UNDERWRITING AGREEMENT
----------------------
__________ ___, 1999
XXXXXX, XXXXX XXXXX, INCORPORATED
XXXX, XXX & COMPANY INCORPORATED
As Representatives of the
Several Underwriters Identified
In Schedule A Annexed Hereto
c/x Xxxxxx, Xxxxx Xxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
SECTION 1. INTRODUCTION. Xxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company"), has authorized capital stock consisting of 50,000,000 shares of
Common Stock, $0.0001 par value per share (the "Common Stock"). The Company
proposes to sell an aggregate of __________ shares of Common Stock (the "Firm
Shares") to the several underwriters identified in Schedule A annexed hereto
(the "Underwriters"), who are acting severally and not jointly. In addition, the
Company has agreed to grant to the Underwriters an option to purchase up to
__________ additional shares of Common Stock (the "Optional Shares") to cover
over-allotments, as provided in Section 4 hereof. The Firm Shares and, to the
extent such option is exercised, the Optional Shares, are hereinafter
collectively referred to as the "Common Shares."
You, as representatives of the Underwriters (the "Representatives"),
have advised the Company that the Underwriters propose to make a public offering
(the "Offering") of the Common Shares on the effective date of the Registration
Statement, as defined in Section 2(f) hereof, or as soon thereafter as in the
Representatives' reasonable judgment is advisable (but not later than seven (7)
days after such effective date), and that the purchase price of the Common
Shares will be the public offering price of $_____ per share less underwriting
discounts and commissions of seven percent (7 %) or $_____ per share.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of Delaware, with full
corporate power and authority to own and/or lease its properties and
conduct its business as described in the Prospectus (as defined in
Section 2(f) hereof); the Company is duly qualified to do business as a
foreign corporation under the corporation law of, and is in good
standing as such in, each jurisdiction where such qualification is
required; the Company has received no notice of
any proceeding and, to the Company's knowledge, no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(b) The Company does not own or control any subsidiary and
does not own any interest in any other corporation, joint venture,
proprietorship or other commercial entity or organization except as
described in the Prospectus.
(c) The shares of Common Stock outstanding on the date of this
Agreement and immediately prior to the issuance of the Common Shares
have been duly and validly authorized and are validly issued, fully
paid and nonassessable. There are no preemptive, preferential or other
rights to subscribe for or purchase any of the Common Shares to be sold
by the Company hereunder, and no shares of Common Stock have been
issued in violation of such rights of stockholders. There are no
outstanding rights, warrants or options to acquire or instruments
convertible into or exchangeable for, any shares of Common Stock or
other equity interest in the Company, except as described in the
Prospectus. No holders of securities of the Company have any rights to
the registration of such securities under the Registration Statement,
or such rights have been waived with respect to the Registration
Statement. The statements made in the Prospectus under the caption
"Description of Our Capital Stock" are accurate and complete in all
material respects, and the authorized capital stock of the Company
conforms as to legal matters to the description thereof contained in
the Prospectus.
(d) The Company has the corporate power and authority to
issue, sell and deliver the Common Shares to be sold by it to the
Underwriters as provided herein. The Common Shares to be sold by the
Company have been duly authorized and when issued, delivered and paid
for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable and not subject to any preemptive or similar rights, and
will conform to the description thereof contained in the Prospectus.
Upon consummation of the purchase of the Common Shares by the
Underwriters under this Agreement, the Underwriters will acquire good
and marketable title thereto, free and clear of any claim, security
interest, community property right, or other encumbrance or restriction
on transfer.
(e) The Company has full corporate power and authority to
enter into and perform this Agreement, and the execution and delivery
hereof and the performance of the Company's obligations hereunder have
been duly authorized by all necessary corporate action. This Agreement
has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by each other party hereto,
is, and on each Closing Date referenced in Section 4 hereof will be,
the legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except that rights to
indemnity or contribution may be limited by applicable law and public
policy and enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting the
rights of creditors and by equitable principles limiting the right to
specific performance or other equitable relief. The execution and
performance by the Company of this Agreement, including application of
the net proceeds of the Offering, if and when received, as described in
the Prospectus
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under "Prospectus Summary" and "Use of Proceeds," will not: (i) violate
any provisions of the Certificate of Incorporation or Bylaws of the
Company, or any law, rule or regulation applicable to the Company of
any government, court, regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any of its
businesses or properties, or (ii) result in the breach, or be in
contravention, of any provision of any loan agreement, lease,
franchise, license, note, bond, other evidence of indebtedness,
indenture, mortgage, deed of trust, other instrument, agreement,
contract, permit or other contractual obligation to which the Company
is a party or by which the Company or its property may be bound, or
affected, or any order of any court or governmental agency or authority
entered in any proceeding to which the Company was or is now a party or
by which it is bound, except those, if any, described in the Prospectus
or which would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, the term "Material
Adverse Effect" means, when used in connection with the Company, any
development, change or effect that is, or reasonably could be expected
to be, materially adverse to the business, management, properties,
assets, net worth, condition (financial or other), results of
operations or prospects of the Company. No consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated by this
Agreement except for compliance with the Securities Act of 1933, as
amended (the "Act") and the state securities laws (the "Blue Sky Laws")
applicable to the Offering, and the clearance of such Offering with the
National Association of Securities Dealers, Inc. (the "NASD").
(f) (i) The Company has prepared and filed with the Securities
Exchange Commission (the "Commission") in accordance with the
provisions of the Act and the rules and regulations (the "Rules and
Regulations") of the Commission thereunder, a registration statement on
Form S-1, including a prospectus, relating to the Common Shares. The
registration statement, as amended at the time it became effective,
including all exhibits thereto and the information (if any) deemed to
be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Act ("Rule 430A Information"), and any
post-effective amendment thereafter filed with the Commission with
respect to such registration statement, is herein referred to as the
"Registration Statement." The form of prospectus first filed by the
Company with the Commission pursuant to Rule 424(b) and Rule 430A under
the Act or, if no such filing is required, the form of prospectus
included in the Registration Statement at the time it became effective,
and any supplement or amendment thereafter filed with the Commission
with respect to such prospectus, is hereinafter referred to as the
"Prospectus." For purposes of this Agreement, "Effective Time" means
the date and time as of which the Registration Statement, or the most
recent post-effective amendment thereto, if any, was or is declared
effective by the Commission. "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or amendments
thereof, before the Registration Statement became effective under the
Act, any prospectus filed with the Commission by the Company pursuant
to Rule 424(a) under the Act and the prospectus included in the
Registration Statement at the Effective Time that omits Rule 430A
Information.
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(ii) The Registration Statement has become effective,
and no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending
before or, to the knowledge of the Company, threatened by the
Commission.
(g) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects with the requirements
of the Act and the Rules and Regulations and, as of its date, has not
included 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, in light of the circumstances in which they are
made, not misleading. The Registration Statement and the Prospectus
contain all statements that are required to be stated therein in
accordance with the Act and the Rules and Regulations and in all
material respects conform to the requirements of the Act and the Rules
and Regulations, and neither the Registration Statement nor the
Prospectus includes any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which
they are made, not misleading; provided, however, that the Company
makes no representation or warranty as to information contained in or
omitted from any Preliminary Prospectus, the Registration Statement or
the Prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives specifically for use in the preparation
thereof. There are no legal or governmental actions, suits or legal
proceedings, and there are no statutes, regulations, contracts or other
documents, transactions or relationships of or by the Company required
to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement by the Act or by the
Rules and Regulations which have not been described or filed as
required.
(h) PricewaterhouseCoopers LLP, which has expressed its
opinion with respect to certain of the financial statements filed with
the Commission as a part of the Registration Statement and included in
the Prospectus, are independent certified public accountants as
required by the Act and the Rules and Regulations.
(i) The financial statements of the Company for the respective
periods covered thereby, and the related notes and schedules thereto
included in the Registration Statement and the Prospectus, present
fairly the financial position of the Company for the periods covered
thereby as of the respective dates of such financial statements, all in
conformity with generally accepted accounting principles consistently
applied throughout the periods involved (except as otherwise expressly
noted therein). All adjustments for a fair presentation of results have
been made. The selected financial data included in the Registration
Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein, and the other financial and statistical
information and data with respect to the Company set forth in the
Registration Statement and the Prospectus are, in all material
respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company.
