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EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
3,125,722 SHARES
N2K INC.
COMMON STOCK
UNDERWRITING AGREEMENT
April ___, 1998
PAINEWEBBER INCORPORATED
XXXXX & COMPANY INCORPORATED
BEAR, XXXXXXX & CO. INC.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
N2K Inc., a Delaware corporation (the "Company"), and the persons
named in Schedule I hereto (the "Selling Shareholders") propose to sell an
aggregate of [3,125,722] shares (the "Firm Shares") of the Company's Common
Stock, $.001 par value per share (the "Common Stock"), of which 2,000,000 shares
are to be issued and sold by the Company (the "Company Shares") and an aggregate
of [1,125,722] shares are to be sold by the Selling Shareholders in the
respective amounts set forth opposite their respective names in Schedule I, in
each case to you and to the other underwriters named in Schedule II hereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(the "Representatives"). The Company has also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
[468,858] shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b). The Firm Shares and the Option Shares are
hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares and the
purchase price per share for the Shares to be paid by the several Underwriters
shall be agreed upon by the Company, the Selling Shareholders and the
Representatives, acting on behalf of the several Underwriters, and such
agreement shall be set forth in a separate written instrument substantially in
the form of Exhibit A hereto (the "Price Determination Agreement"). The Price
Determination Agreement may take the form of an exchange of any standard form of
written telecommunication among the Company, the Selling Shareholders and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Price Determination Agreement. From and after the date of
the execution and delivery of the Price Determination Agreement, this Agreement
shall be deemed to incorporate, and, unless the context otherwise indicates, all
references contained herein
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to "this Agreement" and to the phrase "herein" shall be deemed to include the
Price Determination Agreement.
Each Selling Shareholder has executed and delivered a Custody
Agreement and a Power of Attorney in the form attached hereto as Exhibit B
(collectively, the "Agreement and Power of Attorney") pursuant to which each
Selling Shareholder has placed its Firm Shares in custody and appointed the
persons designated therein as a committee (the "Committee") with authority to
execute and deliver this Agreement on behalf of such Selling Shareholder and to
take certain other actions with respect thereto and hereto.
The Company and the Selling Shareholders confirm as follows their
respective agreements with the Representatives and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements
of the Company and the Selling Shareholders herein contained and subject to all
the terms and conditions of this Agreement, (i) the Company and each of the
Selling Shareholders, severally and not jointly, agree to sell to each
Underwriter named below, and (ii) each Underwriter, severally and not jointly,
agrees to purchase from the Company and the Selling Shareholders, at the
purchase price per share for the Firm Shares to be agreed upon by the
Representatives, the Company and the Selling Shareholders in accordance with
Section 1(c) or 1(d) hereof and set forth in the Price Determination Agreement,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II, plus such additional number of Firm Shares which such Underwriter
may become obligated to purchase pursuant to Section 8 hereof. Schedule II may
be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally and
not jointly, up to [468,858] Option Shares from the Company at the same price
per share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this Agreement (or, if
the Company has elected to rely on Rule 430A, on or before the 30th day after
the date of the Price Determination Agreement), upon written or telegraphic
notice (the "Option Shares Notice") by the Representatives to the Company no
later than 12:00 noon, New York City time, at least two and no more than five
business days before the date specified for closing in the Option Shares Notice
(the "Option Closing Date") setting forth the aggregate number of Option Shares
to be purchased and the time and date for such purchase. On the Option Closing
Date, the Company will issue and sell to the Underwriters the number of Option
Shares set forth in the Option Shares Notice, and each Underwriter will purchase
such percentage of the Option Shares as is equal to the percentage of Firm
Shares that such Underwriter is purchasing, as adjusted by the Representatives
in such manner as they deem advisable to avoid fractional shares.
(c) The public offering price per share for the Firm Shares and the
purchase price per share for the Firm Shares to be paid by the several
Underwriters shall be agreed upon and set forth in the Price Determination
Agreement if the Company has elected to rely on Rule
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430A (as hereinafter defined). In the event such price has not been agreed upon
and the Price Determination Agreement has not been executed by the close of
business on the fourteenth business day following the date on which the
Registration Statement (as hereinafter defined) becomes effective, this
Agreement shall terminate forthwith, without liability of any party to any other
party except that Section 6 shall remain in effect.
(d) If the Company has elected not to rely on Rule 430A, the public
offering price per share for the Firm Shares and the purchase price per share
for the Firm Shares to be paid by the several Underwriters shall be agreed upon
and set forth in the Price Determination Agreement, which shall be dated the
date hereof, and an amendment to the Registration Statement containing such per
share price information shall be filed before the Registration Statement becomes
effective.
2. Delivery and Payment. Delivery of the Firm Shares shall be made
to the Representatives for the accounts of the Underwriters at the office of
PaineWebber Incorporated, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
against payment of the purchase price by wire transfer of Federal Funds or
similar same day funds to accounts designated in writing by the Company and the
Selling Shareholders to PaineWebber Incorporated at least one business day prior
to the Closing Date (as hereinafter defined). Such payment shall be made at
10:00 a.m., New York City time, on the third business day after the date on
which the first bona fide offering of the Shares to the public is made by the
Underwriters or at such time on such other date, not later than ten business
days after such date, as may be agreed upon by the Company and the
Representatives (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Firm Shares and Option Shares by the Company to
the respective Underwriters shall be borne by the Company. The cost of tax
stamps, if any, in connection with the sale of the Firm Shares by the Selling
Shareholders shall be borne by the Selling Shareholders. The Company and the
Selling Shareholders will pay and save each Underwriter and any subsequent
holder of the Shares harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying Federal and state stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance or sale to such Underwriter of the Firm
Shares and Option Shares.
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3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No. 333-47307) on Form
S-1 relating to the Shares, including a preliminary prospectus and such
amendments to such registration statement as may have been required to the date
of this Agreement, has been prepared by the Company under the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to the Representatives. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included by Rule
430A or Rule 434 of the Rules and Regulations. If the Company files a
registration statement to register a portion of the Shares and relies on Rule
462(b) of the Rules and Regulations for such registration statement to become
effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration Statement" shall be deemed
to include the Rule 462 Registration Statement, as amended from time to time.
The term "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date.
(b) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included in the
Prospectus, did or will comply with all applicable provisions of the Act, and
the Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any such
amendment did or will contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the information contained in the last paragraph on the cover page of
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the Prospectus, the stabilization legend on the inside front cover page of the
Prospectus, the table of Underwriters set forth under the caption "Underwriting"
in the Prospectus and the amounts of the selling concession and reallowance set
forth in the Prospectus constitute the only information relating to any
Underwriter furnished in writing to the Company by the Representatives
specifically for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the preliminary prospectus, the Prospectus or any other
materials, if any, permitted by the Act.
