EXHIBIT 1.1
4,000,000 Shares
CYBERIAN OUTPOST, INC.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
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July 30, 1998
BT ALEX. XXXXX INCORPORATED
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXX XXXXXXXX XXXXXXX, A DIVISION OF
XXXX XXXXXXXX INCORPORATED
As Representatives of the Several Underwriters
named in Schedule I hereto
c/o BT Alex. Xxxxx Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Cyberian Outpost, Inc., a Delaware corporation (the "Company"), proposes to
sell to the several underwriters named in Schedule I hereto (the "Underwriters"
and individually an "Underwriter") for whom you are acting as representatives
(the "Representatives") an aggregate 4,000,000 shares (the "Firm Shares") of the
Company's Common Stock, $.01 par value (the "Common Stock"). The respective
amounts of the Firm Shares to be so purchased by the several Underwriters are
set forth opposite their names in Schedule I hereto. The Company and Xxxxxx
Xxxx (the "Principal Stockholder") also propose to sell, at the Underwriters'
option, an aggregate of up to 600,000 additional shares (the "Option Shares") of
the Company's Common Stock as set forth below. The maximum number of Option
Shares that may be sold by each of the Company and the Principal Stockholder are
set forth opposite their names on Schedule II hereto.
As the Representatives, you have advised the Company and the Principal
Stockholder (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the
numbers of Firm Shares set forth opposite their respective names in Schedule I,
plus their pro rata portion of the Option Shares if you elect to exercise the
over-allotment option in whole or in part for the accounts of the several
Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
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STOCKHOLDER.
(a) The Company represents and warrants to each of the Underwriters as
follows:
(i) A registration statement on Form S-1 (File No. 333-55819) with
respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and
the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed
with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements
of the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore
been delivered by the Company to you. Such registration statement,
together with any registration statement filed by the Company pursuant to
Rule 462(b) under the Act, herein referred to as the "Registration
Statement," which shall be deemed to include all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has become effective under the Act and no post-effective
amendment to the Registration Statement has been filed as of the date of
this Agreement. "Prospectus" means (a) the form of prospectus first filed
with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time
it becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of
the Shares, together with the term sheet or abbreviated term sheet filed
with the Commission pursuant to Rule 424(b)(7) under the Act. Each
preliminary prospectus included in the Registration Statement prior to the
time it becomes effective is herein referred to as a "Preliminary
Prospectus." Any reference herein to any Prospectus shall be deemed to
include any supplements or amendments thereto filed with the Commission
after the date of filing of the Prospectus under Rules 424(b) or 430A and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. The subsidiary of
the Company listed in Exhibit 21.1 to Item 16(a) of the Registration
Statement (the "Subsidiary") has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its
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incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. The Subsidiary is the only subsidiary, direct or indirect, of
the Company. The Company and the Subsidiary are duly qualified to transact
business in all jurisdictions in which the conduct of their business
requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the earnings, business,
properties, assets, operations, condition (financial or other) or prospects
of the Company and the Subsidiary taken as a whole (a "Material Adverse
Effect"). The outstanding shares of capital stock of the Subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable
and are owned by the Company free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiary are outstanding.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Principal Stockholder, have been
duly authorized and validly issued and are fully paid and non-assessable;
those Shares to be issued and sold by the Company have been duly authorized
and when issued and paid for as contemplated herein will be validly issued,
fully paid and non-assessable; and no preemptive rights of stockholders
exist with respect to any of the Shares or the issue and sale thereof.
Neither the filing of the Registration Statement nor the offering or sale
of the Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating to
the registration of any shares of Common Stock.
(iv) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation. Except as described in the
Prospectus, there are no outstanding securities of the Company convertible
or exchangeable into or evidencing the right to purchase or subscribe for
any shares of capital stock of the Company, and there are no outstanding or
authorized options, warrants or rights of any character obligating the
Company to issue any shares of its capital stock or any securities
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of such stock. Except as described in the
Prospectus, no holder of any securities of the Company or any other person
has the right, contractual or otherwise, which has not been satisfied or
effectively waived, to cause the Company to sell or otherwise issue to
them, or permit them to underwrite the sale of, any of the Shares or the
right to have any shares of Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the
filing of the Registration Statement, to require registration under the Act
of any shares of Common Stock or other securities of the Company.
(v) Neither the Company nor the Subsidiary is, nor with the giving of
notice or lapse of time or both will be, in violation of its Certificate of
Incorporation or By-Laws or
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in default under any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by which
it or any of its properties may be bound, other than any such default that
does not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement by the Company and the consummation by the
Company of the transactions herein contemplated (A) have been duly
authorized by all requisite corporate and stockholder action, (B) will not
violate the Certificate of Incorporation or By-Laws of the Company or the
Subsidiary or conflict with or result in a default under any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or the Subsidiary is a party or by which it
or any of its properties may be bound, other than any such default that
does not have a Material Adverse Effect and (C) will not result in a breach
of any law, order, rule or regulation applicable to the Company or the
Subsidiary of any court or of any regulatory body or administrative agency
or other governmental body having jurisdiction, or result in the creation
or imposition of a material lien or encumbrance of any kind on any of the
properties of the Company or the Subsidiary.