The financial statements of the
4
Company included in the Registration Statement and the Prospectus
conform in all material respects to the applicable requirements of Form
S-1 and Regulation S-X under the Act. No other financial statements,
except the financial statements included in the Registration Statement
and Prospectus, are required by Form S-1 to be included in the
Registration Statement and Prospectus.
(j) The Company is not (i) in violation of its Certificate of
Incorporation or Bylaws, or (ii) in default under any court or
administrative order or decree, or (iii) in default with respect to any
provision of any material loan agreement, lease, franchise, license,
note, bond, other evidence of indebtedness, indenture, mortgage, deed
of trust, other instrument, agreement, contract, permit or other
contractual obligation to which the Company is a party or by which the
Company or any of its properties or businesses may be bound, and, to
the knowledge of the Company, there does not exist any state of facts
which constitutes an event of default as defined in such documents or
which, upon notice or lapse of time or both, would constitute such an
event of default, except those, if any, described in the Prospectus or
which would not, individually or in the aggregate, have a Material
Adverse Effect.
(k) There are no governmental actions, suits or legal
proceedings pending, or to the Company's knowledge, threatened to which
the Company is or could be a party, or to which the business of the
Company or any material property owned or leased by the Company is
subject, or related to product liability, environmental, intellectual
property or discrimination matters which are not disclosed in the
Registration Statement and the Prospectus or which question the
validity of this Agreement or any action taken or to be taken pursuant
hereto except those, if any, described in the Prospectus or which would
not, individually or in the aggregate, have a Material Adverse Effect.
(1) The Company does not own or have title to any real
property. The Company has good and marketable title to all the tangible
properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind or nature
whatsoever except those, if any, reflected in such financial statements
(or elsewhere in the Prospectus) or which, in the aggregate, are not
material to the Company and its business and do not materially affect
the value of such property and do not materially interfere with the use
made or proposed to be made of such property; all material tangible
properties held or used by the Company under leases, licenses or other
agreements are held by it under valid, subsisting and enforceable
leases, franchises or other agreements with respect to which it is not
in default, except that rights to indemnity or contribution may be
limited by applicable law and public policy and enforceability of the
rights and remedies of the Company under any such lease, franchise,
license or other agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting the
rights of creditors and by equitable principles limiting the right to
specific performance or other equitable relief.
(m) The Company will not take and has not taken, directly or
indirectly, any action (and does not know of any action by its
directors, officers or stockholders, or
5
others) designed to or which has constituted or which might reasonably
be expected to cause or result, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise, in stabilization
or manipulation of the price of the Common Shares to facilitate the
sale or resale of the Common Shares.
(n) Except as reflected in or contemplated by the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), since the respective dates as of which
information is given in the Prospectus:
(i) the Company has not incurred any material
liabilities or obligations, direct or contingent, nor entered
into any material transactions not in the ordinary course of
business;
(ii) the Company has not paid or declared any
dividends or other distributions with respect to its capital
stock and is not delinquent in the payment of principal or
interest on any outstanding debt obligations;
(iii) there has not been any material adverse change
or any development involving a prospective material adverse
change in the capital stock of the Company; and
(vi) there has not occurred with respect to the
Company any Material Adverse Effect or any development which
reasonably could be expected to result in a Material Adverse
Effect.
(o) The Company has filed all necessary federal, state and
foreign income and franchise tax returns and paid all taxes shown as
due thereon; and the Company has no knowledge of any tax deficiency
which has been asserted or threatened against the Company which would
have a Material Adverse Effect.
(p) The Company has the capitalization as set forth under the
caption "Capitalization" in the Prospectus as of the date indicated
therein and there has been no material change therein except as
disclosed in the Prospectus. The financial and numerical information
and data in the Prospectus under "Prospectus Summary," "The Offering,"
"Summary Financial Data," "Risk Factors," "Use of Proceeds," "Dividend
Policy," "Capitalization," "Dilution," "Selected Historical Financial
Data," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," "Management," "Related Transactions
and Relationships," "Principal Stockholders" and "Description of Our
Capital Stock" are fairly presented and prepared on a basis consistent
with the audited financial statements of the Company.
(q) The Company holds all licenses, permits, approvals,
exemptions, franchises, consents and other government authorizations,
and has made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory organizations and all courts
and other tribunals, as are required for the present and proposed
conduct of its business as described in the Prospectus, except as would
not,
6
individually or in the aggregate, have a Material Adverse Effect. Such
licenses, permits and other governmental authorizations are in full
force and effect, the Company is in all material respects complying
therewith, and the Company has not received any notice of proceedings
relating to the revocation or modification of any such license, permit,
approval or authorization. The Company is complying in all respects
with all laws, ordinances and regulations applicable to the Company,
its properties and its business, except as would not, individually or
in the aggregate, have a Material Adverse Effect.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (a)
transactions are executed in accordance with management's general or
specific authorizations; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(c) access to assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action taken with respect to any differences. The Company
has maintained its books of account in accordance with generally
accepted accounting principles consistently applied in all material
respects, and such books and records are, and during periods covered by
the financial statements included in the Registration Statement and the
Prospectus are, correct and complete in all material respects, and
fairly and accurately reflect, in all material respects, the income,
expenses, assets and liabilities of the Company and provide a fair and
materially accurate basis for the preparation of such financial
statements.
(s) The minute books of the Company are current and contain a
materially correct and complete record of all corporate action taken by
the Board of Directors and the stockholders of the Company and all
signatures contained therein are true signatures of the persons whose
signatures they purport to be.
(t) Except as described in the Prospectus, the Company is
unaware of any loss or threatened loss of any key customer, supplier or
account which is material to the Company.
(u) The Company has uncontested and sufficient legal rights by
ownership or license to all "Intellectual Property" (defined to include
all unregistered, registered or registration-pending patents,
copyrights, trademarks, trade names, service marks, trade secrets,
know-how or similar rights recognized by U.S., foreign and
international statutes, common law or treaties) to permit continued
operation of the Company's business as it is currently operated and
described in the Prospectus, subject only to payment of periodic
license fees consistent with prior practice. Each description of the
Company's rights to Intellectual Property set forth in the Prospectus
(such as a statement in the Prospectus that an asset is subject to
patent, trademark or copyright protection, whether registered, pending
or otherwise) is true, complete and correct in all material respects.
The Company has no knowledge of any infringement or other conflicting
activity by others upon its Intellectual Property rights, and the
Company has no knowledge of any infringements or conflicting activity
by the Company on any Intellectual Property rights
7
of others. The Company is the named registrant for any and all of the
Company's Intellectual Property that is subject to registration. The
Company is the sole registered holder and sole administrative contact
for the domain name xxx.xxxxxxxx.xxx and the Company has no knowledge
of any pending, threatened or reasonably foreseeable adverse claim to
the Company's exclusive right to use such domain name.
(v) The Company is in compliance with all federal, state or
local laws or ordinances, including orders, rules and regulations
thereunder, regulating or otherwise affecting employee health and
safety or the environment, noncompliance with which could have a
Material Adverse Effect. To its knowledge, the Company has disposed of
all wastes in substantial compliance with applicable laws, and it is
not aware of any existing condition that may form the basis for any
present or future claim, demand or action seeking clean-up of any site,
location or body of water, surface or subsurface.
(w) The provisions of any qualified retirement plans sponsored
by the Company are in compliance with the Employee Retirement Income
Security Act of 1974 ("ERISA"), and the Company is in compliance with
ERISA, including, without limitation, ERISA's fiduciary and prohibited
transaction rules, or the funding requirements with respect to any such
plan, except to the extent such noncompliance would not, individually
or in the aggregate, have a Material Adverse Effect. The Company has
timely filed the reports required to be filed by ERISA in connection
with the maintenance of plans sponsored by the Company and no fact,
including, without limitation, any "reportable event" as defined by
ERISA and the regulations thereunder, exists in connection with any
plan sponsored by the Company which might constitute grounds for the
termination of such plan by the Pension Benefit Guaranty Corporation or
for the appointment by the appropriate United States District Court of
a trustee to administer any such plan. With respect to multiemployer
plans in which the Company participates on behalf of its employees who
are members of collective bargaining units, the Company has no
withdrawal liability except to the extent set forth in the Prospectus.
