1
EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
INTERNET PICTURES CORPORATION
10,000,000 Shares of Common Stock
Underwriting Agreement
, 2000
X.X. Xxxxxx Securities Inc.
Chase Securities Inc.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxx Xxxxxxxx Incorporated
Prudential Securities Incorporated
As Representatives of the several underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Internet Pictures Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters listed in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), an aggregate of 7,500,000 shares (the
"Company Underwritten Shares") of common stock, par value $.001 per share, of
the Company (the "Common Stock") and certain stockholders of the Company named
in Schedule II hereto (the "Selling Stockholders") propose to sell to the
several Underwriters an aggregate of 2,500,000 shares (the "Selling Stockholder
Underwritten Shares" and, together with the Company Underwritten Shares, the
"Underwritten Shares") of Common Stock. In addition, at the option of the
Underwriters and for the sole purpose of covering over-allotments in connection
with the sale of the Underwritten Shares, the Company proposes to issue and
sell to the Underwriters up to an additional 1,125,000 shares (the "Company
Option Shares") and certain of the Selling Stockholders propose to issue to the
Underwriters up to an additional 375,000 shares (the "Selling Stockholder
Option Shares" and, together with the Company Option Shares, the "Option
Shares") of Common Stock. The Underwritten Shares and the Option Shares are
herein referred to as the "Shares."
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The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective including
information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement", and the
prospectus in the form first used to confirm sales of Shares is referred to in
this Agreement as the "Prospectus." If the Company has filed an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
1. The Company agrees to issue and sell the Company
Underwritten Shares, and the Selling Stockholders agree, severally and not
jointly, to sell the Selling Stockholder Underwritten Shares set forth opposite
the name of each such Selling Stockholder on Schedule II hereto to the several
Underwriters as hereinafter provided, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company and the Selling Stockholders at a purchase price per share of
$ (the "Purchase Price") the number of Underwritten Shares (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying the
aggregate number of Underwritten Shares to be sold by the Company and the
Selling Stockholders by a fraction, the numerator of which is the aggregate
number of Underwritten Shares to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the aggregate number of Underwritten Shares to be purchased by all
the Underwriters from the Company and the Selling Stockholders hereunder.
In addition, the Company agrees to sell the Company Option
Shares, and certain Selling Stockholders agree severally and not jointly to
sell the number of Selling Stockholder Option Shares set forth next to such
Selling Stockholders' names under the heading "Number of Option Shares" on
Schedule II hereto, to the several Underwriters, and the Underwriters shall
have the option to purchase at their election up to 1,125,000 Company Option
Shares and 375,000 Selling Stockholder Option Shares for the sole purpose of
covering over-allotments in the sale of the Underwritten Shares. The
Underwriters, on the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, shall have the
option to purchase, severally and not jointly, from the Company and the Selling
Stockholders at the Purchase Price that portion of the number of Option Shares
as to which such election shall have been exercised (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying such number of
Option Shares by a fraction, the numerator of which is the maximum number of
Option Shares which such
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Underwriter is entitled to purchase and the denominator of which is the maximum
number of Option Shares that all of the Underwriters are entitled to purchase
hereunder, for the sole purpose of covering over-allotments (if any) in the
sale of the Underwritten Shares by the several Underwriters. In the event the
Underwriters do not exercise their option to purchase the Option Shares in
full, the Underwriters shall first purchase Company Option Shares from the
Company and then purchase Selling Stockholder Option Shares from the Selling
Stockholders on a pro rata basis.
The Underwriters may exercise the option to purchase the
Option Shares at any time (but not more than once) on or before the thirtieth
day following the date of this Agreement, by written notice from the
Representatives to the Company and the Attorneys-in-Fact (as defined herein).
Such notice shall set forth the aggregate number of Option Shares as to which
the option is being exercised and the date and time when the Option Shares are
to be delivered and paid for which may be the same date and time as the Closing
Date (as hereinafter defined) but shall not be earlier than the Closing Date
nor later than the tenth full Business Day (as hereinafter defined) after the
date of such notice (unless such time and date are postponed in accordance with
the provisions of Section 9 hereof). Any such notice shall be given at least
two full Business Days prior to the date and time of delivery specified
therein.