(vi) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares
nor, to the Company's knowledge, instituted proceedings for that purpose.
The Registration Statement conforms, and the Prospectus and any amendments
or supplements thereto will conform, to the requirements of the Act and the
Rules and Regulations. The Registration Statement and any amendment
thereto do not contain, and will not contain, any untrue statement of a
material fact and do not omit, and will not omit, to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendment and supplement
thereto do not contain, and will not contain, any untrue statement of
material fact; and do not omit, and will not omit, to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representatives,
specifically for use in the preparation thereof.
(vii) The consolidated financial statements of the Company and the
Subsidiary, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the
results of operations and cash flows of the Company and the consolidated
Subsidiary, at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance
with generally accepted accounting principles, consistently applied
throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such periods
have been made. The summary financial and statistical data included in the
Registration Statement present fairly the information shown therein and
such data have been compiled on a basis consistent with the financial
statements presented therein and the books and records of
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the Company. The pro forma financial statements and other pro forma
information included in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, have been properly compiled on the pro forma
bases described therein, and, in the opinion of the Company and the
Principal Stockholder, the assumptions used in the preparation thereof are
reasonable, and the adjustments used therein are appropriate to give effect
to the transactions or circumstances referred to therein.
(viii) KPMG Peat Marwick LLP, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and
the Rules and Regulations.
(ix) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or the Subsidiary
before any court or administrative agency or otherwise which if determined
adversely to the Company or the Subsidiary would reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby, except as
set forth in the Registration Statement.
(x) The Company and the Subsidiary have good and marketable title to
all of their material properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except those reflected in such financial statements (or as
described in the Registration Statement) or which are not material in
amount. The Company and the Subsidiary occupy their respective leased
properties under valid and binding leases conforming in all material
respects to the descriptions thereof set forth in the Registration
Statement.
(xi) The Company and the Subsidiary have filed all Federal, state,
local and foreign tax returns which have been required to be filed and have
paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are
not being contested in good faith and for which an adequate reserve for
accrual has been established in accordance with generally accepted
accounting principals, except for such failure to file or defaults in
payment of a character not required to be disclosed in the Prospectus and
which would not reasonably be expected to have a Material Adverse Effect.
All tax liabilities have been adequately provided for in the financial
statements of the Company, and the Company does not know of any actual or
proposed additional material tax assessments.
(xii) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, there has
not been any material adverse change in or any development involving a
prospective material adverse change in or affecting the earnings, business,
properties, assets, rights, operations, condition (financial or otherwise),
or prospects of the Company and its Subsidiary taken
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as a whole, whether or not occurring in the ordinary course of business,
and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company
or the Subsidiary, other than transactions in the ordinary course of
business and changes and transactions described in the Registration
Statement, as it may be amended or supplemented. The Company and the
Subsidiary have no material contingent obligations which are not disclosed
in the Company's financial statements which are included in the
Registration Statement.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required by the
Commission, The National Association of Securities Dealers, Inc. (the
"NASD") or such additional steps as may be necessary to qualify the Shares
for public offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(xiv) The Company and the Subsidiary each hold all material licenses,
certificates and permits from governmental authorities which are necessary
to the conduct of their businesses; and neither the Company nor the
Subsidiary has infringed any patents, patent rights, trade names,
trademarks or copyrights, which infringement is material to the business of
the Company and the Subsidiary taken as a whole. The Company knows of no
material infringement by others of patents, patent rights, trade names,
trademarks or copyrights owned by or licensed to the Company.
(xv) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of Common Stock to facilitate the sale or resale of
the Shares. The Company acknowledges that the Underwriters may engage in
passive market making transactions in the Shares on the Nasdaq National
Market in accordance with Rule 10b-6A under the Exchange Act.
(xvi) Neither the Company nor the Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules and regulations of the
Commission thereunder.
(xvii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles 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.
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(xviii) The Company and the Subsidiary each carry, or are covered by,
insurance in such amounts and covering such risks as is customary for
companies in similar industries.
(xix) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects, and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(xx) The Plan and Agreement of Merger, dated as of June 12, 1998 (the
"Merger Agreement"), by and between Cyberian Outpost, Inc., a Connecticut
corporation, and the Company has been validly executed and delivered by the
Company. The transactions contemplated by the Merger Agreement and the
Company's Proxy Statement dated June 12, 1998 (the "Proxy Statement") have
been duly authorized by all requisite corporate and stockholder action.
The Certificate of Merger evidencing the Merger Agreement was filed with
the Secretaries of State of the States of Delaware and Connecticut on July
6, 1998 and July 8, 1998, respectively, and the transactions contemplated
by the Merger Agreement and the Proxy Statement became effective as of such
date.