The provisions of any employee benefit welfare plan, as defined in
ERISA's Section 3(l), sponsored by the Company are in compliance with
ERISA's fiduciary and prohibited transaction rules and reporting and
disclosure requirements with respect to any such plan, except to the
extent such noncompliance would not, individually or in the aggregate,
have a Material Adverse Effect.
(x) No labor dispute with the employees of the Company exists
or, to the knowledge of the Company is imminent, and it is not aware of
any existing or imminent labor disputes by the employees of any of its
principal suppliers, manufacturers or contractors which might be
expected to result in a Material Adverse Effect. There is no: (a)
significant unfair labor practice complaint, grievance or arbitration
proceeding pending or, to the Company's knowledge, threatened against
the Company before the National Labor Relations Board or any state or
local labor relations board; (b) strike, labor dispute, slowdown or
stoppage pending or, to the Company's knowledge, threatened against the
Company; or (c) union representation question pending or, to the
Company's knowledge, proposed with respect to the employees of the
Company. To the
8
knowledge of the Company, no collective bargaining organizing
activities are taking place with respect to the Company.
(y) The Company has not violated any provision of the Foreign
Corrupt Practice Act, or the rules and regulations promulgated
thereunder.
(z) To the Company's knowledge after due inquiry, no
relationship, direct or indirect, or agreement, arrangement or
understanding (including, without limitation, any voting agreement),
exists between or among the Company or any other person, which is
required by the Act to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required.
(aa) No part of the proceeds of the sale of the Common Shares
will be used for any purpose that violates the provisions of any of
Regulations G, T or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board of Governors.
(bb) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times exempt from the
registration requirements of the Act and were duly registered with or
the subject of an available exemption from the registration
requirements of the applicable Blue Sky Laws.
(cc) The Company is not, does not intend to conduct its
business in a manner in which it would become, and after giving effect
to the offering and sale of the Common Shares and the application of
the proceeds thereof as described in the Prospectus will not be, an
"investment company" as defined in the Investment Company Act of 1940,
as amended.
A certificate signed by any officer of the Company delivered to you or
to counsel for the Underwriters shall be deemed a representation and warranty of
the Company to you as to the matters covered thereby.
SECTION 3. REPRESENTATION OF UNDERWRITERS. You have been duly
authorized to act and will act as the Representatives for the Underwriters in
connection with this financing, and any action under or in respect of this
Agreement taken by you, as such Representatives, will be binding upon all
Underwriters.
SECTION 4. PURCHASE, SALE AND DELIVERY OF COMMON SHARES. 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
__________ Firm Shares to the Underwriters, and the Underwriters agree,
severally and not jointly, to purchase from the Company the number of Firm
Shares as hereinafter set forth at the price per share set forth in Section 1
hereof. In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase from the Company up
9
to __________ Optional Shares at the same purchase price per share to be paid
for the Firm Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The obligation of
each Underwriter to the Company shall be to purchase from the Company that
number of full Optional Shares which (as nearly as practicable in full shares as
determined by the Representatives) bears to __________ the same proportion as
the number of shares set forth opposite the name of such Underwriter in Schedule
A hereto bears to the total number of Firm Shares to be purchased by all the
Underwriters under this Agreement.
At 9:00 a.m., Baltimore, Maryland time, on the third full business day
after the commencement of the Offering, or at such other time not later than
seven (7) full business days after the commencement of the Offering, as the
Representatives and the Company may agree, the Company will deliver to the
Representatives, at the offices of Xxxxxx, Xxxxx Xxxxx, Incorporated, 0000
Xxxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, X.X., or through the facilities of
The Depository Trust Company, for the accounts of the Underwriters, definitive
certificates representing the Firm Shares to be sold, with all transfer taxes,
if any, with respect to the transfer, sale and delivery of the Firm Shares to
the several Underwriters duly paid by the Company, against payment in
Washington, D.C. of the purchase price therefor by wire transfer of immediately
available funds to an account designated by the Company in respect of the Firm
Shares being sold by the Company. Such time of delivery and payment is referred
to throughout this Agreement as the "First Closing Date." The certificates for
the Firm Shares to be so delivered will be in denominations and registered in
such names as the Representatives request by notice delivered to the Company
prior to 9:00 a.m., Baltimore, Maryland time, no later than the second full
business day preceding, the First Closing Date, and, if the certificates are to
be physically delivered, will be made available for checking and packaging at
9:00 a.m., Baltimore, Maryland time, at least 24 hours prior to the First
Closing Date at a location to be designated by the Representatives.
The over-allotment option granted hereunder may be exercised at any
time (but not more than once) within thirty (30) days after the date the
Registration Statement becomes effective upon written notice by the
Representatives to the Company setting forth the aggregate number of Optional
Shares as to which the Underwriters are exercising the option, the names and
denominations in which the certificates for such shares are to be registered and
the time and place at which such certificates will be delivered. Such time of
delivery (which may not be earlier than the First Closing Date), being herein
referred to as the "Second Closing Date," shall be determined by the
Representatives, but if at any time other than the First Closing Date, shall not
be earlier than three (3) nor later than seven (7) full business days after
delivery of such notice of exercise to the Company. Definitive certificates for
the Optional Shares, with all transfer taxes, if any, with respect to the
transfer, sale and delivery of the Optional Shares to the several Underwriters
duly paid by the Company, will be made available for checking and packaging at
9:00 a.m., Baltimore, Maryland time, at least 24 hours prior to the Second
Closing Date at a location to be designated by the Representative if the
certificates are to be physically delivered. The manner of payment for and
delivery of (including the denominations of and the names in which certificates
are to be registered) the Optional Shares shall be the same as for the Firm
Shares purchased from the Company. As Representatives of the Underwriters, you
may cancel the option at any time prior to its expiration by giving written
notice of such cancellation to the Company.
10
The Representatives have advised the Company that each Underwriter has
authorized the Representatives to accept delivery of its Common Shares and to
make payment therefor. You, individually and not as the Representatives of the
Underwriters, may make payment for any Common Shares to be purchased by any
Underwriter whose funds shall not have been received by you by the First Closing
Date or the Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any
obligation hereunder.
SECTION 5. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the several Underwriters as follows:
(a) The Company will prepare and timely file with the
Commission pursuant to Rule 424(b) under the Act the Prospectus
containing information previously omitted in reliance on Rule 430A
under the Act. The Company will advise the Representatives and its
counsel promptly of (i) the time when any post-effective amendment to
the Registration Statement becomes effective; (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for
that purpose, or of any notification of the initiation or threatening
of any proceedings for that purpose; (iii) of any request of the
Commission for amendment or supplement of the Registration Statement,
of any Preliminary Prospectus or of the Prospectus, or for additional
information, and will not file or make any amendment or supplement of
the Registration Statement, to any Preliminary Prospectus or to the
Prospectus of which the Representatives have not been furnished with a
copy prior to such filing or to which you object; and (iv) the
happening of any event during the period referred to in Section 5(g)
below which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires any
additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time
the Commission shall issue any stop orders suspending the effectiveness
of the Registration Statement, the Company will use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time. The Company will file promptly and will furnish to the
Representatives at or prior to the filing thereof copies of all reports
and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Sections 13, 14 and 15
of the Exchange Act subsequent to the date of the Prospectus, and for
so long as the delivery of a prospectus is required in connection with
the Offering.
(b) If, at any time when a prospectus relating to the Common
Shares is required to be delivered under the Act, any event occurs as a
result of which the Prospectus, including any subsequent amendment or
supplement, would include an untrue statement of a material fact, or
would omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or if it is
necessary at any time to amend or supplement the Prospectus to comply
with the Act, the Rules and Regulations or Blue Sky Laws, the Company
promptly will advise the Representative and its counsel thereof. In
such event, or if during such period any event shall occur or
11
condition shall exist as a result of which, in the reasonable judgment
of the Representatives, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the reasonable judgment of the Representatives, it
is necessary to amend or supplement the Prospectus to comply with the
Act, the Rules and Regulations or Blue Sky Laws, then the Company will
promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or effect such
compliance and will use its best efforts to cause any post-effective
amendment to the Registration Statement relating thereto to become
promptly effective.
(c) Except as described in the Prospectus, the Company will
not, prior to the Second Closing Date (or the expiration of the thirty
(30) day period within which the Representatives are required to
exercise the over-allotment option pursuant to Section 4 hereof if
there is no Second Closing Date), incur any material liability or
obligation, direct or contingent, or enter into any material
transaction, other than in the ordinary course of business.