(c) The only subsidiaries (as defined in the Rules and Regulations)
of the Company are the subsidiaries listed on Exhibit 21 to the Registration
Statement (the "Subsidiaries"). The Company and each of its Subsidiaries is, and
at the Closing Date will be, a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. The
Company and each of its Subsidiaries has, and at the Closing Date will have,
full power and authority to conduct all the activities conducted by it, to own
or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company and each
of its Subsidiaries is, and at the Closing Date will be, duly licensed or
qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole. All of the outstanding shares of capital
stock of the Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Company free and clear of all
liens, encumbrances and claims whatsoever. Except for the stock of the
Subsidiaries, the Company does not own, and at the Closing Date will not own,
directly or indirectly, any shares of stock or any other equity or long-term
debt securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and correct
copies of the certificate of incorporation and of the by-laws of the Company and
each of its Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(d) The outstanding shares of Common Stock have been, and the Shares
to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right. The description of the Common Stock in the
Registration Statement and the Prospectus is, and at the Closing Date will be,
complete and accurate in all material respects. Except as set forth in the
Prospectus, the Company does not have outstanding, and at the Closing Date will
not have outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock, any
shares of capital stock of any Subsidiary or any such warrants, convertible
securities or obligations.
(e) The financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows of the
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Company for the respective periods covered thereby, all in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the entire period involved, except as otherwise disclosed in the
Prospectus. The pro forma financial statements, if any, and other pro forma
financial information included in the Registration Statement or the Prospectus
(i) present fairly in all material respects the information shown therein, (ii)
have been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and (iii) have been properly computed
on the bases described therein. The assumptions used in the preparation of the
pro forma financial statements, if any, and other pro forma financial
information included in the Registration Statement or the Prospectus are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein. No other financial
statements or schedules of the Company are required by the Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Xxxxxxx X. Xxxxxx & Company LLP and Xxxxxx Xxxxxxxx LLP (the "Accountants"), who
have expressed their opinions on the audited financial statements and schedules
included in the Registration Statement and the Prospectus, are independent
accountants with respect to the Company as required by the Act and the Rules and
Regulations. The statements included in the Registration Statement with respect
to the Accountants pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects.
(f) The Company and each of its Subsidiaries maintains a system of
internal accountings controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of the Company, or any material adverse change in the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, arising for
any reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred nor will it incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions referred
to herein and (iii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock.
(h) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(i) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
Company's knowledge, threatened
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against or affecting the Company or any of its Subsidiaries or any of their
respective officers in their capacity as such, before or by any Federal or state
court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, wherein an unfavorable ruling, decision or finding
might materially and adversely affect the Company or any of its Subsidiaries or
its business, properties, business prospects, condition (financial or otherwise)
or results of operations, taken as a whole.
(j) The Company and each of its Subsidiaries has, and at the Closing
Date will have, (i) all governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus, except to the extent that the failure to have
any such license, permit, consent, order, approval or authorization will not
have a material adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole, (ii) complied in all respects with all laws,
regulations and orders applicable to it or its business, the violation of which
would have a material adverse effect on the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, and (iii) performed all its
obligations required to be performed by it, and is not, and at the Closing Date
will not be, in default in any material respect, under any indenture, mortgage,
deed of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its property
is bound or affected. To the best knowledge of the Company and each of its
Subsidiaries, no other party under any contract or other agreement to which it
is a party is in default in any respect thereunder. Neither the Company nor any
of its Subsidiaries is, nor at the Closing Date will any of them be, in
violation of any provision of its certificate of incorporation or by-laws.
(k) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the purchase
and distribution by the Underwriters of the Shares.
(l) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company and
is enforceable against the Company in accordance with the terms hereof, except
as rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Company's obligations hereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and by general equitable principles. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of the
net proceeds from the offering and sale of the Shares in the manner set forth in
the Prospectus under "Use of Proceeds" will not result in the creation or
imposition of
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any lien, charge or encumbrance upon any of the assets of the Company or any of
its Subsidiaries pursuant to the terms or provisions of, or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, any contract
or other agreement to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of its properties is
bound or affected, or violate or conflict with any judgment, ruling, decree,
order, statute, rule or regulation of any court or other governmental agency or
body applicable to the business or properties of the Company or any of its
Subsidiaries, which, in any case, individually or in the aggregate would have a
material adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole.
(m) The Company and each of its Subsidiaries has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions, except such
as are described in the Registration Statement and the Prospectus or are not
material to the business of the Company or its Subsidiaries. The Company and
each of its Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such exceptions as
are not material and do not materially interfere with the use made and proposed
to be made of such properties by the Company and such Subsidiaries.
(n) There is no document or contract of a character required 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. All such contracts to which the Company or any Subsidiary is a party
have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof, except as such enforceability may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(o) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
(p) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(q) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement, other than such rights as have been duly waived in
accordance with the terms thereof.
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(r) The Shares are duly authorized for listing, subject to official
notice of issuance, on the Nasdaq National Market.
(s) The Company and its Subsidiaries are in compliance with all
federal, state and local employment and labor laws, including, but not limited
to, laws relating to non-discrimination in hiring, promotion and pay of
employees; no labor dispute with the employees of the Company or any Subsidiary
exists or, to the knowledge of the Company, is imminent or threatened; and the
Company is not aware of any existing, imminent or threatened labor disturbance
by the employees of any of its principal suppliers, manufacturers or contractors
that could result in a material adverse effect on the condition (financial or
otherwise) or on the earnings, business, properties, business prospects or
operations of the Company and its Subsidiaries, taken as a whole.
(t) The Company and its Subsidiaries own, or are licensed or
otherwise have the full exclusive right to use, the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, services marks and trade names (collectively,
"patent and proprietary rights") presently employed by them or which are
necessary in connection with the conduct of the business now operated by them.
Neither the Company nor any of its Subsidiaries has received any written notice
or otherwise has actual knowledge of any infringement of or conflict with
asserted rights of others or any other claims with respect to any patent or
proprietary rights, or of any basis for rendering any patent and proprietary
rights invalid or inadequate to protect the interest of the Company or any of
its Subsidiaries.
(u) Neither the Company nor any of its Subsidiaries nor to the
Company's knowledge, any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.
(v) The Company has complied, and until the completion of the
distribution of the Shares will comply, with all of the provisions of
(including, without limitation, filing all forms required by) Section 517.075 of
the Florida Securities and Investor Protection Act and Regulation 3E-900.001
issued thereunder with respect to the offering and sale of the Shares.
(w) The Company and its Subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
imposing liability or standards of conduct concerning any Hazardous Material
(as hereinafter defined) ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate result in a material adverse effect on the
condition (financial or otherwise) or on the earnings, business, properties,
business prospects or operations of the Company and its Subsidiaries, taken as
a whole. The term "Hazardous Material" means (A) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as
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amended, (B) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(x) Except as set forth in the Registration Statement and the
Prospectus, there are no costs and liabilities associated with or arising in
connection with Environmental Laws as currently in effect (including, without
limitation, costs of compliance therewith) which would, singly or in the
aggregate have a material adverse effect on the condition (financial or
otherwise) or on the earnings, business, properties, business prospects or
operations of the Company and its Subsidiaries, taken as a whole.
(y) The Company maintains insurance with respect to its properties
and business of the types and in amounts generally deemed adequate for its
business and consistent with insurance coverage maintained by similar companies
and businesses, all of which insurance is in full force and effect.