(xxi) Annexed hereto as Schedule 1(a)(xxi) is a list setting forth
certain contracts and agreements (collectively, the "Strategic Alliance
Agreements") to which the Company is a party. True and complete copies of
all the Strategic Alliance Agreements have been provided to the
Representatives and their counsel. Each Strategic Alliance Agreement is
valid and enforceable against the Company in accordance with its terms for
the periods stated therein and, to the knowledge of the Company, there does
not exist any claim by any third party that any Strategic Alliance
Agreement referred to in said Schedule is not valid and enforceable against
such third party in accordance with its terms for the periods stated
therein. There does not exist under any such Strategic Alliance Agreement
any default or event of default or event which with notice or lapse of time
or both would constitute such a default, other than such default or event
of default which does not individually or in the aggregate have a Material
Adverse Effect.
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(b) The Principal Stockholder represents and warrants to each of the
Underwriters as follows:
(i) The Principal Stockholder now has and at the Closing Date and the
Option Closing Date (as such dates are hereinafter defined), as these may
be, will have good and marketable title to the Option Shares to be sold by
the Principal Stockholder, free and clear of any liens, encumbrances,
equities and claims, and full right, power and authority to effect the sale
and delivery of such Option Shares; and, upon delivery and payment for such
Option Shares as contemplated by this Agreement, the several Underwriters
will acquire good and marketable title thereto, free and clear of any
liens, encumbrances, equities and claims.
(ii) The Principal Stockholder has full right, power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the
consummation by the Principal Stockholder of the transactions herein
contemplated and the fulfillment by the Principal Stockholder of the terms
hereof will not require any consent, approval, authorization, or other
order of any court, regulatory body, administrative agency or other
governmental body (except as may be required under the Act, state
securities laws or Blue Sky laws) and will not result in a breach of any of
the terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which such
Principal Stockholder is a party, or of any order, rule or regulation
applicable to such Principal Stockholder of any court or of any regulatory
body or administrative agency or other governmental body having
jurisdiction.
(iii) The Principal Stockholder has not taken and will not take,
directly or indirectly, any action designed, or which has constituted, or
which might reasonably be expected to cause or result in the stabilization
or manipulation of the price of the Common Stock of the Company and, other
than as permitted by the Act, the Principal Stockholder will not distribute
any prospectus or other offering material in connection with the offering
of the Shares.
(iv) The Principal Stockholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1
are not true and correct, is familiar with the Registration Statement and
has no knowledge of any material fact, condition or information not
disclosed in the Registration Statement which has adversely affected or may
adversely affect the business of the Company or the Subsidiary; and the
sale of the Option Shares by the Principal Stockholder pursuant hereto is
not prompted by any information concerning the Company or the Subsidiary
which is not set forth in the Registration Statement. The information
pertaining to such Principal Stockholder under the caption "Management" in
the Prospectus is complete and accurate in all material respects.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
-----------------------------------------
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase, at a price of $16.74 per share, the
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number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made by wire
transfer to the Company of immediately available funds to a bank account or bank
accounts designated by the Company against delivery of certificates therefor to
the Representatives for the several accounts of the Underwriters. Such payment
and delivery are to be made through the facilities of the Depository Trust
Company, New York, New York at 10:00 a.m., New York time on the third business
day after the date of this Agreement or at such other time and date not later
than five business days thereafter as you and the Company shall agree upon, such
time and date being herein referred to as the "Closing Date." (As used herein,
"business day" means a day on which the New York Stock Exchange is open for
trading and on which banks in New York are open for business and are not
permitted by law or executive order to be closed.) The certificates for the
Firm Shares will be delivered in such denominations and in such registrations as
the Representatives request in writing not later than the second full business
day prior to the Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
and the Principal Stockholder hereby grant an option to the several Underwriters
to purchase the Option Shares at the price per share set forth in the first
paragraph of this Section 2. The maximum number of Option Shares to be sold by
the Company and the Principal Stockholder is set forth opposite their respective
names in Schedule II hereto. The option granted hereby may be exercised in
whole or in part by giving written notice (i) at any time before the Closing
Date and (ii) only once thereafter within 30 days after the date of this
Agreement, by you, as Representatives of the several Underwriters, to the
Company and the Principal Stockholder setting forth the number of Option Shares
as to which the several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such certificates are to be delivered. If the option granted
hereby is exercised in part, the Option Shares to be sold by the Principal
Stockholder shall be sold in full prior to the sale of any Option Shares by the
Company. The time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be earlier
than three nor later than ten full business days after the exercise of such
option, nor in any event prior to the Closing Date (such time and date being
herein referred to as the "Option Closing Date"). If the date of exercise of
the option is three or more days before the Closing Date, the notice of exercise
shall set the Closing Date as the Option Closing Date. The number of Option
Shares to be purchased by each Underwriter shall be in the same proportion to
the total number of Option Shares being purchased as the number of Firm Shares
being purchased by such Underwriter bears to the total number of Firm Shares,
adjusted by you in such manner as to avoid fractional shares. The option with
respect to the Option Shares granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters. You, as
Representatives of the several Underwriters, may cancel such option at any time
prior to its expiration by giving written notice of such cancellation to the
Company and the Principal Stockholder. To the extent, if any, that the option
is exercised, payment for the Option Shares shall be made on the Option Closing
Date by wire transfer to the
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Company of immediately available funds to a bank account or bank accounts
designated by the Company for the Option Shares to be sold by it, on the one
hand, and to a bank account or designated by the Principal Stockholder, on the
other hand, against delivery of certificates therefor to the Representatives for
the several accounts of the Underwriters. Such payment and delivery are to be
made through the facilities of the Depository Trust Company, New York, New York,
on the Option Closing Date.