2. The Company and the Selling Stockholders understand
that the Underwriters intend (i) to make a public offering of the Shares as
soon after (A) the Registration Statement has become effective and (B) the
parties hereto have executed and delivered this Agreement, as in the judgment
of the Representatives is advisable and (ii) initially to offer the Shares upon
the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer
in immediately available funds (X) to the account specified to the
Representatives by the Company with regard to payment to the Company in the case
of the Company Underwritten Shares and to the account specified by the
Attorneys-in-Fact with regard to payment to the Selling Stockholders with regard
to the Selling Stockholder Underwritten Shares, on , 2000, or at such
other time on the same or such other date, not later than the fifth Business Day
thereafter, as the Representatives and the Company and the Selling Stockholders
may agree upon in writing or (Y) to the account specified to the Representatives
by the Company with regard to payment to the Company with regard to the Company
Option Shares and to the account specified by the Attorneys-in-Fact with regard
to payment to the Selling Stockholders with regard to the Selling Stockholder
Option Shares on the date and time specified by the Representatives in the
written notice of the Underwriters' election to purchase such Option Shares. The
time and date of such payment for the Underwritten Shares is referred to herein
as the "Closing Date" and the time and date for such payment for the Option
Shares, if other than the Closing Date, are herein referred to as the
"Additional Closing Date." As
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used herein, the term "Business Day" means any day other than a day on which
banks are permitted or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or
the Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several Underwriters
of the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than
two full Business Days prior to the Closing Date or the Additional Closing
Date, as the case may be, with any transfer taxes payable in connection with
the transfer to the Underwriters of the Shares duly paid by the Company or the
Selling Stockholders, as the case may be. The certificates for the Shares will
be made available for inspection and packaging by the Representatives at the
office of X.X. Xxxxxx Securities Inc. set forth above not later than 1:00 P.M.,
New York City time, on the Business Day prior to the Closing Date or the
Additional Closing Date, as the case may be.
4. (A) The Company and each of the Selling Stockholders
listed on Schedule III hereto (the "Management Selling Stockholders")
represents and warrants to each Underwriter and each of the other Selling
Stockholders listed on Schedule IV hereto (the "Other Selling Stockholders")
that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed
in all material respects with the Securities Act, and did not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein; and, provided, further, that in the case of
a Management Selling Stockholder, this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information relating to any other Management
Selling Stockholder furnished to the Company in writing by such
Management Selling Stockholder expressly for use therein;
(b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) comply, or will
comply, as the
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case may be, in all material respects with the Securities Act and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the date of
the Prospectus and any amendment or supplement thereto, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional Closing
Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; except that the foregoing representations
and warranties shall not apply to (i) statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein or (ii) in the case of a Management Selling
Stockholder, statements or omissions in the Registration Statement or
the Prospectus made in reliance upon and in conformity with
information relating to any other Management Selling Stockholder
furnished to the Company in writing by such Management Selling
Stockholder expressly for use therein;
(c) the financial statements, and the related notes
thereto, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates indicated and the results
of their operations and changes in their consolidated cash flows for
the periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein; the financial statements, and the related notes
thereto, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of each of
Interactive Pictures Corporation ("IPC") and PictureWorks Technology,
Inc. ("PictureWorks") as of the dates indicated and the results of
their operations and changes in their consolidated cash flows for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein; and the pro forma financial information, and the
related notes thereto, included in the Registration Statement and the
Prospectus has been prepared in accordance with the applicable
requirements of the Securities Act and are base upon good faith
estimates and assumptions believed by the Company to be reasonable;
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(d) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has
not been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries, or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole (a "Material
Adverse Change"), otherwise than as set forth or contemplated in the
Prospectus; and except as set forth or contemplated in the Prospectus
neither the Company nor any of its subsidiaries has entered into any
transaction or agreement (whether or not in the ordinary course of
business) material to the Company and its subsidiaries taken as a
whole;
(e) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the general
affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect");
(f) each of the Company's subsidiaries has been duly
incorporated or organized and is validly existing as a corporation
under the laws of its jurisdiction of incorporation or organization,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus, and has been
duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each jurisdiction
in which it owns or leases properties, or conducts any business, so as
to require such qualification, other than where the failure to be so
qualified or in good standing would not have a Material Adverse
Effect; and all the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly
issued, are fully-paid and non-assessable, and (except, in the case of
foreign subsidiaries, for directors' qualifying shares and except as