(d) The Company will not declare or pay any dividend or make
any other distribution upon its capital stock payable to its holders of
record on a date prior to the Second Closing Date or, if there is no
Second Closing Date, then prior to the First Closing Date.
(e) Until the Underwriters have completed the Offering, the
Company will not take, directly or indirectly, any action designed to
or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the
price of the Common Shares to facilitate the sale or resale of the
Common Shares.
(f) The Company will make generally available to the
Representatives and to the Company's security holders an earnings
statement (which need not be audited) as soon as practicable, but in no
event later than 15 months after the end of the Company's current
fiscal quarter, covering a period of 12 consecutive calendar months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of
the Act and Rule 158 promulgated thereunder.
(g) Prior to 10:00 a.m., Baltimore, Maryland time, on the
first business day after the date of this Agreement and from time to
time thereafter as in the opinion of counsel for the Underwriters a
prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, the Company will furnish the
Representatives, at the Company's expense, with copies of the
Registration Statement, the Prospectus and the Preliminary Prospectus
in each case as soon as available and in such quantities as the
Representatives may reasonably request, for the purposes contemplated
by the Act or the Exchange Act.
(h) The Company will cooperate with the Representatives, their
counsel and the Underwriters in qualifying or registering the Common
Shares if and as required for
12
sale under the Blue Sky Laws of such jurisdictions within the United
States and its territories as the Representatives shall designate, and
will continue such qualifications or registrations in effect so long as
reasonably requested by the Representatives to effect the distribution
of the Common Shares. The Company will advise you promptly and, if
requested by you, will confirm such advice in writing of the suspension
of qualification of the Common Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes.
The Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified to transact business.
(i) During the period of five years after the date hereof, as
soon as practicable after the end of each fiscal year, the Company will
furnish the Representatives with two copies, and to each of the other
Underwriters who may so request, one copy, of the Annual Report of the
Company containing the balance sheet of the Company as of the close of
such fiscal year and corresponding statements of earnings,
stockholders' equity and cash flows for the year then ended, such
financial statements to be under the certificate or opinion of the
Company's independent certified public accountants. During such period
the Company will also furnish the Representatives with one copy:
(i) as soon as practicable after the filing
thereof, of each report filed by the Company with the Commission; and
(ii) as soon as available, of each report of the
Company mailed to its stockholders.
(j) The Company will use its best efforts to comply or cause
to be complied with the conditions to the obligations of the
Underwriters set forth in Section 7 hereof.
(k) The Company shall use its best efforts to cause (i) the
Common Shares to be listed for trading on the NASDAQ National Market as
soon as practicable after the effectiveness of the Registration
Statement and (ii) the Common Shares to remain so listed for at least
thirty-six (36) months thereafter.
(1) The Company shall promptly prepare and file with the
Commission, from time to time, such reports as may be required to be
filed by the Rules and Regulations.
(m) The Company shall comply in all respects with the
undertakings given by the Company in connection with the qualification
or registration of the Common Shares for offering and sale under the
Blue Sky Laws of one or more jurisdictions.
(n) The Company shall apply the net proceeds from the sale of
the Common Shares to be sold by it hereunder for the purposes set forth
in the Prospectus.
(o) Except for the sale of Common Shares pursuant to this
Agreement, the Company hereby agrees not to (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or
13
warrant to purchase, or establish or increase a put equivalent position
or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder, or otherwise transfer or dispose of, directly
or indirectly, any shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for any
shares of capital stock of the Company or (ii) enter into any swap or
other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any shares of capital
stock of the Company (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
publicly announce an intention to effect any of the foregoing
transactions, for a period of 180 days after the date of the Prospectus
without the prior written consent of the Representatives; provided,
however, that notwithstanding the foregoing limitation, the Company may
issue, without the prior consent of the Representatives, (i) options to
purchase up to 200,000 shares of Common Stock to employees under the
Company's employee benefit plans (which options shall not vest or be
exercisable within such 180 day period) and (ii) up to 200,000 shares
of Common Stock for business purposes in connection with establishing
or maintaining commercial relationships with distributors, content
providers or strategic partners (which shares shall be issued as
"restricted securities" within the meaning of Rule 144 under the Act
without registration rights during such 180 day period). Except for a
registration statement on Form S-8 to be filed by the Company to
register the offer and sale of not more than 1.75 million shares of
Common Stock pursuant to employee benefit plans, the Company also
agrees not to file any registration statement with respect to any
shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock for a period of 180 days
after the date of the Prospectus without the prior written consent of
the Representatives. The Company shall, prior to or concurrently with
the execution of this Agreement, deliver an agreement executed by (i)
each of the present officers and directors of the Company and (ii) the
holders and beneficial owners of not less than 95% of the issued and
outstanding shares of Common Stock of the Company (calculated on a
fully diluted basis) as of the effective date of the Registration
Statement, to the effect that such person will not, during the period
commencing on the date such person signed such agreement and ending 180
days after the date of the Prospectus, without the prior consent of the
Representatives, (A) engage in any of the transactions described in the
first sentence of this paragraph or (B) make any demand for, exercise
any right, or file (or participate in the filing of) a registration
statement 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 transfers or other dispositions of
shares of Common Stock for estate planning purposes shall be permitted
without the prior consent of the Representatives if the transferee
first executes and delivers an agreement to the Representatives that
contains all of the terms and conditions of the agreement executed and
delivered by the transferor pursuant to this paragraph; and provided
further, that the Company shall not be required to deliver an agreement
from any holder or beneficial owner of Common Stock that has or, upon
exercise or conversion, will have shares of Common Stock that
constitute "restricted securities" within the meaning of Rule 144 under
the Act and that are subject to the holding period specified in Rule
144(d) for 180 days after the date of the Prospectus, and the number of
shares constituting such
14
restricted securities shall be counted for purposes of determining the
Company's compliance with the 95% threshold described above.
(p) Upon the First Closing Date, the Company shall grant and
issue warrants to the Representatives (for themselves and not for or on
behalf of any other Underwriters) to purchase shares of Common Stock
equal in the aggregate to ten percent (10.0%) of the total number of
Common Shares sold in the Offering excluding the Optional Shares (the
"Underwriters Warrants") at an exercise price equal to one hundred ten
percent (110.0%) of the public offering price per share. Prior to the
First Closing Date, the Representatives shall deliver to the Company a
letter instructing the Company as to the percentage of such
Underwriters Warrants to be issued to each of the Representatives. The
Underwriters Warrants will have a five (5) year term commencing on the
effective date of the Offering and expiring on the fifth anniversary
thereof, and shall be exercisable, in whole or in part, by the
Representatives from time to time during such term on or after the
first anniversary of the effective date of the Offering. The
Underwriters Warrants will contain (i) standard anti-dilution
provisions covering any Common Stock split or dividend,
recapitalization or reorganization of the Company, (ii) registration
rights providing one demand registration right and piggyback
registration rights upon any subsequent offering of Common Stock by the
Company and (iii) a net issuance feature.
(q) The Company will furnish to you five (5) signed copies of
the Registration Statement as first filed with the Commission and each
amendment to it, including all exhibits and documents incorporated
therein by reference, if any, and will furnish to you and each
Underwriter designated by you such number of conformed copies of the
Registration Statement as so filed and each amendment to it, without
exhibits, as you may reasonably request.
(r) The Company shall use its best efforts to do and perform
all things required or necessary to be done or performed under this
Agreement by the Company prior to the First Closing Date or the Second
Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Common Shares.
(s) Subject to the closing of the Offering contemplated by
this Agreement, the Company hereby grants to the Representatives a
right of first refusal to serve as managing underwriters for any
subsequent public offering the Company may undertake within the first
year following the First Closing Date; provided, however, that the
terms and conditions of any such subsequent underwriting engagement
shall be the same or more advantageous to the Company than competing
offers from other underwriters and consistent with industry standards
for similarly sized offerings.
SECTION 6. PAYMENT OF EXPENSES. The Company will pay the following
costs, fees and expenses incurred in connection with the Offering:
(a) All costs, fees and expenses incurred in connection with
the performance of the Company's obligations hereunder, including
without limiting the generality of the foregoing, all costs and
expenses incurred in connection with the preparation, printing,
15
filing and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial
statements) and all agreements and supplements provided for herein, and
the Preliminary and, if required, any Supplemental Blue Sky Memorandum.