(d) If on the Option Closing Date the Option Shares that the Principal
Stockholder has agreed to sell on such date as set forth in Schedule II hereto
are not so sold, the Company agrees that it will sell or arrange for the sale of
that number of shares of Common Stock to the Underwriters that represents the
Option Shares that such Principal Stockholder has failed to sell, as set forth
in Schedule II hereto, or such lesser number as may be requested by the
Representatives.
3. OFFERING BY THE UNDERWRITERS.
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It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a Master
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
------------------------
(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company will (i) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule
430A of the Rules and Regulations is followed, to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a
Prospectus in a form approved by the Representatives containing information
previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations, and (ii)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives shall
have reasonably objected in writing or which is not in compliance with the
Rules and Regulations.
(ii) The Company will advise the Representatives promptly (A) when
the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the
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Commission for amendment of the Registration Statement or for supplement to
the Prospectus or for any additional information, and (D) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution
of any proceedings for that purpose. The Company will use its best efforts
to prevent the issuance of any such stop order preventing or suspending the
use of the Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish
such information as may be reasonably required for that purpose, provided
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction where it
is not now so qualified or required to file such a consent. The Company
will, from time to time for a period of 180 days after the date of this
Agreement, prepare and file such statements, reports and other documents as
are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for
distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period
when delivery of a Prospectus is required under the Act, as many copies of
the Prospectus in final form, or as thereafter amended or supplemented, as
the Representatives may reasonably request. The Company will deliver to
the Representatives at or before the Closing Date, four signed copies of
the Registration Statement and all amendments thereto including all
exhibits filed therewith, and will deliver to the Representatives such
number of copies of the Registration Statement (including such number of
copies of the exhibits filed therewith that may reasonably be requested),
and of all amendments thereto, as the Representatives may reasonably
request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters,
it becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, not misleading, or, if it
is necessary at any time to amend or supplement the Prospectus to comply
with any law, the Company promptly will prepare and file with the
Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus
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so that the Prospectus as so amended or supplemented will not, in the light
of the circumstances when it is so delivered, be misleading, or so that the
Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail,
covering a period of at least twelve consecutive months beginning after the
effective date of the Registration Statement, which earnings statement
shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of
the Rules and Regulations and will advise you in writing when such
statement has been so made available.
(vii) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the
Company for any period subsequent to the period covered by the most recent
financial statements appearing in the Registration Statement and the
Prospectus.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other securities convertible into
or exchangeable or exercisable for shares of Common Stock or derivative of
Common Stock (or agreement for such) will be made for a period of 180 days
after the date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder or with the prior written consent of BT Alex.
Xxxxx Incorporated, except that the Company may, without such consent (A)
issue shares of Common Stock upon exercise of options or warrants existing
on the date of this Agreement and (B) grant options or offer to sell and
sell shares of its Common Stock to employees, directors or consultants
pursuant to its existing stock-based compensation plans.
(ix) The Company will use its best efforts to cause the Shares to be
quoted, subject to notice of issuance, on the Nasdaq National Market.
(x) The Company has caused each officer and director and specific
stockholders of the Company to furnish to you, on or prior to the date of
this agreement, a letter or letters, in form and substance satisfactory to
the Underwriters, pursuant to which each such person shall agree not to
offer, sell, sell short or otherwise dispose of any shares of Common Stock
of the Company or other capital stock of the Company, or any other
securities convertible, exchangeable or exercisable for shares of Common
Stock or derivative of Common Stock owned by such person or request the
registration for the offer or sale of any of the foregoing (or as to which
such person has the right to direct the disposition of) for a period of 180
days after the date of this Agreement, directly or indirectly except as
provided in such letter or letter or with the prior written consent of BT
Alex. Xxxxx Incorporated (collectively, the "Lockup Agreements").
12
(xi) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus 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.
(xii) The Company shall not invest or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as
would require the Company or the Subsidiary to register as an investment
company under the 1940 Act.
(xiii) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(xiv) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the price
of any securities of the Company for the applicable period under the Act.
(b) The Principal Stockholder covenants and agrees with the several
Underwriters that:
(i) No offering, sale, short sale or other disposition of any shares
of Common Stock of the Company or other capital stock of the Company or
other securities convertible, exchangeable or exercisable for shares of
Common Stock or derivative of shares of Common Stock owned by the Principal
Stockholder or request the registration for the offer or sale of any of the
foregoing (or as to which the Principal Stockholder has the right to direct
the disposition of) will be made for a period of 180 days after the date of
this Agreement, directly or indirectly, by such Principal Stockholder
otherwise than hereunder, as permitted by Lockup Agreements or with the
prior written consent of BT Alex. Xxxxx Incorporated.