described in the Prospectus) are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances, security
interests and claims;
(g) this Agreement has been duly authorized, executed
and delivered by the Company;
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(h) the Company has an authorized capitalization as set
forth in the Prospectus and such authorized capital stock conforms as
to legal matters to the description thereof set forth in the
Prospectus, and all of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully-paid
and non-assessable and are not subject to any pre-emptive or similar
rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock
of the Company or any such subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options;
(i) the Company Underwritten Shares and the Company
Option Shares have been duly authorized, and, when issued and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be duly issued and will be fully paid
and non-assessable and will conform to the descriptions thereof in the
Prospectus; and the issuance of such Shares is not subject to any
preemptive or similar rights;
(j) neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its certificate or articles of
incorporation or by-laws or any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which it or any of them or
any of their respective properties is bound, except for violations and
defaults which individually or in the aggregate would not have a
Material Adverse Effect; the issue and sale of the Shares to be sold
by the Company hereunder and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will any such
action result in any violation of the provisions of the certificate or
articles of incorporation or the by-laws of the Company or any
applicable law or statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective properties; and
no consent, approval, authorization, order, license, registration or
qualification of or with any such court or governmental agency
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or body is required for the issue and sale of the Shares to be sold by
the Company hereunder or the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and as
may be required under state securities or Blue Sky Laws in connection
with the purchase and distribution of the Shares by the Underwriters;
(k) other than as set forth or contemplated in the
Prospectus, there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
subsidiaries or any of their respective properties or to which the
Company or any of its subsidiaries is or may be a party or to which
any property of the Company or any of its subsidiaries is or may be
the subject which, if determined adversely to the Company or any of
its subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a Material Adverse Effect, and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and
there are no statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(l) the Company and its subsidiaries have good and
marketable title in fee simple to all items of real property and good
and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except such
as are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company
and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under
valid, existing and enforceable leases with such exceptions as are not
material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or its subsidiaries;
(m) no relationship, direct or indirect, exists between
or among the Company or any or its subsidiaries on the one hand, and
the directors, officers, stockholders, customers or suppliers of the
Company or any of its subsidiaries on the other hand, which is
required by the Securities Act to be described in the Registration
Statement and the Prospectus which is not so described;
(n) except as disclosed in the Registration Statement,
no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of
the filing of the Registration Statement with the Commission or the
issue and sale of the Shares to be sold by the Company
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hereunder or, to the best knowledge of the Company, the sale of the
Shares to be sold by the Selling Stockholders hereunder; all holders
of securities of the Company having rights to the registration of
shares of Common Stock, or other securities, because of the filing of
the Registration Statement by the Company, have waived such rights or
such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration
Statement;
(o) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
or an entity "controlled" by an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(p) PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") who have certified certain financial
statements of the Company, its subsidiaries, IPC and PictureWorks are
independent public accountants as required by the Securities Act;
(q) the Company and its subsidiaries have filed all
federal, state, local and foreign tax returns which have been required
to be filed and have paid all taxes shown thereon 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, except as
disclosed in the Registration Statement and the Prospectus, there is
no tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company or any subsidiary which
individually or in the aggregate would have a Material Adverse Effect;
(r) the Company has not taken nor will it take, directly
or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(s) the unissued Shares issuable upon the exercise of
options (the "Options") to be exercised by certain of the Selling
Stockholders (the "Optionholders") have been duly and validly
authorized and reserved for issuance, and at the time of delivery to
the Underwriters with respect to such Shares, such Shares will be
issued and delivered in accordance with the provisions of the
applicable stock option agreements between the Company and such
Optionholders pursuant to which such Options were granted (the "Option
Agreements") and will be duly and validly issued, fully paid and
non-assessable and will conform to the description thereof in the
Prospectus;
(t) the Options were duly authorized and issued pursuant
to the Option Agreements and constitute valid and binding obligations
of the Company, and the Optionholders are entitled to the benefits
provided by the Option Agreements; the
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Option Agreements were duly authorized, executed and delivered and
constitute valid and binding instruments enforceable in accordance
with their terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Options and the Option Agreements conform to the
descriptions thereof in the Prospectus;