(z) The Company has filed all material federal, state and foreign
income and franchise tax returns and has paid all taxes shown as due thereon,
other than taxes which are being contested in good faith and for which adequate
reserves have been established in accordance with GAAP; and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company. There are no tax returns of the Company or any
of its Subsidiaries that are currently being audited by state, local or federal
taxing authorities or agencies (and with respect to which the Company or any
Subsidiary has received notice), where the findings of such audit, if adversely
determined, would result in a material adverse effect on the condition
(financial or otherwise) or on the earnings, business, properties, business
prospects or operations of the Company and its Subsidiaries, taken as a whole.
(aa) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by the Company, or with
respect to which the Company could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of circumstances, in
connection with which the Company could be subject to any liability under the
terms of such Benefit Plan, applicable law (including, without limitation, ERISA
and the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"))
or any applicable agreement that could materially adversely affect the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole.
4. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents, warrants and
covenants to each Underwriter that:
(a) Such Selling Shareholder has full power and authority to enter
into this Agreement and the Agreement and Power of Attorney. All authorizations
and consents necessary
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for the execution and delivery by such Selling Shareholder of the Agreement and
Power of Attorney, and for the execution of this Agreement on behalf of such
Selling Shareholder, have been given. Each of the Agreement and Power of
Attorney and this Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Shareholder and constitutes a valid and binding
agreement of such Selling Shareholder and is enforceable against such Selling
Shareholder in accordance with the terms thereof and hereof, except as rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the qualification
that the enforceability of such Selling Shareholder's obligations hereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(b) Such Selling Shareholder now has, and at the time of delivery
thereof hereunder will have, (i) good and marketable title to the Shares to be
sold by such Selling Shareholder hereunder, free and clear of all liens,
encumbrances and claims whatsoever (other than pursuant to the Agreement and
Power of Attorney), and (ii) full legal right and power, and all authorizations
and approvals required by law, to sell, transfer and deliver such Shares to the
Underwriters hereunder and to make the representations, warranties and
agreements made by such Selling Shareholder herein. Upon the delivery of and
payment for such Shares hereunder, such Selling Shareholder will deliver good
and marketable title thereto, free and clear of all liens, encumbrances and
claims whatsoever.
(c) On the Closing Date or the Option Closing Date, as the case may
be, all stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares to be
sold by such Selling Shareholder to the several Underwriters hereunder will have
been fully paid or provided for by such Selling Shareholder and all laws
imposing such taxes will have been fully complied with.
(d) The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of such Selling
Shareholder pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the acceleration of any obligation under, if such Selling
Shareholder is a corporation or partnership, the organizational documents of
such Selling Shareholder, or, as to all such Selling Shareholders, any contract
or other agreement to which such Selling Shareholder is a party or by which such
Selling Shareholder or any of its property is bound or affected, or under any
ruling, decree, judgment, order, statute, rule or regulation of any court or
other governmental agency or body having jurisdiction over such Selling
Shareholder or the property of such Selling Shareholder, except in each case as
would not materially adversely affect the ability of such Selling Shareholder to
consummate the transactions contemplated by this Agreement and perform its
obligations under this Agreement..
(e) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required for
the consummation by such Selling Shareholder of the transactions on its part
contemplated herein and in the Agreement and Power of Attorney, except such as
have been obtained under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the by-laws
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and rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares to be sold by such Selling Shareholder.
(f) Such Selling Shareholder has no knowledge of any material fact
or condition not set forth in the Registration Statement or the Prospectus which
has adversely affected, or may adversely affect, the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company, and the sale of the Shares proposed to be sold by such Selling
Shareholder is not prompted by any such knowledge.
(g) All information with respect to such Selling Shareholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) complied and at the Closing Date will comply with all
applicable provisions of the Act and the Rules and Regulations, contains and
will contain all statements required to be stated therein in accordance with the
Act and the Rules and Regulations, and does not and at the Closing Date will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein with respect to such Selling Shareholder, in light of the circumstances
in which they were made, not misleading.
(h) Other than as permitted by the Act and the Rules and
Regulations, such Selling Shareholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Shareholder has not taken, directly or indirectly, any action intended, or which
might reasonably be expected, to cause or result in, under the Act or otherwise,
or which has caused or resulted in, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.
(i) Certificates in negotiable form for the Firm Shares to be sold
hereunder by such Selling Shareholder have been placed in custody, for the
purpose of making delivery of such Firm Shares under this Agreement, under the
Agreement and Power of Attorney which appoints American Stock Transfer & Trust
Company, as custodian (the "Custodian") for each Selling Shareholder. Such
Selling Shareholder agrees that the Shares represented by the certificates held
in custody for him or it under the Agreement and Power of Attorney are for the
benefit of and coupled with and subject to the interest hereunder of the
Custodian, the Committee, the Underwriters, each other Selling Shareholder and
the Company, that the arrangements made by such Selling Shareholder for such
custody and the appointment of the Custodian and the Committee by such Selling
Shareholder are, except as specifically provided in the Agreement and Power of
Attorney, irrevocable, and that the obligations of such Selling Shareholder
hereunder shall not be terminated by operation of law, whether by the death,
disability, incapacity or liquidation of any Selling Shareholder or the
occurrence of any other event. If any Selling Shareholder should die, become
disabled or incapacitated or be liquidated or if any other such event should
occur before the delivery of the Shares hereunder, certificates for the Shares
shall be delivered by the Custodian in accordance with the terms and conditions
of this Agreement and actions taken by the Committee and the Custodian pursuant
to the Agreement and Power of Attorney shall be as valid as if such death,
liquidation, incapacity or other event had not occurred, regardless of whether
or not the Custodian or the Committee, or either of them, shall have received
notice thereof.
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5. Agreements of the Company and the Selling Shareholders. The Company and
the Selling Shareholders (as to Section 5(i), (j), (k), (o), (p), (q) and (r))
agree, severally and not jointly, with the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Representatives promptly, and
will confirm such advice in writing, (1) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes
effective, (2) of any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus or for additional information, (3)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose or the threat thereof, (4) of the happening of any event during the
period mentioned in the second sentence of Section 5(e) that in the judgment of
the Company makes any statement made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements therein, in light of
the circumstances in which they are made, not misleading and (5) of receipt by
the Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any preliminary prospectus or the Prospectus. If at any time the
Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. The Company will
use its best efforts to comply with the provisions of and make all requisite
filings with the Commission pursuant to Rule 430A and to notify the
Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without charge,
two signed copies of the Registration Statement and of any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto and will furnish to the Representatives, without charge, for
transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
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required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request.