(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act
of 1983 with respect to the transactions herein contemplated, the Principal
Stockholder agrees to deliver to you prior to or at the Closing Date a
properly completed and executed United States Treasury Department Form W-8
or W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(iii) The Principal Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the Company
for the applicable period under the Act.
13
5. COSTS AND EXPENSES.
------------------
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company and the Principal Stockholder
under this Agreement, including, without limiting the generality of the
foregoing, the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company and the Principal Stockholder; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Invitation Letter, the Listing Application, the
Blue Sky Survey and any supplements or amendments thereto; the filing fees of
the Commission; the filing fees and expenses (including the reasonable legal
fees and disbursements) incident to securing any required review by the NASD of
the terms of the sale of the Shares; the Listing Fee of the Nasdaq National
Market; and the expenses, including the reasonable fees and disbursements of
counsel for the Underwriters, incurred in connection with the qualification of
the Shares under State securities or Blue Sky laws and the qualification of the
terms of the sale of the Shares under NASD regulation. The Company agrees to
pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed shares of the Common Stock by the Underwriters to employees and persons
having business relationships with the Company and its Subsidiary. The Company
shall not, however, be required to pay for any of the Underwriters' expenses
(other than those related to qualification under NASD regulation and State
securities or Blue Sky laws) except that, if this Agreement shall not be
consummated because the conditions in Section 6 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to Xxxxxx
00(x) (B) (i), (iv) or (vi) hereof, or by reason of any failure, refusal or
inability on the part of the Company or the Principal Stockholder to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on their part to be performed, unless such failure to satisfy
said condition or to comply with said terms is due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel, incurred in connection with investigating, marketing
and proposing to market the Shares or in contemplation of performing their
obligations hereunder; but the Company shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
---------------------------------------------
The several obligations of the Underwriters to purchase the Firm Shares on
the Closing Date and the Option Shares, if any, on the Option Closing Date are
subject to the accuracy, as of the Closing Date or the Option Closing Date, as
the case may be, of the representations and warranties of the Company and the
Principal Stockholder contained herein, and to the performance by the Company
and the Principal Stockholder of their respective covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and
14
Regulations shall have been made, and any request of the Commission for
additional information (to be included in the Registration Statement or
otherwise) shall have been disclosed to the Representatives and complied with to
their reasonable satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued and
no proceedings for that purpose shall have been taken or, to the knowledge of
the Company or the Principal Stockholder, shall be contemplated by the
Commission and no injunction, restraining order, or order of any nature by a
Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C. ("Xxxxx Xxxxx"), counsel for the Company and the
Principal Stockholder, dated the Closing Date or the Option Closing Date, as the
case may be, addressed to the Underwriters (and stating that it may be relied
upon by counsel to the Underwriters) to the effect that:
(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own and lease its properties and to
conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in the State of Connecticut;
(ii) the Subsidiary has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own and lease its
properties and to conduct its business as described in the Prospectus;
(iii) the Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus; the shares
of Common Stock of the Company, including the Shares to be sold by the
Principal Stockholder, outstanding prior to the consummation of the
transactions contemplated by this Agreement have been duly authorized and
validly issued and are fully paid and non-assessable;
(iv) all of the issued shares of capital stock of the Subsidiary
have been duly and validly authorized and issued, are fully paid and non-
assessable and are owned directly of record by the Company, to the
knowledge of such counsel, free and clear of all liens, encumbrances,
equities or claims;
(v) the Shares, including the Option Shares, if any, to be sold by
the Company pursuant to this Agreement, have been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to preemptive rights; all of the Shares conform
to the description thereof contained in the Prospectus; the certificates
for the Shares, assuming they are in the form filed with the Commission,
are in due and proper form;
15
(vi) except as described in or contemplated by the Prospectus, to the
knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of capital stock of the Company and
there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock
or any securities convertible or exchangeable into or evidencing the right
to purchase or subscribe for any shares of such stock; and except as
described in the Prospectus, to the knowledge of such counsel, no holder of
any securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, any of the
Shares or the right to have any shares of Common Stock or other securities
of the Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require registration
under the Act of any shares of Common Stock or other securities of the
Company;
(vii) this Agreement has been duly authorized, executed and delivered
by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement will not contravene any provision of applicable law or the
Certificate of Incorporation or Bylaws of the Company or, to the knowledge
of such counsel, any agreement or other instrument binding upon the Company
or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to the knowledge of such counsel, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under the Agreement, except such as may be required by the securities or
Blue Sky laws of the various states (with respect to which such counsel
need express no opinion) in connection with the offer and sale of the
Shares by the Underwriters;
(ix) the statements in the Prospectus under the captions "Description
of Capital Stock" and "Shares Eligible for Future Sale," in each case
insofar as such statements constitute summaries of the legal matters or
documents referred to therein, fairly present in all material respects the
information called for with respect to such legal matters and documents and
fairly summarize the matters referred to therein;
(x) to such counsel's knowledge, but without inquiring into the
dockets of any court, commissions, regulatory body, administrative agency