(b) All costs, fees and expenses, including reasonable legal
fees and disbursements of counsel for the Underwriters, incurred by the
Underwriters in connection with qualifying or registering all or any
part of the Common Shares for offer and sale under the Blue Sky Laws,
if required, including the preparation of the Preliminary and any
Supplemental Blue Sky Memoranda relating to the Common Shares, and the
clearing of such sales with the NASD.
(c) All fees and expenses of the Company's transfer agent,
printing of the certificates for the Common Shares, and all transfer
taxes, if any, with respect to the transfer, sale and delivery of the
Common Shares to the several Underwriters and all fees of the NASD and
NASDAQ.
(d) A non-accountable expense allowance (the "Expense
Allowance"), to be paid by the Company to the Representatives on the
First Closing Date to, among other things, provide the Representatives
with reimbursement of expenses incurred by them on behalf of themselves
and the Underwriters with the respect to the Offering. The Expense
Allowance shall be equal to three percent (3.0%) of the first $20.0
million of gross proceeds of the Offering and one percent (1.0%) of the
gross proceeds of the Offering in excess of such $20.0 million. The
Expense Allowance shall not be payable by the Company if for any reason
the sale to the Underwriters of the Firm Shares is not consummated as
provided herein; provided, however, in such event the Company shall be
liable for reimbursement of the Underwriters' expenses as provided in
Section 8 hereof.
SECTION 7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase and pay for the Firm Shares on the
First Closing Date and the Optional Shares on the Second Closing Date shall be
subject to the accuracy of the representations and warranties on the part of the
Company herein set forth as of the date hereof and as of the First Closing Date
or the Second Closing Date, as the case may be, 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
conditions:
(a) The Registration Statement shall be effective, and no stop
order suspending the effectiveness of the Registration Statement shall
have been instituted or shall be pending or, to the knowledge of the
Company, or the Representatives, shall be contemplated by the
Commission, and any request of the Commission for additional
information shall have been complied with to the Representatives'
reasonable satisfaction.
(b) The Common Shares shall either be "covered securities" as
defined in the Act or shall have been qualified or registered for sale
under the Blue Sky Laws of such states as shall have been specified by
the Representatives prior to the date hereof.
16
(c) The legality and sufficiency of the authorization,
issuance and sale of the Common Shares hereunder, the validity and form
of the certificates representing the Common Shares, the execution and
delivery of this Underwriting Agreement, and all corporate proceedings
and other legal matters incident thereto, and the form of the
Registration Statement and the Prospectus (except financial statements
and other financial data included therein) shall have been approved by
Williams, Mullen, Xxxxx & Xxxxxxx, P.C., Richmond, Virginia, counsel
for the Representatives and the Underwriters.
(d) The Registration Statement or Prospectus shall not
contain, in the reasonable judgment of the Representatives, an untrue
statement of material fact or omit to state a material fact which is
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(e) Since the dates as of which information is given in the
Registration Statement and Prospectus:
(i) the Company shall not have sustained any material
loss or interference with its business from any labor dispute,
strike, fire, explosion, flood or other calamity (whether or
not insured), or from any court or governmental action, order
or decree, and
(ii) there shall not have been any change in the
capital stock, or any material change in the short-term debt
or long-term debt of the Company, or a change or a development
involving a prospective change in or affecting the ability of
the Company to conduct its business (whether by reason of any
court, legislative, other governmental action, order, decree,
or otherwise), or in the general affairs, management,
financial position, stockholders' equity or results of the
operations of Company, whether or not arising from
transactions in the ordinary course of business, in each case
other than as set forth in or contemplated by the Registration
Statement and Prospectus,
The effect of which on the Company, in any such case described
in clause (i) or (ii), above, is in the Representatives' opinion
sufficiently material and adverse as to make it impracticable or
inadvisable to proceed with the Offering or the delivery of the Common
Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
(f) All written voting agreements, understandings and
arrangements with respect to the voting of Common Stock shall have been
terminated and shall be of no further force or effect except as
disclosed in the Prospectus.
17
(g) There shall have been furnished to you, as Representatives
of the Underwriters, on each of the First Closing Date and the Second
Closing Date, as applicable:
(i) An opinion of Piper & Marbury, L.L.P., counsel
for the Company, addressed to the Representatives as such and
dated the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(1) The Company has been duly incorporated
and is validly existing and in good standing under
the laws of Delaware, with full corporate power and
authority to own and/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 under the corporation law of, and
is in good standing as such in, each state where such
qualification is required.
(2) The Company does not own or control any
subsidiary and does not, to such counsel's knowledge
after a review of the Company's minute books and
other corporate records, own any interest in any
other corporation, joint venture, proprietorship or
other commercial entity or organization except as
described in the Prospectus.
(3) The authorized capital stock of the
Company consists of 50,000,000 shares of Common
Stock, $0.0001 par value, and all such capital stock
conforms as to legal matters to the description
thereof under the caption "Description of Our Capital
Stock" in the Registration Statement and Prospectus,
the issued and outstanding shares immediately prior
to the issuance of the Common Shares have been duly
authorized and validly issued and are fully paid and
nonassessable and were issued in compliance with
exemptions from or were registered in accordance with
the registration provisions of Section 5 of the Act;
neither the Company's Certificate of Incorporation or
Bylaws or any statute applicable to the Company
confers any preemptive rights to subscribe for or
purchase any Common Stock of the Company and, to the
knowledge of such counsel, no other preemptive or
other such rights exist with respect to the Common
Stock; except as otherwise stated in the Registration
Statement, to the knowledge of such counsel, there
are no outstanding rights, warrants or options to
acquire, or instruments, securities or obligations of
the Company, convertible into or exchangeable for,
any shares of Common Stock or other equity interests
in the Company, nor to the knowledge of such counsel
are there any obligations of the Company to issue any
of the foregoing. The statements made in the
Prospectus under the section entitled "Description of
Our Capital Stock" are accurate in all material
respects.
18
(4) The Common Shares will be duly
authorized and validly issued, fully paid and
nonassessable and, upon consummation of the purchase
by the Underwriters, the Underwriters will acquire
good and marketable title thereto, free and clear of
any claim, security interest, community property
right, or other encumbrance or restriction on
transfer (except for restrictions under the Act and
under the Blue Sky Laws), and the form of the
certificates evidencing the Common Shares complies
with all formal requirements of Maryland law.
(5) The Company has full corporate power and
authority to enter into and perform this Agreement,
and the execution and delivery hereof and the
performance of the Company's obligations hereunder
have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and
delivered by and on behalf of the Company, and,
assuming the due authorization, execution and
delivery by each other party hereto, is a legal,
valid and binding agreement of the Company,
enforceable against the Company in accordance with
its terms, except that rights to indemnity or
contribution may be limited by applicable law and
public policy and enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors and by
equitable principles limiting the right to specific
performance or other equitable relief.
(6) The execution, delivery and performance
of this Agreement by the Company; the valid
authorization, issuance, sale and delivery of the
Common Shares; and the compliance by the Company with
all the provisions hereof and the consummation by the
Company of the transactions contemplated in this
Agreement and the Registration Statement as described
under the headings "Prospectus Summary,"
"Capitalization" and "Use of Proceeds" will not: (A)
conflict with or constitute a breach of any of the
terms or provisions of, or a default under, (x) the
Certificate of Incorporation or Bylaws of the
Company, or (y) any indenture, loan agreement,
mortgage, lease or other material agreement or
instrument (but only to the extent that such counsel
has knowledge of any of the foregoing documents) to
which the Company is a party or by which the Company
or its property is bound; or (B) violate or conflict
with any applicable law or any rule, regulation,
judgment, order or decree of any court or any
governmental body or agency having jurisdiction over
the Company or any of its properties.
(7) No consent, approval, authorization or
other order of any court, regulatory body,
administrative agency or other governmental body is
required for the execution and delivery of this
Agreement by the Company or the consummation by the
Company of the transactions contemplated by this
Agreement, except for compliance with the Act and
19
Blue Sky Laws applicable to the Offering and the
clearance of such Offering with the NASD.