(f) Prior to any public offering of the Shares by the Underwriters,
the Company will cooperate with the Representatives and counsel to the
Underwriters in connection with the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of such jurisdictions
as the Representatives may request; provided, that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective
Date, the Company will furnish to the Representatives and each other Underwriter
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11 (a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company and the Selling
Shareholders will pay, or reimburse if paid by the Representatives, all costs
and expenses incident to the performance of the obligations of the Company and
the Selling Shareholders under this Agreement, including but not limited to
costs and expenses of or relating to (1) the preparation, printing and filing of
the Registration Statement and exhibits to it, each preliminary prospectus, the
Prospectus and any amendment or supplement to the Registration Statement or the
Prospectus, (2) the preparation and delivery of certificates representing the
Shares, (3) the word processing, printing and reproduction of this Agreement,
the Agreement Among Underwriters, any Dealer Agreements and any Underwriters'
Questionnaire, (4) furnishing (including costs of shipping, mailing and courier)
such copies of the Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold, (5) the listing of the Shares on the
Nasdaq National Market, (6) any filings required to be made by the Underwriters
with the NASD, and the reasonable fees, disbursements and other charges of
counsel for the Underwriters in connection therewith, (7) the registration or
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qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 5(f), including the
reasonable fees, disbursements and other charges of counsel to the Underwriters
in connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (8) counsel to the Company, (9) the
transfer agent for the Shares and (10) the Accountants.
(j) If this Agreement shall be terminated by the Company or the
Selling Shareholders pursuant to any of the provisions hereof (otherwise than
pursuant to Section 9) or if for any reason the Company or any Selling
Shareholder shall be unable to perform its obligations hereunder, the Company or
the Selling Shareholders, severally, will reimburse the several Underwriters for
all out-of-pocket expenses (including the reasonable fees, disbursements and
other charges of counsel to the Underwriters) reasonably incurred by them in
connection herewith.
(k) Neither the Company nor any Selling Shareholder will at any
time, directly or indirectly, take any action intended, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of the shares of Common Stock to facilitate the sale
or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds" and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(m) During the period of 90 days commencing at the Closing Date, the
Company will not, without the prior written consent of PaineWebber Incorporated,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any Common Stock or securities convertible into Common
Stock, other than to the Underwriters pursuant to this Agreement and other than
pursuant to employee benefit plans.
(n) The Company will cause each of its executive officers and
directors and those shareholders listed on Schedule III to enter into agreements
with the Representatives in the form set forth in Exhibit C to the effect that
they will not, for a period of 45 days after the commencement of the public
offering of the Shares, without the prior written consent of PaineWebber
Incorporated, sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to acquire such shares (other than pursuant to employee
stock option plans or in connection with other employee incentive compensation
arrangements).
(o) The Selling Shareholders will not, without the prior written
consent of PaineWebber Incorporated, make any bid for or purchase any shares of
Common Stock during the 45-day period following the date hereof.
(p) As soon as any Selling Shareholder is advised thereof, such
Selling Shareholder will advise PaineWebber Incorporated and confirm such advice
in writing, (1) of receipt by such Selling Shareholder, or by any representative
of such Selling Shareholder, of any communication from the Commission relating
to the Registration Statement, the Prospectus or
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any preliminary prospectus, or any notice or order of the Commission relating to
the Company or any of the Selling Shareholders in connection with the
transactions contemplated by this Agreement and (2) of the happening of any
event during the period from and after the Effective Date during which the
Prospectus is required by law to be delivered that in the judgment of such
Selling Shareholder makes any statement made in the Registration Statement or
the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(q) The Selling Shareholders will deliver to PaineWebber
Incorporated prior to or on the Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
6. Conditions of the Obligations of the Underwriters. In addition to
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or, to the knowledge of the Company, contemplated
by the Commission or the authorities of any such jurisdiction, (iii) any request
for additional information on the part of the staff of the Commission or any
such authorities shall have been complied with to the satisfaction of the staff
of the Commission or such authorities and (iv) after the date hereof no
amendment or supplement to the Registration Statement or the Prospectus shall
have been filed unless a copy thereof was first submitted to the Representatives
and the Representatives did not object thereto in good faith, and the
Representatives shall have received certificates, dated the Closing Date and the
Option Closing Date and signed by the Chief Executive Officer or the Chairman of
the Board of Directors of the Company and the Chief Financial Officer of the
Company (who may, as to proceedings threatened, rely upon the best of their
information and belief), to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been,
and no development shall have occurred which could reasonably be expected to
result in, a material adverse change in the general affairs, business, business
prospects, properties, management, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries, taken as a whole,
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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 the Prospectus and (ii) neither the Company nor any of its
Subsidiaries shall have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in the judgment of the
Representatives any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price.
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
Subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would materially and adversely affect the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole.
(e) Each of the representations and warranties of the Company and
the Selling Shareholders contained herein shall be true and correct in all
material respects at the Closing Date and, with respect to the Option Shares, at
the Option Closing Date, as if made at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and the Selling
Shareholders and all conditions herein contained to be fulfilled or complied
with by the Company and the Selling Shareholders at or prior to the Closing Date
and, with respect to the Option Shares, at or prior to the Option Closing Date,
shall have been duly performed, fulfilled or complied with.
(f) The Representatives shall have received opinions, dated the
Closing Date and, with respect to the Option Shares, dated the Option Closing
Date, and satisfactory in form and substance to counsel for the Underwriters,
from Xxxxx Xxxxxxxxxx LLP, counsel to the Company, and from counsel to each of
the Selling Shareholders, to the effect set forth in Exhibit D and Exhibit E,
respectively.
(g) The Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from X'Xxxxxxxx Graev & Karabell, LLP,
counsel to the Underwriters, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with respect
to the Company as required by the Act and the Rules and Regulations and with
respect to the financial and other statistical and numerical information
contained in the Registration Statement. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished to
the Representatives a letter, dated the date of its
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delivery, which shall confirm, on the basis of a review in accordance with the
procedures set forth in the letter from the Accountants, that nothing has come
to their attention during the period from the date of the letter referred to in
the prior sentence to a date (specified in the letter) not more than five days
prior to the Closing Date and the Option Closing Date which would require any
change in their letter dated the date of the Prospectus, if it were required to
be dated and delivered at the Closing Date and the Option Closing Date.
(i) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to the Representatives an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of
such certificate, such documents are true and correct in all
material respects and do not omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not untrue or misleading and (B) since the Effective Date,
no event has occurred as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein
not untrue or misleading in any material respect;
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at
the time such certificate is delivered, true and correct in all
material respects;
(iii) Each of the covenants required herein to be performed by
the Company on or prior to the delivery of such certificate has been
duly, timely and fully performed and each condition herein required
to be complied with by the Company on or prior to the date of such
certificate has been duly, timely and fully complied with in every
material respect; and
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) there
has not been, and no development has occurred which could reasonably
be expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, in
each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (B) neither the
Company nor any of its Subsidiaries has sustained any material loss
or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree, which is not set forth
in the Registration Statement and the Prospectus, and such other
matters as the Representatives may reasonably request.
(j) At the Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its delivery, signed
by the Committee on behalf of each of
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the Selling Shareholders, in form and substance satisfactory to the
Representatives, to the effect that the representations and warranties of each
of the Selling Shareholders contained in this Agreement were, when originally
made, and are, at the time such certificate is delivered, true and correct in
all material respects, and each of the covenants required herein to be performed
by the Selling Shareholders on or prior to the delivery of such certificate has
been duly, timely and fully performed and each condition herein required to be
complied with by the Selling Shareholders on or prior to the date of such
certificate has been duly, timely and fully complied with in every material
respect.