or other government body, there are no legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries is a
party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described, or any
statutes, regulations, contracts or other documents that are required to be
described in the
16
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not so described or filed as required;
(xi) to such counsel's knowledge, no holder of securities of the
Company has the right, which has not been satisfied or effectively waived,
to have any Common Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement to require registration under the Act of any shares
of Common Stock or other securities of the Company;
(xii) a member of the Commission's staff has advised such counsel by
telephone that the Commission's Division of Corporation Finance pursuant to
authority delegated to it by the Commission, has entered an order declaring
the Registration Statement effective under the Securities Act on July 30,
1998 (the "Effective Date") and such counsel has no knowledge of any stop
order suspending its effectiveness being issued or that any proceedings for
that purpose are pending before, or overtly threatened by, the Commission;
(xiii) we have no knowledge about any contract, lease or other legal
document to which the Company or any subsidiary is a party or to which any
of their property is subject that has caused us to conclude that such
contract, lease or other document is required, to be described in the
Prospectus but is not so described or is required to be filed as an exhibit
to the Registration Statement but has not been so filed;
(xiv) the Merger Agreement has been validly executed and delivered
by the Company; the transactions contemplated by the Merger Agreement and
the Proxy Statement have been duly authorized by all requisite corporate
and stockholder action; the Certificate of Merger evidencing the Merger
Agreement was filed with the Secretaries of State of the States of Delaware
and Connecticut on July 6, 1998 and July 8, 1998, respectively, and the
transactions contemplated by the Merger Agreement and the Proxy Statement
became effective as of such date;
(xv) this Agreement has been duly executed and delivered by the
Principal Stockholder;
(xvi) the Principal Stockholder has full legal power and authority
to sell, transfer and deliver the Shares being sold by the Principal
Stockholder pursuant to this Agreement; all authorizations and consents
necessary for the execution and delivery of this Agreement on behalf of the
Principal Stockholder have been given (other than as required by State
securities and Blue Sky laws as to which such counsel need express no
opinion);
(xvii) the Underwriters (assuming that they are protected purchasers
within the meaning of the Uniform Commercial Code) have acquired all the
rights of the Principal Stockholder in the Shares being sold by the
Principal Stockholder on the Option Closing
17
Date, free of any adverse claim, and the Company is required to register
transfer to Underwriters on the Option Closing Date;
(xviii) the Company is not, and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended; and
(xix) the Registration Statement, the Prospectus and each amendment
or supplement thereto (except for financial statements and schedules and
other financial and statistical data included therein as to which such
counsel need not express an opinion) comply as to form in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder.
In rendering such opinion, Xxxxx Xxxxx may rely on the opinion of Xxxxxx &
Xxxxxxxxxx previously provided to counsel for the Underwriters, provided that in
each case Xxxxx Xxxxx shall state that they believe that they and the
Underwriters are justified in relying on such other counsel. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Xxxxx Xxxxx
may state that their belief is based upon the procedures set forth therein, but
is without independent check and verification.
(c) The Representatives shall have received from Reboul, MacMurray,
Xxxxxx, Xxxxxxx & Kristol ("Reboul XxxXxxxxx"), counsel for the Underwriters, an
opinion dated the Closing Date or the Option Closing Date, as the case may be,
substantially to the effect specified in subparagraphs (iii), (v), (vi), (viii)
and (xii) of paragraph (b) of this Section 6, and that the Company is a duly
organized and validly existing corporation under the laws of the State of
Delaware. In rendering such opinion, Reboul XxxXxxxxx may rely as to all
matters governed other than by the laws of the state of Delaware or Federal laws
on the opinion of counsel referred to in paragraph (b) of this Section 6. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to
18
state a material fact, necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Reboul
XxxXxxxxx may state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
(d) The Representatives shall have received at or prior to the Closing
Date from Reboul XxxXxxxxx a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
or Blue Sky laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
(e) You shall have received, on each of the date hereof, the Closing Date
and the Option Closing Date, as the case may be, a letter dated the date hereof,
the Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to you, of KPMG Peat Marwick LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
President and Chief Executive Officer and the Chief Financial Officer of the
Company (the Officers Certificate) and a certificate of the Principal
Stockholder to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) In the case of the Officers Certificate only, the Registration
Statement has become effective under the Act and no stop order suspending
the effectiveness of the Registration Statement has been issued, and no
proceedings for such purpose have been taken or are, to his or her
knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company (and, in the
case of the certificate of the Principal Stockholder only, the
representations and warranties of the Principal Stockholder) contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;
19
(iii) In the case of the Officers Certificate only, all filings
required to have been made pursuant to Rules 424 or 430A under the Act have
been made;
(iv) He or she has carefully examined the Registration Statement and
the Prospectus and, in his or her opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, and since the effective date of the Registration Statement, no
event has occurred which should have been set forth in a supplement to or
an amendment of the Prospectus which has not been so set forth in such a
supplement or amendment; and
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the earnings, business, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiary taken as a whole, whether or not arising in the ordinary
course of business.
(g) The Company and the Principal Stockholder shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq National Market.
(i) The Lockup Agreements described in Section 4(a)(x) are in full force
and effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Reboul XxxXxxxxx, counsel
for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be. In such event, the Company, the Principal Stockholder and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
20
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDER.