(8) Such counsel has been advised by the
Commission that the Registration Statement has become
effective under the Act, and, to the knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the
Act; the Registration Statement and the Prospectus
comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations
(except that such counsel need express no opinion as
to the financial statements and other financial and
statistical data included therein); and such counsel
does not know of any statutes, regulations, legal or
governmental proceedings or, after due investigation,
of any contracts or other documents, transactions or
relationships of or by the Company required to be
described in the Registration Statement or to be
filed as exhibits to the Registration Statement by
the Act or the Rules and Regulations which are not
described or filed, as required, and the description
of the terms of any such statutes, regulations, legal
or governmental proceedings or any contracts or other
documents, transactions or relationships contained in
the Registration Statement or the Prospectus are
correct in all material respects.
(9) To the knowledge of such counsel, except
as described in the Prospectus, there are no legal or
governmental actions, suits or legal proceedings
pending or threatened to which the Company is a party
or to which its businesses or material property owned
or leased by the Company is subject, or which
question the validity of this Agreement or any action
taken or to be taken pursuant hereto.
(10) To the knowledge of such counsel, (i)
the Company does not own or have title to any real
property and (ii) the Company has good and marketable
title, except as otherwise stated in the Prospectus,
to all the tangible personal property owned by the
Company as set forth in the Prospectus, subject to no
lien, mortgage, pledge, charge or encumbrance of any
kind or nature whatsoever except those, if any,
referred to in the Prospectus (or reflected in the
financial statements included therein) or which, in
the aggregate, are not material to the Company and
its business and do not materially affect the value
of such property; the real or other properties held
or used by the Company under leases or other
agreements as set forth in the Prospectus are held or
used by it under valid and subsisting leases or other
agreements enforceable against the Company and, to
the knowledge of such counsel, with respect to which
the Company is not in default, except to the extent
that rights to indemnity or contribution may be
limited by applicable law and public policy and the
enforceability of any such lease or other agreement
may be limited by
20
bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting the rights of
creditors and by equitable principles limiting the
right to specific performance or other equitable
relief.
(11) (a) The Company possesses all licenses,
permits, approvals and other governmental
authorizations required for the conduct of its
business, as described in the Prospectus, except as
would not have a Material Adverse Effect; (b) such
licenses, permits and other governmental
authorizations are in full force and effect and to
such counsel's knowledge the Company is in all
material respects complying therewith; and (c) to
such counsel's knowledge, the Company is complying in
all respects with all laws, ordinances and
regulations applicable to the Company, its properties
and business, the noncompliance or violation of which
would have a Material Adverse Effect on the Company.
(12) The statements under the captions
"Business - Content Providers," "Strategic
Relationships," "- Marketing and Distribution," "-
Facilities" and "- Legal Proceedings," "Management,"
"Related Transactions and Relationships,"
"Description of Our Capital Stock" and "Shares
Eligible for Future Sale" in the Prospectus and Item
14 of Part II of the Registration Statement, insofar
as such statements constitute a summary of the legal
matters, documents and proceedings referred to
therein, fairly present the information called for
with respect to such legal matters, documents and
proceedings.
(13) The Company is not and, after giving
effect to the Offering and the application of the
proceeds thereof as described in the Prospectus, will
not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as
amended.
(14) To such counsel's knowledge, except as
described in the Prospectus, there are no contracts,
agreements or understandings between the Company and
any person granting such person the right to require
the Company to file a registration statement under
the Act with respect to any securities of the Company
or to require the Company to include such securities
with the Common Shares registered pursuant to the
Registration Statement.
It is understood that the opinion of such counsel may state that such
counsel is relying as to factual matters on certificates of officers of the
Company and of state officials and, as to legal matters in jurisdictions other
than in which they are domiciled, on opinions of local counsel or of other
counsel retained or having rendered legal services with respect to specific
matters, in which case their opinion is to state that they are so doing and they
believe such reliance is reasonable, and copies of said certificates and/or
opinions are to be attached to the opinion. It is further understood that such
counsel shall give no opinion concerning Company Intellectual Property (as
21
defined below) or other matters covered by the opinion to be delivered pursuant
to subparagraph (g)(ii) below.
Such counsel shall also state that such counsel has participated in the
preparation of the Registration Statement and the Prospectus, including review
of the contents thereof and conferences with officers and other representatives
of the Company, representatives of the independent accountants of the Company,
and representatives of the Underwriters and their counsel at which the contents
of the Registration Statement and the Prospectus were discussed, and although
such counsel has not independently verified and is not passing upon and does not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
specified elsewhere in such counsel's opinion), on the basis of the foregoing,
nothing has come to such counsel's attention that caused them to believe that
the Registration Statement, at the time it became effective, on the date of this
Agreement and as of the date of such opinion, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as of its date and as of the date of such opinion, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except in each case as to the financial statements and other
financial or statistical data included therein as to which no opinion need be
expressed).
(ii) An opinion of Lipton, Xxxxxxxxxx & Xxxxxx,
special counsel for the Company with respect to intellectual
property matters, addressed to the Representatives as such and
dated the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(1) The Company is the registered holder and
administrative contact with respect to the domain
names xxx.xxxxxxxx.xxx and xxxxxxxx.xxx (the "Domain
Names"), and as of the date of such counsel's opinion
there exist no pending or, to such counsel's
knowledge, threatened challenges filed pursuant to
the InterNIC domain name dispute resolution policy.
(2) The Company has not granted any
consensual rights (by license or otherwise) to any
person relating to ownership or use of the Domain
Names.
(3) To the knowledge of such counsel, based
upon actual investigation, there are no pending or
threatened adverse claims or rights to the Company's
exclusive ownership or use of the Domain Names.
(4) To the knowledge of such counsel, based
on commercially reasonable diligence, the Company is
not subject to any adverse claim, pending or
threatened, contesting or asserting rights to use or
ownership of "Company Intellectual Property" (to be
defined as any and all patent,
22
copyright, trademark, trade name, service xxxx, trade
secret rights, know-how or rights of a similar nature
relating to content (including text in any format,
graphics, layout, visual schemes or other protectible
visible elements), functions (including computer
source and object code, scripts, tools, objects,
modules and similar functional software) and
processes (including all protectible business
methods, techniques and processes), whether or not
registered or subject to registration, used or
to-be-used in the present or future business
operations of the Company).
(5) To the knowledge of such counsel, based
on commercially reasonable diligence, the Company
Intellectual Property does not infringe on the rights
of any other person or entity.
(6) The Company has exercised commercially
reasonable diligence in establishing the Company's
rights to Company Intellectual Property that it has
purchased, licensed or internally developed.
(7) There is no controlling U.S. (federal or
state) case law or statute that would provide or
conclude that the Company's "Web Site Functions"
constitute a basis for "Infringement Claims." For
purposes of the opinion, "Web Site Functions" shall
be defined as: (i) the Company's current use of web
browser "pop-up" windows containing Company content
that are superimposed on the user's primary web
browser desktop in a manner that positions the
"pop-up" window over, and obscuring, content of third
parties, which third party content was accessed
pursuant to clause (iii) below, (ii) the Company's
current use of, or referral to, content or functions
of unaffiliated entities (including, for example and
without limitation, "pull-down" links on the
Company's pages to commercial search engines such as
Excite, and links on the Company's pages to
information sources such as PRNewswire), and (iii)
the performance of searches on third-party search
engines resulting in the presentation to the user of
the product of such searches and specifically
bypassing the initial search page of such third-party
search engines; and "Infringement Claims" shall be
defined as statutory, regulatory or common law claims
asserting (i) infringement on patent, trademark,
copyright, trade secret or other intellectual
property rights of others, and (ii) fraud, improper
trading or trade practices, misrepresentation, unjust
enrichment, trespass or other similar claim relating
to misuse of the property or property rights of
others.
(iii) An opinion of Williams, Mullen, Xxxxx &
Xxxxxxx, P.C. counsel for the Representatives and the
Underwriters, addressed to the Representatives in such
capacity and dated the First Closing Date or the Second
Closing Date, as the case may be, with respect to the validity
of the Common Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably
require, and the Company shall have furnished to such counsel
such documents
23
and shall have exhibited to them such papers and records as
they request for the purpose of enabling them to pass upon
such matters.
(iv) A certificate of the Chief Executive Officer and
the Chief Financial Officer of the Company dated the First
Closing Date or the Second Closing Date, as the case may be,
to the effect that:
(1) the representations and warranties of
the Company set forth in Section 2 of this Agreement
are true and correct as of the date of this Agreement
and as of the First Closing Date or the Second
Closing Date, as the case may be, as if again made on
and as of such Closing Date and the Company has
complied with all the agreements and satisfied all
the conditions to be performed or satisfied by it at
or prior to such Closing Date.