(k) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 5(n).
(l) The Shares shall be qualified for sale in such states as the
Representatives may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
(m) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the Nasdaq National Market upon official notice of
issuance.
(n) The NASD shall have approved the underwriting terms and
arrangements and such approval shall not have been withdrawn or limited.
(o) The Company and the Selling Shareholders shall have furnished to
the Representatives such certificates, in addition to those specifically
mentioned herein, as the Representatives may have reasonably requested as to the
accuracy and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company and the Selling Shareholders herein, as to the
performance by the Company and the Selling Shareholders of their respective
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Representatives.
7. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, liabilities,
expenses and damages (including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred to which any Underwriter or any such person, may become subject under
the Act, the Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, liabilities,
expenses or damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the
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Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus, or in any application or other document executed by or on behalf of
the Company or based on written information furnished to or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
Securities Laws thereof or filed with the Commission; (ii) the omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading; or (iii) any act
or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable under this clause (iii) to the extent it is finally judicially determined
by a court of competent jurisdiction that such loss, claim, liability, expense
or damage resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence or willful
misconduct); provided that the Company will not be liable to the extent that
such loss, claim, liability, expense or damage (A) arises from the sale of the
Shares in the public offering to any person by an Underwriter and is based on an
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf of any
Underwriter expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus or (B) results solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, such preliminary prospectus, which untrue statement or omission was
completely corrected in the Prospectus (as then amended or supplemented) if the
Company shall sustain the burden of proving that the Underwriters sold Shares to
the person alleging such loss, claim, liability, expense or damage without
sending or giving, at or prior to the written confirmation of such sale, a copy
of the Prospectus (as then amended or supplemented) if the Company has
previously furnished copies thereof to the Underwriters within a reasonable
amount of time prior to such sale or such confirmation, and the Underwriters
failed to deliver the corrected Prospectus, if required by law to have so
delivered it and if delivered would have been a complete defense against the
person asserting such loss, claim, liability, expense or damage. This indemnity
will be in addition to any liability that the Company might otherwise have.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the indemnity from the Company to each
Underwriter set forth in Section 7(a) hereof, but only with respect to
information relating to such Selling Shareholder contained in the Registration
Statement, the Prospectus or any preliminary prospectus, or any amendment or
supplement thereto, and subject to the limitations set forth in Section 7(g)
hereof. This indemnity will be in addition to any liability which any Selling
Shareholder might otherwise have.
(c) Each Underwriter will indemnify and hold harmless the Company,
the Selling Shareholders, each person, if any, who controls the Company or the
Selling Shareholders within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, each director of the Company and each officer of the
Company who signs the Registration Statement to the same extent as the foregoing
indemnity from the Company and the Selling Shareholders to each Underwriter, but
only insofar as losses, claims, liabilities, expenses or damages arise out of or
are
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based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives on behalf
of such Underwriter expressly for use in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have; provided, however,
that in no case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discounts and commissions received by such
Underwriter.
(d) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 7 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or
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consent includes an unconditional release of each indemnified party from all
liability arising or that may arise out of such claim, action or proceeding.
Notwithstanding any other provision of this Section 7(d), if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Selling Shareholders
or the Underwriters, the Company, the Selling Shareholders and the Underwriters
will contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company or the Selling Shareholders from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company or
the Selling Shareholders and any one or more of the Underwriters may be subject
in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. If, but only if, the allocation provided by the foregoing sentence
is not permitted by applicable law, the allocation of contribution shall be made
in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the Company
and the Selling Shareholders, on the one hand, and the Underwriters, on the
other, with respect to the statements or omissions which resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Shareholders or the Representatives on behalf of the Underwriters, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, the Selling
Shareholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 7(e) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 7(e)
shall be deemed to include, for purpose of this Section 7(e),
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23
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(e) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(e), any person who
controls a party to this Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 7(e), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(e). Except for a settlement entered
into pursuant to the last sentence of Section 7(d) hereof, no party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
(f) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and the Selling
Shareholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of the Shares and payment therefor or (iii) any
termination of this Agreement.
(g) Notwithstanding any other provision of this Section 7, the
liability of any Selling Shareholder for indemnification or contribution under
this Section 7 shall not exceed an amount equal to the number of Shares sold by
such Selling Shareholder hereunder multiplied by the purchase price per share
set forth in the Price Determination Agreement.
8. Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time on or prior to the Closing Date
(or, with respect to the Option Shares, on or prior to the Option Closing Date),
by notice to the Company from the Representatives, without liability on the part
of any Underwriter to the Company or the Selling Shareholders, if, prior to
delivery and payment for the Shares (or the Option Shares, as the case may be),
in the sole judgment of the Representatives, (i) there has been, since the
respective dates as of which information is given in the Registration Statement,
any material adverse change in the Company's business, properties, business
prospects, condition (financial or otherwise) or results of operations, (ii)
trading in any of the equity securities of the Company shall have been suspended
by the Commission, the NASD, by an exchange that lists the Shares or by the
Nasdaq Stock Market, (iii) trading in securities generally on the New York Stock
Exchange or the Nasdaq Stock Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such exchange
or over the counter market or additional material governmental restrictions, not
in force on the date of this Agreement, shall have been imposed upon trading in
securities generally by such exchange or by order of the Commission or the NASD
or any court or other governmental authority, (iv) a general banking moratorium
shall
-23-
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have been declared by either Federal or New York State authorities or (v) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States or
any outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred the effect of any of which is such as to make it, in the sole judgment
of the Representatives, impracticable or inadvisable to market the Shares on the
terms and in the manner contemplated by the Prospectus.
9. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it or
they have agreed to purchase hereunder, and the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares which
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares which
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by more than one-ninth of the number of
Firm Shares agreed to be purchased by such Underwriter without the prior written
consent of such Underwriter. If any Underwriter or Underwriters shall fail or
refuse to purchase any Firm Shares and the aggregate number of Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of the Firm Shares and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company or any Selling Shareholder for the
purchase or sale of any Shares under this Agreement. In any such case either the
Representatives or the Company and the Committee shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any action
taken pursuant to this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, N2K
Inc., 00 Xxxxx Xxxxxx, 00xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx
X. Xxxxxxx, (b) if to the Selling Shareholders, to them at their respective
addresses set forth on Schedule I hereto or (c) if to the Underwriters, to the
Representatives at the offices of PaineWebber Incorporated, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department. Any
such notice shall be effective only upon receipt. Any notice under Section 8 or
9 may be made by telex or telephone, but if so made shall be subsequently
confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company and the Selling Shareholders and of the
controlling persons, directors and officers referred to in Section 7, and their
respective successors and assigns, and no other
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person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" as used in this Agreement shall not include a
purchaser, as such purchaser, of Shares from any of the several Underwriters.
All representations, warranties and agreements of the Company and
the Selling Shareholders contained herein or in certificates or other
instruments delivered pursuant hereto, shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter or any of its controlling persons and shall survive delivery of and
payment for the Shares hereunder.