--------------------------------------------------------------------------
The obligations of the Company and the Principal Stockholder to sell and
deliver the Shares required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the Option
Closing Date, as the case may be, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
---------------
(a) The Company and, to the extent that indemnification from the Company
is unavailable, the Principal Stockholder, severally and not jointly, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities to which such Underwriter or any such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter and each such controlling person upon
demand for any legal or other out-of-pocket expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a party to any
action or proceeding; provided, however, that neither the Company nor the
Principal Stockholder will be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof and provided further that the
indemnity provided in Section 8(a) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any losses, claims, damages or liabilities or actions based upon any untrue
statement or alleged untrue statement of material fact or omission or alleged
omission to state therein a material fact purchased the Shares, if a copy of the
Prospectus in which such untrue statement or alleged untrue statement or
omission or alleged omission was corrected had not been sent or given to such
person within the time required by the Act and the Rules and Regulations, unless
such failure is the result of noncompliance by the Company with Section 4(d)
hereof. In no event shall the liability of the Principal Stockholder for
indemnification pursuant to this Section 8(a) exceed the lesser of (i) the
proceeds received by the Principal Stockholder from the Underwriters in the
offering or (ii) the proportion of the aggregate amount of losses, liabilities,
claims, damages or expenses which, up to and including such time, have been or
are being claimed by the Underwriters and each person, if any, who controls any
Underwriter within the meaning of the Act, or any of them against the Principal
Stockholder and the Company, equal to the proportion that the number of Shares
sold hereunder by such Principal Stockholder bears to the aggregate number of
Shares sold hereunder. The indemnity agreement
21
will be in addition to any liability which the Company or the Principal
Stockholder may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Principal Stockholder, and each person,
if any, who controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, Principal Stockholder or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
Principal Stockholder or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that each Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing within sixty (60) days. No indemnification
provided for in Section 8(a) or (b) or contribution provided for in Section 8(d)
shall be available to any party who shall fail to give notice as provided in
this Section 8(c) if the party to whom notice was not given was prejudiced in
any material respect by the failure to give such notice, but the failure to give
such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party otherwise than on
account of the provisions of Section 8(a), (b) or (d). In case any such
proceeding shall be brought against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded
22
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them or (iii) the indemnifying
party shall have failed to assume the defense and employ counsel reasonably
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 8(a) and by the Company and the Principal Stockholder in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (if the indemnified party is a party to
such claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient (other than as a result of the failure to give notice
required by Section 8(c)) to hold harmless an indemnified party under Section
8(a) or (b) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Principal
Stockholder on the one hand and the Underwriters on the other from the offering
of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Principal Stockholder on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Principal Stockholder 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 Principal
Stockholder 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. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Principal Stockholder on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
23
The Company, the Principal Stockholder and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 8(d)
were 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 account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation and (iii) the Principal Stockholder
shall not be required to contribute any amount in excess of the lesser of (A)
the proceeds received by the Principal Stockholder from the Underwriters in the
offering or (B) the proportion of the aggregate amount of losses, liabilities,
claims, damages or expenses which, up to and including such time, have been or
are being claimed by the Underwriters and each person, if any, who controls any
Underwriter within the meaning of the Act, or any of them against the Principal
Stockholder and the Company, equal to the proportion that the number of Shares
sold hereunder by such Principal Stockholder bears to the aggregate number of
Shares sold hereunder. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Principal Stockholder set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
8.
24
9. DEFAULT BY UNDERWRITERS.
-----------------------
If on the Closing Date or the Option Closing Date, as the case may be, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company or the Principal
Stockholder), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the
Principal Stockholder such amounts as may be agreed upon and upon the terms set
forth herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Principal Stockholder or you as the Representatives of the Underwriters will
have the right, by written notice given within the next 36-hour period to the
parties to this Agreement, to terminate this Agreement without liability on the
part of the non-defaulting Underwriters or of the Company or of the Principal
Stockholder except to the extent provided in Section 8 hereof. In the event of
a default by any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as you, as Representatives, may
determine in order that the required changes in the Registration Statement or in
the Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a defaulting Underwriter.
Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. NOTICES.
-------
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows: if to the Underwriters, to BT Alex. Xxxxx Incorporated,
Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxx X. Xxxxxxx, with
copies to BT Alex. Xxxxx Incorporated, Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
00000, Attention: General Counsel, and Reboul, MacMurray, Xxxxxx, Xxxxxxx &
Kristol, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X.
Xxxxxxx; if to the Company or the Principal Stockholder, to Cyberian Outpost,
Inc., 00 Xxxxx Xxxx Xxxxxx, X.X. Xxx 000, Xxxx, Xxxxxxxxxxx 00000, Attention:
Xxxxxx Xxxx, with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Stanford X.
Xxxxxxx, Xx.
