares
of Option Stock issued on the date hereof) and such authorized capital
stock conforms to the description thereof contained in the Prospectus;
proper corporate proceedings have been validly taken to authorize such
authorized capital stock; all of the outstanding shares of such capital
stock (including the Underwritten Stock and the shares of Option Stock
issued, if any) have been duly and validly issued and are fully paid and
nonassessable; any Option Stock purchased after the Closing Date, when
issued and delivered to and paid for by the Underwriters as provided in the
Underwriting
A-25
25
Agreement, will have been duly and validly issued and be fully paid and
nonassessable; and no preemptive rights of, or rights of refusal in favor
of, stockholders exist with respect to the Stock, or the issue and sale
thereof, pursuant to the Certificate of Incorporation or Bylaws of the
Company and, to our knowledge , there are no contractual preemptive rights
that have not been waived, rights of first refusal or right of co-sale
which exist with respect to the issue and sale of the Stock;
(iii) the Registration Statement has become effective under the
Securities Act and, to the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus is in effect and no proceedings for that purpose
have been instituted or are pending or, to our knowledge, are contemplated
by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Securities Act
and with the rules and regulations of the Commission thereunder;
(v) we have participated in conferences with officers and other
representatives of the Company and Daisytek, representatives of the
independent public accountants of the Company and Daisytek and
representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus were discussed and, although we
are not passing upon and do not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as, and to the extent, expressly stated
above), on the basis of the foregoing, nothing has come to our attention
that causes us to believe that on the Effective Date the Registration
Statement (except as to the financial statements and schedules and other
financial and statistical data contained or incorporated by reference
therein, as to which we express no opinion or belief) contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus (except as to the financial statements
and schedules and other financial and statistical data contained or
incorporated by reference therein, as to which we express no opinion or
belief) as of its date or at the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to our firm) and
11(c) of Form S-1 is, to the best of our knowledge, accurately and
adequately set forth therein in all material respects or no response is
required with respect to such Items, and the description of the Company's
stock option plans and the options granted and which may be granted
thereunder set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to said plans and options to
the extent required by the Securities Act and the rules and regulations of
the Commission thereunder;
A-26
26
(vii) we are not aware of (1) any franchises, contracts, leases or
documents which in our opinion are of a character required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement, which are not described and filed as
required or (2) any legal proceedings, pending or threatened, which in our
opinion are of a character required to be described in the Registration
Statement or the Prospectus which are not described as required;
(viii) each of the Spin-off Agreements has been duly authorized,
executed and delivered by the parties thereto and each of the Spin-off
Agreements is a valid and binding agreement of the parties thereto
enforceable in accordance with its terms;
(ix) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company and Daisytek;
(x) (1) the Underwriting Agreement and the issue and sale by the
Company of the shares of Stock sold by the Company as contemplated therein
and (2) the Spin-off Agreements and the transactions contemplated therein,
in each case, do not and will not conflict with, or result in a breach of,
the Certificate of Incorporation or Bylaws of Daisytek, the Company or any
of their subsidiaries or any agreement or instrument known to us to which
Daisytek, the Company or any of their subsidiaries is a party or by which
any of the properties or assets of Daisytek, the Company or any of their
subsidiaries may be bound or affected, or any applicable law or regulation,
or so far as is known to us, any order, writ, injunction or decree, of any
jurisdiction, court or governmental instrumentality;
(xi) to our knowledge, there are no holders of securities of the
Company having rights to the registration of shares of Common Stock, or
other securities, because of the filing of the Registration Statement by
the Company, that have not waived such rights, or such rights have expired
by reason of lapse of time following notification of the Company's intent
to file the Registration Statement;
(xii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in the Underwriting Agreement, except such as
have been obtained under the Securities Act (and we express no opinion as
to any necessary qualification under the securities or Blue Sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters), or for the transactions contemplated in the Spin-off
Agreements; and
(xiii) the Stock issued and sold by the Company is duly authorized for
listing by the Nasdaq National Market.
Our opinions set forth above are subject to the following further
limitations and qualifications.
X-00
00
0. Our opinion set forth in Paragraph (vii) above is subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws affecting the enforcement of creditors rights
generally and general principles of equity (regardless of whether considered in
a proceeding in equity or at law), and we express no opinion as to whether a
court would grant specific performance or any other equitable remedy with
respect to enforcement of the agreements described therein or whether a court
would grant a particular remedy sought under such agreements as opposed to
another remedy provided therein or at law or in equity. Without limiting the
foregoing, we express no opinion as to any limitations based on statute or
public policy limiting a right to indemnification or a person's right to waive
the benefits of statutory provisions or common law rights.
2. To the extent the purchase and distribution of Stock contemplated by
the Underwriting Agreement is accomplished through a book entry closing, we have
assumed, with your permission and without independent investigation, that (i)
Depository Trust Company ("DTC") is registered as a "clearing agency" under
Federal securities law, (ii) DTC, or one or more nominees designated by DTC, has
acquired possession of and control over the Stock, (iii) the Stock is registered
in the name of the DTC or one or more of its nominees or the certificates for
the Stock are in bearer form or endorsed in blank by the person specified by the
certificated security to be entitled to the security and (iv) appropriate
entries to the account of the Underwriters on the books of DTC have been made
under Section 8-320 of the New York Uniform Commercial Code.
This opinion is furnished to you solely for your benefit and the
benefit of the other Underwriters in connection with the closing under the
Underwriting Agreement occurring today and is not to be used, circulated, quoted
or otherwise referred to for any other purpose without our express written
permission.
Very truly yours,
A-28