Any action required or permitted to be taken by the Representatives
under this Agreement may be taken by them jointly or by PaineWebber
Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company, the Selling Shareholders and the Underwriters each
hereby irrevocably waive any right they may have to a trial by jury in respect
of any claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Representatives, the Company and the Selling Shareholders.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
N2K INC.
By:
----------------------------------
Xxxxxxxx X. Xxxxxxx
Vice Chairman
THE SELLING SHAREHOLDERS NAMED
IN SCHEDULE I ATTACHED HERETO
By: The Committee
By:
----------------------------------
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
XXXXX & COMPANY INCORPORATED
BEAR, XXXXXXX & CO. INC.
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule II hereof.
By: PAINEWEBBER INCORPORATED
By:
---------------------------
Riza Dekidjiev, Jr.
First Vice President
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27
SCHEDULE I
SELLING SHAREHOLDERS
Number of
Name and Address of Firm Shares
Shareholder to be Sold
----------- ----------
Xxxxxx Xxxxx 3,189
Xxxxxx Xxxxxxx 600
Beagle Limited 138,889
Xxxxxx Xxxxxxx 62,500
Clovelly Investments Limited 12,500
Xxxxxx X. Xxxxx 9,312
Xxxxxx Xxxxx 2,500
Xxxx Xxxxxx 3,750
Xxxxx X. Xxxxx 7,812
Xxxxxx X. Xxxxx 12,500
Xxxxxx & Co. FBO Xxxxxx Xxxxxxx 9,634
Xxxx Xxxxxxxx 20,866
Xxxxxx X. Xxxxxxx (12) 30,000
Global Technology Fund 67,965
Xxxxxx X. Xxxxxxx 19,701
Xxxxxxxx Xxxx 3,009
Xxxxx X. Xxxxxx 3,146
Xxxxxx Xxxxxx 5,831
Xxxxx X. Xxxxxxxxx 2,500
Xxxxxx Hills 125.00
Xxxxxx Xxxxxxxxx 750.00
Xxxxxx and Xxxxx Xxxxxxx 3,125
Xxxxxx X. Xxxxxxxx, Xx. 1,248
Xxxxxxx Xxxxxx 1,500
Xxxxxxx X. Xxxxxx (13) 88,642
Xxxx Xxxxxx 100,000
Ludivine Holdings Limited 12,500
Israel & Xxxxxx Xxxxxx, JTWROS 26,861
Xxxxxx Xxxxx 20,000
Xxxxxxxxx Xxxxxxx 2,500
Xxxxx X. Xxxx 1,544
28
Xxxx Xxxxxxxxx 1,171
Pryor, Cashman, Xxxxxxx & Xxxxx 6,250
Poly Ventures II, LP 196,250
Raptor Global Fund, LP 9,555
Raptor Global Fund, Ltd. 18,000
Xxxxxx Xxxxxxx 13,587
Xxxxxx Xxxxx 2,500
Xxxxxxx X. Xxxxxx 83,333
Xxxxxxx Xxxxxxxxx 5,000
Xxxx Xxxxx Xxxxxxxxx 1,750
Xxxx Xxxxxxxxx 600
Xxxxxx Xxxxxxxxx 600
Xxxxxx X. & Xxxxxx Xxxxxxxxx, JT
TEN W/R/O/S 1,750
Xxxxx Xxxxxxxxx 1,250
Xxxx Xxxx Xxxxxxxx 2,500
Xxxxx X. Xxxx(14) 20,000
Xxxxxx Xxxxxxx(15) 11,847
Xxxx Xxxxxxxx(16) 1,200
Tudor Arbitrage Partners, LP 3,722
Tudor BVI Futures Ltd. 24,278
Unterberg Harris 401k Profit Sharing
FBO Xxxxxx Xxxxxxx 4,687
Xxxxxxx Xxxxxxxxx 6,666
Xxxxxxxxx'x Children 1988 Trust 6,666
Xxxxx Xxxx 3,125
Xxxxx Xxxxxx, MD 350
Xxxxx X. Xxxxxx 8,000
Xxxxxx X. Xxxx 2,500
Xxxxxxx Xxxxxxx 13,586
---------
TOTAL [1,125,722]
=========
29
SCHEDULE II
UNDERWRITERS
Number of
Firm Shares
Name of Underwriters to be Purchased
-------------------- ---------------
PaineWebber Incorporated
Xxxxx & Company Incorporated
Bear, Xxxxxxx & Co. Inc.
---------
Total [3,125,722]
=========
30
SCHEDULE III
SHAREHOLDERS SUBJECT TO LOCK-UP AGREEMENTS
Xxxxx Xxxxxx
Xxxxx & Company, Inc.
Xxxxx Xxxxx
Xxxxx Xxxxx
American Diversified Ent.
Xxxx Xxxxxxxx
Back Partners
Xxxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxx
Xxxx Xxxxxxxxxx
Xxxxxx Xxxxxxxx
CYRK International Foundation
Xxxxxxx Xxxxxx
GDJ, JR Investments LLP
HAGC Partners
Xxxxxx Investments, LP
Xxxxxx X. Xxxxxx, Xx.
Xxxx Xxxxxx
H. Xxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxxxxx
Don Xxxxxxxx
Xxxxxxx & Xxxx Xxxxxx, JTRWROS
Xxx Xxxxxx
Xxxxxxxx Xxxxxxxx Asset Mgmt, Inc.
Xxxxxx X. X'Xxxxx
Raptor Global Fund, LP
Raptor Global Fund, Ltd.
Xxxxxxx Xxxxxx
Xxxx Xxxxxxxxx
Xxxx Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Arbitrage Partners, XX
Xxxxx BVI Futures, Ltd.
Vulcan Ventures
Warburg, Xxxxxx Emerging Growth Fund, Inc.
Warburg, Xxxxxx Institutional Fund, Inc. - Small Co. Growth
Warburg, Xxxxxx Post-Venture Capital Fund, Inc.
Warburg, Xxxxxx Trust, Inc.-Post-Venture Capital Portfolio
Whittier Ventures
31
EXHIBIT A
N2K INC.
------------------------
PRICE DETERMINATION AGREEMENT
April __, 1998
PAINEWEBBER INCORPORATED
XXXXX & COMPANY INCORPORATED
BEAR, XXXXXXX & CO. INC.
As Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated April
____,1998 (the "Underwriting Agreement"), among N2K Inc., a Delaware corporation
(the "Company"), the Selling Shareholders named in Schedule I thereto or hereto
(the "Selling Shareholders") and the several Underwriters named in Schedule II
thereto or hereto (the "Underwriters"), for whom PaineWebber Incorporated, Xxxxx
& Company Incorporated and Bear, Xxxxxxx & Co. Inc. are acting as
representatives (the "Representatives").
The Underwriting Agreement provides for the purchase by the
Underwriters from the Company and the Selling Shareholders, subject to the terms
and conditions set forth therein, of an aggregate of [3,125,722] shares (the
"Firm Shares") of the Company's common stock, par value $ .001 per share. This
Agreement is the Price Determination Agreement referred to in the Underwriting
Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives as follows:
The public offering price per share for the Firm Shares shall be $
_______.
The purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be $____ representing an amount equal to the public
offering price set forth above, less $____ per share.