(2) the Commission has not issued any order
preventing or suspending the use of any Preliminary
Prospectus or the Prospectus filed as a part of the
Registration Statement; no stop order suspending the
effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been
instituted or, to the Company's knowledge, are
pending or contemplated under the Act.
(3) each of the respective signatories of
the certificate for the Company has carefully
examined the Registration Statement and the
Prospectus and, in the opinion of such signatory and
to his knowledge, the Registration Statement and the
Prospectus contain all statements that are required
to be stated therein, and neither the Registration
Statement nor the Prospectus includes any untrue
statement of a material fact or omits to state any
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances in which they are made, not
misleading, and, since the date on which the
Registration Statement was first filed with the
Commission, there has occurred no event required to
be set forth in an amended or supplemented prospectus
or in an amendment to the Registration Statement
which has not been so set forth.
(4) since the date on which said
Registration Statement was initially filed, there has
not been any material adverse change or a development
involving a prospective material adverse change in
the business, properties, financial condition or
earnings of the Company, whether or not arising from
transactions in the ordinary course of business,
except as disclosed in said Registration Statement as
heretofore amended including the proposed amendment
thereto delivered to the Representatives prior to or
contemporaneously with the execution of this
Agreement or (but only if the Representatives
expressly consent thereto in writing) delivered to
the Representatives thereafter; since such date and
24
except as so disclosed or in the ordinary course of
business, the Company has not incurred any material
liability or obligation, direct or indirect, or
entered into any material transaction since such date
and except as so disclosed there has not been any
change in the capital stock or any material change in
the short-term debt or long-term debt of the Company
and the Company has not acquired any of the Common
Shares nor has the Company declared or paid any
dividend, or made any other distribution, upon its
outstanding shares of Common Stock payable to
stockholders of record on a date prior to the First
Closing Date or Second Closing Date, as the case may
be; since such date and except as so disclosed, the
Company has not incurred any material contingent
obligations, and no material litigation is pending
or, to the Company's knowledge, threatened against
the Company; and, since such date and except as so
disclosed the Company has not sustained a material
loss or interference by strike, labor dispute, fire,
explosion, flood, windstorm, accident or other
calamity (whether or not insured) or from any court
or governmental action, order or decree.
The delivery of the certificate provided for in this subparagraph (iv)
shall be and constitute a representation and warranty of the Company as to the
facts required in the immediately foregoing clauses (1), (2), (3) and (4) of
this subparagraph (iv) to be set forth in said certificate.
(v) At the time this Agreement is executed and also
on the First Closing Date and the Second Closing Date, there
shall be delivered to the Representatives a letter addressed
to the Representatives, as Representatives of the
Underwriters, from PricewaterhouseCoopers, LLP, independent
certified public accountants, the first letter to be dated the
date of this Agreement, the second letter to be dated the
First Closing Date and the third letter (in the event of a
Second Closing) to be dated the Second Closing Date, in form
and substance satisfactory to you containing the information
and statements of the type ordinarily included in accountants'
"comfort letters" to Underwriters with respect to the
financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
There shall not have been any change or decrease specified in
any of the letters referred to in this subparagraph (v) which
makes it impractical or inadvisable in the Representatives'
judgment to proceed with the Offering or the purchase of the
Common Shares as contemplated hereby.
(vi) The Company shall have delivered to you the
lockup agreements specified in Section 5(o) hereof, which
agreements shall be in full force and effect on the Closing
Date.
(vii) The Common Shares shall have been duly
authorized for trading on the NASDAQ National Market System,
subject to notice of issuance.
25
(viii) The NASD shall not have raised any objection
with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(ix) Upon the First Closing Date, the Company shall
have delivered the Underwriters Warrants pursuant to Section
5(p) hereof.
(x) The amounts payable by the Company pursuant to
Section 6 hereof shall be paid in full or satisfactory
arrangements therefor agreed to by the Representatives.
(xii) Such further certificates and documents as the
Representatives may reasonably request.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory to the Representatives and to Williams, Mullen, Xxxxx &
Xxxxxxx, P.C., counsel for the Representatives and the Underwriters.
The Company shall furnish the Representatives with such manually signed
or conformed copies of such opinions, certificates, letters and
documents as the Representatives may reasonably request.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at either Closing Date is not so satisfied,
this Agreement at the Representatives' election will terminate upon
notification to the Company without liability on the part of any
Underwriter (including the Representatives) or the Company, except for
the expenses to be paid by the Company pursuant to Sections 6(a), (b)
and (c) and Section 8 hereof, and except to the extent provided in
Section 10 hereof.
SECTION 8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If for any reason
the sale to the Underwriters of the Firm Shares is not consummated as provided
herein, then, in addition to the payment of costs, fees and expenses to be paid
by the Company pursuant to Sections 6(a), (b) and (c) hereof, the Company agrees
to reimburse the several Underwriters for all reasonable out-of-pocket expenses
(including the fees and disbursements of counsel) incurred by them in connection
with the Offering, all such expenses to be paid by the Company to the
Representatives within ten (10) days of receipt of an invoice therefor. The
Company also agrees to reimburse the several Underwriters for all reasonable
fees and expenses (including, without limitation, the fees and disbursements of
counsel) incurred by them in connection with enforcing their rights under this
Section 8.
SECTION 9. EFFECTIVENESS OF REGISTRATION STATEMENT. The Representatives
and the Company will each use their respective best efforts to cause the
Registration Statement to remain effective, to prevent the issuance of any stop
order suspending the effectiveness of the Registration Statement, and, if such
stop order is issued, to obtain as soon as possible the lifting thereof.
26
SECTION 10. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act or the Exchange Act against any losses,
claims, damages, or liabilities, joint or several, to which such
Underwriter or each such controlling person may become subject under
the Act, the Exchange Act, Blue Sky Laws or other federal or state
securities laws or regulations, at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of the Company), 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 the Registration Statement, any Preliminary
Prospectus, the Prospectus or in any application filed under any Blue
Sky Law or other document executed by the Company specifically for that
purpose or filed in any state or other jurisdiction in order to qualify
any or all of the Common Shares under the securities laws thereof (any
such application or document being hereinafter referred to as a "Blue
Sky Application") or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; the Company
agrees to reimburse each Underwriter and each such controlling person
for any legal or other expenses reasonably incurred by such Underwriter
or any such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that:
(i) any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the
Prospectus or in any Blue Sky Application in reliance upon and
in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the
Representatives specifically for use therein; or
(ii) if such statement or omission was contained or
made in any Preliminary Prospectus and corrected in the
Prospectus and (1) any such loss, claim, damage or liability
suffered or incurred by any Underwriter (or person who
controls any Underwriter) based on such statement or omission
resulted from an action, claim or suit by any person who
purchased Common Shares which are the subject thereof from
such Underwriter in the Offering, and (2) such Underwriter
failed to deliver or provide a copy of the Prospectus to such
person at or prior to the confirmation of the sale of such
Common Shares in any case where such delivery is required by
the Act unless such failure was due to failure by the Company
to provide copies of the Prospectus to the Underwriters as
required by this Agreement.
The indemnification obligations of the Company as provided above are in
addition to any liabilities the Company may otherwise have under other
agreements, under common law or otherwise.
27
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Company, each of its directors and each of its
officers who sign the Registration Statement, and each person, if any,
who controls the Company within the meaning of the Act or the Exchange
Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company, or any such director, officer or
controlling person may become subject under the Act, the Exchange Act,
Blue Sky Laws or other federal or state statutory laws or regulations,
at common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of such
Underwriter and the Representatives, which shall not be unreasonably
withheld), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
in any Blue Sky Application, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or in any Blue Sky Application,
in reliance upon and in conformity with any written information
furnished to the Company by such Underwriter through the
Representatives specifically for use in the preparation thereof; each
Underwriter will severally reimburse any legal or other expenses
reasonably incurred by the Company, or any such director, officer, or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. Notwithstanding the
provisions of this Section, no Underwriter shall be required to
indemnify the Company, or any officer, director or controlling person
of the Company in any amount in excess of the total price at which the
Common Shares purchased by any such Underwriter hereunder were offered
to the public, plus reimbursement for reasonable legal fees and other
reasonable expenses incurred. For all purposes of this Agreement, the
name and number of shares of Common Stock to be purchased by each
Underwriter, and the third paragraph and first sentence of the
thirteenth paragraph (as such sentence relates to the Underwriters)
under the heading "Underwriting" in the Prospectus constitute the only
information furnished in writing by or on behalf of any Underwriter for
inclusion in any Registration Statement, Preliminary Prospectus,
Prospectus or Blue Sky Application. The indemnification obligations of
each Underwriter as provided above are in addition to any liabilities
any such Underwriter may otherwise have under other agreements, under
common law or otherwise.