25
11. TERMINATION.
-----------
(a) This Agreement may be terminated by you as follows: (A) at any time
prior to the earlier of (i) the time the Shares are released by you for sale or
(ii) 11:30 a.m. on the first day following the date of this Agreement, or (B) by
notice to the Company at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and its
Subsidiary taken as a whole or the earnings, business, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiary taken as a whole, whether or not arising in the
ordinary course of business, (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable or inadvisable to market the Shares or to
enforce contracts for the sale of the Shares, (iii) suspension of trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange, (iv) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by United States or New York State authorities, (vi) the suspension of trading
of the Company's common stock by the Nasdaq National Market, the Commission, or
any other governmental authority or, (vii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
----------
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
------------------------------------
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus
26
or the Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
-------------
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
27
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us he enclosed duplicates hereof, whereupon
it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CYBERIAN OUTPOST, INC.
By /s/ XXXXXX XXXX
------------------------------------
Xxxxxx Xxxx, President and
Chief Executive Officer
/s/ XXXXXX XXXX
------------------------------------
Xxxxxx Xxxx
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. XXXXX INCORPORATED
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXX XXXXXXXX XXXXXXX, A DIVISION OF
XXXX XXXXXXXX INCORPORATED
As Representatives of the several Underwriters
listed on Schedule I
By: BT Alex. Xxxxx Incorporated
By: /s/ XXX X. XXXXXXX
---------------------------------
Authorized Officer
Xxx Xxxxxxx
Principal
28
By: NationsBanc Xxxxxxxxxx Securities LLC
By: /s/ M. Xxxxxxxx Xxxx
-----------------------------
Authorized Officer
By: Xxxx Xxxxxxxx Xxxxxxx, a division of
Xxxx Xxxxxxxx Incorporated
By: /s/ Xxxxxxxx X. Xxxxxx, III
-----------------------------
Authorized Officer
Xxxxxxxx X. Xxxxxx, III
29
SCHEDULE I
UNDERWRITERS
-----------------------------------------------------------------------------------------------
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
-----------------------------------------------------------------------------------------------
BT Alex. Xxxxx Incorporated 1,300,000
-----------------------------------------------------------------------------------------------
NationsBanc Xxxxxxxxxx Securities LLC 910,000
-----------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx Xxxxxxx, a division of
Xxxx Xxxxxxxx Incorporated 390,000
-----------------------------------------------------------------------------------------------
BancAmerica Xxxxxxxxx Xxxxxxxx 100,000
-----------------------------------------------------------------------------------------------
Bear, Xxxxxxx & Co. Inc. 100,000
-----------------------------------------------------------------------------------------------
Credit Suisse First Boston Corporation 100,000
-----------------------------------------------------------------------------------------------
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation 100,000
-----------------------------------------------------------------------------------------------
Xxxxxxxxx & Xxxxx LLC 100,000
-----------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx & Co. Incorporated 100,000
-----------------------------------------------------------------------------------------------
PaineWebber Incorporated 100,000
-----------------------------------------------------------------------------------------------
Xxxxx, Xxxxxxxx & Xxxx, Inc. 70,000
-----------------------------------------------------------------------------------------------
Advest, Inc. 70,000
-----------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. 70,000
-----------------------------------------------------------------------------------------------
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 70,000
-----------------------------------------------------------------------------------------------
Pennsylvania Merchant Group 70,000
-----------------------------------------------------------------------------------------------
Soundview Financial Group, Inc. 70,000
-----------------------------------------------------------------------------------------------
X.X. Xxxxxxxxx, Towbin 70,000
-----------------------------------------------------------------------------------------------
Xxx Xxxxxx & Company 70,000
-----------------------------------------------------------------------------------------------
Wheat First Union 70,000
-----------------------------------------------------------------------------------------------
Wit Capital Corporation 70,000
---------
-----------------------------------------------------------------------------------------------
Total 4,000,000
=========
-----------------------------------------------------------------------------------------------
30
SCHEDULE II
OPTION SHARES
--------------------------------------------------------------------------------------------------------
Maximum Percentage of
Number of Option Total Number
Seller Shares to Be Sold of Option Shares
------ ----------------- ----------------
--------------------------------------------------------------------------------------------------------
Cyberian Outpost, Inc. 564,286 94.05%
--------------------------------------------------------------------------------------------------------
Xxxxxx Xxxx 35,714 5.95%
------- -----
--------------------------------------------------------------------------------------------------------
Total 600,000 100.0%
======= =====
--------------------------------------------------------------------------------------------------------
31
Schedule 1(a)(xxi)
Strategic Alliance Agreements
-----------------------------
Interactive Marketing Agreement, dated December 1, 1997, by and between America
Online, Inc. and the Company.
Agreement, dated April 7, 1998, by and between Lycos-Bertelsmann GmbH and the
Company.
Co-Marketing Agreement, dated July 16, 1998, by and between StarMedia Network,
Inc. and the Company.
Promotion Agreement, dated January 26, 1998, by and between CNET, Inc. and the
Company.
Merchant Integration Agreement, dated January 6, 1998, by and between Infospace
and the Company.
Sponsorship Agreement, dated December 4, 1997, by and between Excite, Inc. and
the Company.
Marketing Agreement, dated May 21, 1998, by and between xxxxxxxx.xxx, Inc. and
the Company.
Renewal, dated May 8, 1998, to Advertising Agreement by and between go2net and
the Company.
32