The Company represents and warrants to each of the Underwriters that
the representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
The Selling Shareholders represent and warrant to each of the
Underwriters that the representations and warranties of the Selling Shareholders
set forth in Section 4 of the Underwriting Agreement are accurate as though
expressly made at and as of the date hereof.
32
As contemplated by the Underwriting Agreement, attached as Schedule
II is a completed list of the several Underwriters, which shall be a part of
this Agreement and the Underwriting Agreement.
This Agreement shall be governed by the law of the State of New York
without regard to the conflict of laws principles of such State.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters, the Company and the Selling Shareholders,
please sign and return to the Company a counterpart hereof, whereupon this
instrument along with all counterparts and together with the Underwriting
Agreement shall be a binding agreement among the Underwriters, the Company and
the Selling Shareholders in accordance with its terms and the terms of the
Underwriting Agreement.
Very truly yours,
N2K INC.
By:
---------------------------------
Xxxxxxxx X. Xxxxxxx
Vice Chairman
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE I TO THE UNDERWRITING
AGREEMENT
By: The Committee
By:
---------------------------------
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
XXXXX & COMPANY INCORPORATED
BEAR, XXXXXXX & CO. INC.
Acting on behalf of themselves
and as the Representatives of the
other several Underwriters named in
Schedule II hereof.
By: PAINEWEBBER INCORPORATED
By:
------------------------------------
Riza Dekidjiev, Jr.
First Vice President
33
EXHIBIT B
[CUSTODY AGREEMENT]
34
EXHIBIT C
__________, 1998
PAINEWEBBER INCORPORATED
XXXXX & COMPANY INCORPORATED
BEAR, XXXXXXX & CO. INC.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In consideration of the agreement of the several Underwriters, for
whom PaineWebber Incorporated, Xxxxx & Company Incorporated and Bear, Xxxxxxx &
Co. Inc. (the "Representatives") intend to act as Representatives, to underwrite
a proposed public offering (the "Offering") of shares of the Common Stock, par
value $.001 per share (the "Common Stock"), of N2K Inc., a Delaware corporation
(the "Company"), the undersigned hereby agrees that the undersigned will not,
for a period of 45 days after the commencement of such public offering, without
the prior written consent of PaineWebber Incorporated, offer to sell, sell,
contract to sell, grant any option to sell, encumber, pledge or otherwise
dispose of, or require the Company to file with the Securities and Exchange
Commission a registration statement under the Securities Act of 1933 to
register, any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or warrants or other rights to acquire shares of
Common Stock (collectively, the "Common Stock Equivalents") of which the
undersigned is now, or may in the future become, the holder or a beneficial
owner within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended or modified from time to time.
Anything contained herein to the contrary notwithstanding, any
person to whom shares of Common Stock or Common Stock Equivalents are
transferred from the undersigned by operation of law or otherwise shall be bound
by the terms of this Agreement.
In order to enable the aforesaid covenants to be enforced, the
undersigned hereby consents to the placing of legends and/or stop-transfer
orders with any transfer agent of the Common Stock with respect to any shares of
Common Stock or Common Stock Equivalents.
[Name of Signatory]
By:
--------------------------------
Name:
Title:
35
EXHIBIT D
Form of Opinion of
Counsel to the Company
Each of the Company and the U.S. Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. The Company is the sole record owner
and, to our knowledge, the sole beneficial owner of all of the capital stock of
the U.S. Subsidiary.
All of the outstanding shares of Common Stock, including shares
issued upon the exercise of options granted under the Company's stock option
plans and delivered as against payment therefor as provided for in such plans,
outstanding prior to the issuance of the Company Shares have been duly
authorized and validly issued, and are fully paid and non-assessable. The
Company Shares have been duly authorized and, when issued and paid for by the
Underwriters in accordance with the terms of the Underwriting Agreement(*), will
be, duly authorized, validly issued, fully paid and nonassessable and will not
be subject to any preemptive or similar right under (i) the Delaware General
Corporation Law, (ii) the Company's certificate of incorporation or by-laws or
(iii) any instrument, document, contract or other agreement referred to in the
Registration Statement or any instrument, document, contract or agreement filed
as an exhibit to the Registration Statement. Except as described in the
Registration Statement or the Prospectus, to the best of our knowledge, there is
no commitment or arrangement to issue, and there are no outstanding options,
warrants or other rights calling for the issuance of, any share of capital stock
of the Company or any Subsidiary to any person or any security or other
instrument that by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company.
No consent, approval, authorization or order of, or any filing or
declaration with, any New York or federal court or governmental agency or body
is required on the part of the Company in connection with the valid issuance and
sale of the Company Shares to the Underwriters as contemplated by the
Underwriting Agreement1 or in connection with the execution, delivery and
performance of the Underwriting Agreement by the Company, except such as have
been obtained under the Act, the Rules and Regulations, the Securities Exchange
Act of 1934 and such as may be required under state securities or "Blue Sky"
laws or by the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Company Shares to be sold by the
Company.
The authorized, issued and outstanding capital stock of the Company
is as set forth in the Registration Statement and the Prospectus under the
caption "Capitalization." The description of the Common Stock contained in the
Prospectus is complete and accurate in all material respects. The form of
certificate used to evidence the Common Stock complies in all material respects
with the requirements of the Delaware General Corporation Law.
----------
* All references in this opinion to the Underwriting Agreement shall include
the Price Determination Agreement.
36
The Registration Statement and the Prospectus comply in all material
respects as to form with the requirements of the Act and the Rules and
Regulations (except that we express no opinion as to financial statements and
the notes thereto, schedules and other financial, statistical and accounting
data contained in the Registration Statement or the Prospectus).
To our knowledge, any instrument, document, lease, license, contract
or other agreement (collectively, "Documents") required to be described or
referred to in the Registration Statement or the Prospectus has been properly
described or referred to therein and any Document required to be filed as an
exhibit to the Registration Statement has been filed as an exhibit thereto; and,
to our knowledge, no default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any Document
filed or required to be filed as an exhibit to the Registration Statement.
To our knowledge, except as disclosed in the Registration Statement
or the Prospectus, no person or entity has the right to require the registration
under the Act of shares of Common Stock or other securities of the Company by
reason of the filing or effectiveness of the Registration Statement.
To our knowledge, the Company is not in violation of, or in default
with respect to, any law, rule, regulation, order, judgment or decree, except as
may be described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a material adverse effect upon the operations,
business or assets of the Company and the Subsidiaries, taken as a whole.
All descriptions in the Prospectus of statutes, regulations or legal
or governmental proceedings are accurate in all material respects.
The Company has full corporate power and authority to enter into the
Underwriting Agreement, and the Underwriting Agreement has been duly authorized,
executed and delivered by the Company, is a valid and binding agreement of the
Company and, except for the indemnification and contribution provisions thereof,
as to which we express no opinion, is enforceable against the Company in
accordance with the terms thereof.