(c) 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 this Section, notify the indemnifying party in
writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve any indemnifying party from any
liability which it or he may have to any indemnified party otherwise
than under this Section. In case any such action is brought against any
indemnified party and such indemnified party notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it or he may wish,
jointly with all other
28
indemnifying parties, similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
legal defenses available to it or he and/or other indemnified parties
which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the
right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Representatives in the event that
one or more of the Underwriters, their directors, officers or
controlling persons, are the indemnified parties). Upon receipt of
notice from the indemnifying party to such indemnified party of its
election to assume the defense of such action and upon approval by the
indemnified party of counsel to the indemnifying party, 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, unless:
(i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence;
(ii) the indemnifying party shall not have employed
counsel reasonable satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
notice of commencement of the action; or
(iii) the indemnifying party has authorized the
employment of counsel at the expense of the indemnifying
party.
(d) If the indemnification provided for in this Section is
unavailable to an indemnified party under subparagraphs (a) or (b)
hereof in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities:
(i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the
Underwriters from the Offering of the Common Shares; or
(ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of the
Company and the Underwriters in connection with the statements
or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations.
29
The respective relative benefits received by the Company and
the Underwriters shall be deemed to be in such proportion so that the
Underwriters are responsible for the portion of the losses, claims,
damages or liabilities represented by the percentage that the
underwriting discount per share appearing on the cover page of the
Prospectus bears to the public offering price per share appearing
thereon, and the Company is responsible for the remaining portion. The
relative fault of the Company and the Underwriters 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 the information supplied by the
Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above
shall be deemed to include, subject to the limitations set forth in
paragraph (d) of this Section, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section were
determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method or allocation which does not take into account the
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Common Shares underwritten
by it and distributed to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant
to this Section are several in proportion to their respective
underwriting commitments and not joint.
SECTION 11. DEFAULT OF UNDERWRITERS. It shall be a condition to this
Agreement and the obligation of the Company to sell and deliver the Common
Shares hereunder, and of each Underwriter to purchase the Common Shares
hereunder in the manner as described herein, that, except as hereinafter in this
paragraph provided, each of the Underwriters shall purchase and pay for all of
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Representatives of all such Common Shares in accordance with the
terms hereof. If any Underwriter or Underwriters default in their obligations to
purchase Common Shares hereunder on either the First Closing Date or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed ten
percent (10%) of the total number of Common Shares which the Underwriters are
obligated to purchase on such Closing Date, the Representatives may make
arrangements satisfactory to the Company for the purchase of such Common Shares
by other persons, including any of the Underwriters, but if no such arrangements
are made by such Closing Date the non-defaulting Underwriters shall be obligated
severally, in proportion to their
30
respective commitments hereunder, to purchase (up to but not in excess of any
limitations provided by law or the rules or other directives of the NASD) the
Common Shares which such defaulting Underwriters agreed but failed to purchase
on such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of Common Shares with respect to such default or defaults occur
is greater than the above percentage and arrangements satisfactory to the
Representatives and the Company for the purchase of such Common Shares by other
persons are not made with 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company except for the expenses to be paid by the Company pursuant to Section 6
and Section 8 hereof (other than fees and expenses payable to any defaulting
Underwriter) and except to the extent provided in Section 10 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than seven (7) business
days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section.
SECTION 12. EFFECTIVE DATE. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.
SECTION 13. TERMINATION. This Agreement may be terminated by the
Representatives prior to the First Closing Date, and the option from the Company
referred to in Section 4 hereof, if exercised, may be canceled at any time prior
to the Second Closing Date, if any of the following has occurred:
(a) The suspension or material limitation of trading in
securities or other instruments on the New York Stock Exchange, the
American Stock Exchange, the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange, the Chicago Board of Trade or the NASDAQ
National Market or limitation on prices for securities or other
instruments on any such exchange or the NASDAQ National Market;
(b) The suspension of trading of any securities of the Company
on any exchange or in the over-the-counter market;
(c) The enactment, publication, decree or other promulgation
of any federal or state statute, regulation, rule or order of any court
or other governmental authority which, in the opinion of the
Representatives, has had a Material Adverse Effect, or reasonably could
be expected to have a Material Adverse Effect, on the Company;
(d) The declaration of a banking moratorium by either federal,
Maryland, Delaware or New York state authorities;
31
(e) 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 opinion of the Representatives has a material adverse effect on
the financial markets in the United States;
(f) Any event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or which is not
reflected in the Registration Statement but should be reflected therein
in order to make the statements or information contained therein, in
light of the circumstances in which they are made, not misleading in
any material respect;
(g) An outbreak or escalation of major hostilities or other
national or international emergency or calamity or any substantial
change in political, financial or economic conditions shall have
occurred or shall have accelerated to such extent, as in the judgment
of the Representatives, to have a material adverse effect on the
general securities market or make it impractical or inadvisable to
proceed with completion of the sale of and payment for the Common
Shares; or
(h) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, a Material
Adverse Effect has occurred.
Any termination pursuant to Section 13 shall be without
liability on the part of any Underwriter to the Company or on the part
of the Company to any Underwriter (except for expenses to be paid by
the Company pursuant to Section 6 hereof or reimbursed by the Company
pursuant to Section 8 hereof and except as to indemnification to the
extent provided in Section 10 hereof).
SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, and other
statements of the Company, of its officers or directors, and of the Underwriters
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers, directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Common Shares sold hereunder.
SECTION 15. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters or the Representatives will be mailed,
delivered or telegraphed and confirmed to you c/o: Xxxxxx, Xxxxx Xxxxx,
Incorporated, 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
R. Xxxx Xxxx, Vice President; and to Xxxx, Xxx & Company, Incorporated, 0000
Xxxx Xxxx Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxx,
Chairman.
With a copy to:
Williams, Mullen, Xxxxx & Xxxxxxx, P.C.
Two Xxxxx Center, 16th Floor
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esquire
32
If sent to the Company will be mailed, delivered or telegraphed and
confirmed to the Company at:
Xxxxxxxx.xxx, Inc.
000 Xxxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Chairman of the Board and
Chief Executive Officer
With a copy to:
Piper & Marbury, L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxxxx, Esquire
SECTION 16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement; provided, however, that (i) the obligations (other than
indemnification obligations) of the parties under that certain engagement letter
agreement between the Company and the Representatives dated June 4, 1999 (the
"Engagement Letter") that are expressly stated to survive the termination or
expiration thereof shall not be superseded but shall remain in full force and
effect until the closing of the Firm Shares under this Agreement and (ii) the
indemnification obligations under the Engagement Letter that are expressly
stated to survive the termination or expiration thereof shall not be superseded
but shall remain in full force and effect, except as to matters specifically
addressed by Section 10 hereof.
SECTION 17. SUCCESSORS. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in Section 10, and no other person will have
any right or obligations hereunder. The term "successors" shall not include any
purchaser of the Common Shares as such from any of the Underwriters merely by
reason of such purchase.
SECTION 18. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 19. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
33
SECTION 20. COUNTERPARTS. This Agreement may be signed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including you, all in accordance with its terms.
Very truly yours,
Xxxxxxxx.xxx, Inc.
By:
-----------------------
Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written by the
undersigned acting as Representatives of
the several Underwriters (including
themselves) named in Schedule A hereto.
XXXXXX, XXXXX XXXXX, INCORPORATED
By:
------------------------------
Title:
---------------------------
XXXX, XXX & COMPANY
By:
------------------------------
Title:
---------------------------
34
SCHEDULE A
----------
Number of
Name of Underwriter Shares
------------------- ------
Xxxxxx, Xxxxx Xxxxx, Incorporated
Xxxx, Xxx & Company Incorporated
Total