The execution and delivery by the Company of, and the performance by
the Company of its agreements in, the Underwriting Agreement do not and will not
(i) violate the certificate of incorporation or by-laws of the Company, (ii)
breach or result in a default under, which breach or default would have a
material adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole, cause the time for performance of any
obligation to be accelerated under, or result in the creation or imposition of
any material lien, charge or encumbrance upon any of the assets of the Company
or the U.S. Subsidiary pursuant to the terms of, (x) any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement, capital lease or
other evidence of indebtedness to which the Company or the U.S. Subsidiary is a
party or by which the Company or the U.S. Subsidiary or any of their respective
properties is bound of which we have knowledge, (y) any voting trust arrangement
or any contract or other agreement to which the Company is a party that
restricts the ability of the Company to issue securities and of which we have
knowledge or (z) any Document filed as an exhibit to the Registration Statement,
(iii) breach or otherwise violate any existing obligation of the Company under
any court or administrative order, judgment or decree of which we have knowledge
or (iv) violate applicable
37
provisions of any statute or regulation of the State of New York, the United
States or the General Corporation Law of the State of Delaware.
The Company is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
The Shares have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
We hereby confirm to you that we have received telephonic advice
from a member of the staff of the Commission that the Registration Statement has
become effective under the Act and that no order suspending the effectiveness of
the Registration Statement has been issued and, to our knowledge, no proceeding
for that purpose has been instituted or is pending, threatened or contemplated.
We hereby further confirm to you that, to our knowledge, except as
described in the Prospectus, there are no actions, suits, proceedings or
investigations pending or overtly threatened in writing against the Company or
the U.S. Subsidiary, or any of their respective officers or directors in their
capacities as such, before or by any court, governmental agency or arbitrator
which (i) seek to challenge the legality or enforceability of the Underwriting
Agreement, (ii) seek to challenge the legality or enforceability of any of the
Documents filed, or required to be filed, as exhibits to the Registration
Statement, (iii) seek damages or other remedies with respect to any of the
Documents filed, or required to be filed, as exhibits to the Registration
Statement, (iv) except as set forth in or contemplated by the Registration
Statement and the Prospectus, seek money damages in excess of $100,000 or seek
to impose criminal penalties upon the Company, the U.S. Subsidiary or any of
their respective officers or directors in their capacities as such and of which
we have knowledge or (v) seek to enjoin any of the business activities of the
Company or the U.S. Subsidiary or the transactions described in the Prospectus
and of which we have knowledge.
We have participated in the preparation of the Registration
Statement and the Prospectus and, without assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, nothing has come to our attention that causes us to believe that, both
as of the Effective Date and as of the Closing Date or as of the Option Closing
Date, as the case may be, the Registration Statement or any amendment thereto
contained or contains any 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 not misleading or that any Prospectus or any
amendment or supplement thereto, as of its date and at the Closing Date or at
the Option Closing Date, as the case may be, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading (except that we express no
opinion as to financial statements and the notes thereto, schedules and other
financial, statistical and accounting data contained in the Registration
Statement or the Prospectus).
The opinions set forth above are subject in all respects to the
following qualifications:
38
(A) Our opinions expresses above are limited to the laws of the
State of New York, the General Corporation Law of the State of Delaware
and to the extent applicable, the Federal law of the United States.
(B) Our opinions expressed above are subject to (1) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, or similar laws affecting creditors' rights
generally and subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought, (2) limitations
on enforceability of indemnity and contribution claims under applicable
securities laws and public policy relating thereto, and (3) the effect of
general principles or equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).
(C) All references to "our knowledge" contained herein refer only to
the knowledge of the attorneys of this firm working on this matter, and
unless otherwise stated, does not imply that any independent investigation
was made with respect to the matters related thereto.
The opinions expressed herein shall be effective only as of the date
of this opinion letter. We do not assume responsibility for updating this
opinion letter as of any date subsequent to the date of this opinion letter, and
assume no responsibility for advising you of any changes with respect to any
matters described in this opinion letter or from the discovery subsequent to the
date of this opinion letter of information not previously known to us pertaining
to the events occurring prior to the date of this opinion letter.
The foregoing opinions have been rendered to you at your request
solely for your benefit pursuant to the terms of the Underwriting Agreement and
are not to be used, made public, referred to, furnished to any other person, or
relied upon in any manner by any other person or by you for any other purpose
except that this letter may be relied upon by your counsel in connection with
the opinion letter to be delivered to you pursuant to Section 6(g) of the
Agreement.
39
EXHIBIT E
Form of Opinion of Counsel
to Each Selling Shareholder
Each of the Selling Shareholders has full power and authority to
enter into the Underwriting Agreement and the Agreement and Power of Attorney
and to sell, transfer and deliver such Shares pursuant to the Underwriting
Agreement and the Agreement and Power of Attorney. All authorizations and
consents necessary for the execution and delivery of the Underwriting Agreement
and the Agreement and Power of Attorney on behalf of each of the Selling
Shareholders has been given. The delivery of the Shares on behalf of the Selling
Shareholders pursuant to the terms of the Underwriting Agreement and payment
therefor by the Underwriters will transfer good and marketable title to the
Shares to the several Underwriters purchasing the Shares, free and clear of all
liens, encumbrances and claims whatsoever.
Each of the Underwriting Agreement and the Agreement and Power of
Attorney has been duly authorized, executed and delivered by or on behalf of
each of the Selling Shareholders, is a valid and binding agreement of each
Selling Shareholder and, except for the indemnification and contribution
provisions of the Underwriting Agreement, the Underwriting Agreement and the
Agreement and Power of Attorney are enforceable against the Selling Shareholders
in accordance with the terms thereof.
No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by or on behalf of the Selling Shareholders, in connection with the
execution, delivery and performance of the Underwriting Agreement and the
Agreement and Power of Attorney by or on behalf of the Selling Shareholders or
in connection with the taking by or on behalf of the Selling Shareholders of any
action contemplated thereby, except such as have been obtained under the Act or
the Rules and Regulations and such as may be required under state securities or
"Blue Sky" laws or by the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares to be sold by the
Selling Shareholders.
The execution and delivery by the Selling Shareholders of, and the
performance by the Selling Shareholders of their agreements in, the Underwriting
Agreement and the Agreement and Power of Attorney, do not and will not (i)
violate the certificate of incorporation or by-laws of any corporate Selling
Shareholder, (ii) breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the assets of any
Selling Shareholder pursuant to the terms of, (x) any indenture, mortgage, deed
of trust, loan agreement, bond, debenture, note agreement, capital lease or
other evidence of indebtedness of which we have knowledge, (y) any voting trust
arrangement or any contract or other agreement to which any Selling Shareholder
is a party that restricts the ability of any such Selling Shareholder to issue
securities and of which we have knowledge or (2) any other contract or other
agreement of which we have knowledge, (iii) breach or otherwise violate any
existing obligation of any Selling Shareholder under any court or administrative
order, judgment or decree of which we have knowledge or (iv) violate applicable
40
provisions, of any statute or regulation of the State of New York, the United
States or the General Corporation Law of the State of Delaware.
There are no transfer or similar taxes payable in connection with
the sale and delivery of the Shares by the Selling Shareholders to the several
Underwriters.