(u) each of the Company and its subsidiaries owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, and neither the Company nor any such
subsidiary has received any actual notice of any proceeding relating
to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except
as described in the Registration Statement and the Prospectus; and
each of the Company and its subsidiaries is in compliance with all
laws and regulations relating to the conduct of its business as
conducted as of the date hereof, except for noncompliance which would
not, individually or in the aggregate, have a Material Adverse Effect;
(v) there are no existing or, to the best knowledge of
the Company, threatened labor disputes with the employees of the
Company or any of its subsidiaries which are likely to have a Material
Adverse Effect;
(w) the Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect;
(x) each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, ("ERISA") that is maintained, administered or contributed
to by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been
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maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended
("Code"). To the knowledge of the Company, no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code
has occurred with respect to any such plan excluding transactions
effected pursuant to a statutory or administrative exemption. For each
such plan which is subject to the funding rules of Section 412 of the
Code or Section 302 of ERISA no "accumulated funding deficiency" as
defined in Section 412 of the Code has been incurred, whether or not
waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions;
(y) each of the Company and its subsidiaries owns, is
licensed to use or otherwise possesses adequate rights to use the
patents, patent rights, licenses, inventions, trademarks, service
marks, trade names, copyrights and know-how, including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures (collectively, the "Intellectual
Property") necessary to carry on the business conducted by it, except
to the extent that the failure to own, be licensed to use or otherwise
possess adequate rights to use such Intellectual Property would not
have a Material Adverse Effect; except as set forth in the Prospectus,
the Company has not received any notice of infringement of or conflict
with (and the Company has no knowledge of any infringement of or
conflict with ) asserted rights of others with respect to its
Intellectual Property; the discoveries, inventions, products or
processes of the Company referred to in the Registration Statement and
the Prospectus do not, to the knowledge of the Company, infringe or
conflict with any right or patent of any third party, or any
discovery, patent product or process which is the subject of a patent
application filed by any third party, known to the Company which could
have a Material Adverse Effect;
(z) the statistical and market-related data included in
the Registration Statement and the Prospectus are based on or derived
from sources which are believed by the Company to be reliable;
(aa) the Company carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of
its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries;
(bb) except for compensation to be received by the
Underwriters under this Agreement, the Company does not know of any
outstanding claims for services, ei-
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ther in the nature of a finder's fee or origination fee, with respect
to any of the transactions contemplated hereby;
(cc) The Company has reviewed its operations, the
operations of its subsidiaries and the operations of any third parties
with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company will be
affected by the Year 2000 Problem. As a result of such review and
except as disclosed in the Prospectus, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem has had or
will have a Material Adverse Effect or result in any material loss or
interference with the Company's or any subsidiary's business or
operations. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000; and
(dd) the Company has delivered to the Representatives
written lock-up agreements, substantially in the form attached hereto
as Exhibit 1 (each, a "Lock-Up Agreement"), of each of its directors
and executive officers and certain stockholders previously identified
by the Representatives.
(B) Each of the Selling Stockholders severally
represents and warrants to, and agrees with, each of the Underwriters and the
Company that:
(a) all consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder
of this Agreement and the Power of Attorney (the "Power of Attorney")
and the Custody Agreement (the "Custody Agreement") hereinafter
referred to, and for the sale and delivery of the Shares to be sold by
such Selling Stockholder hereunder, have been obtained; and such
Selling Stockholder has full right, power and authority to enter into
this Agreement, the Power of Attorney and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder; this Agreement, the Power of Attorney
and the Custody Agreement have each been duly authorized, executed and
delivered by such Selling Stockholder;
(b) the sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a
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default under, any statute, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound
or to which any of the property or assets of such Selling Stockholder
is subject, nor will such action result in any violation of any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over such Selling Stockholder or
the property of such Selling Stockholder;
(c) such Selling Stockholder has good and valid title to
the Selling Stockholder Underwritten Shares to be sold at the Closing
Date and/or the Selling Stockholder Option Shares to be sold at the
Additional Closing Date, if applicable, by such Selling Stockholder
hereunder (other than the Shares to be issued upon exercise of
Options), free and clear of all liens, encumbrances, equities or
adverse claims; such Selling Stockholder will have, immediately prior
to the Closing Date or the Additional Closing Date, assuming due
issuance of the Shares to be issued upon exercise of Options, good and
valid title to the Shares to be sold at the Closing Date or Additional
Closing Date by such Selling Stockholder, free and clear of all liens,
encumbrances, equities or adverse claims; and, upon delivery of the
certificates representing such Shares and payment therefor pursuant
hereto, good and valid title to such Shares, free and clear of all
liens, encumbrances, equities or adverse claims, will pass to the
several Underwriters;
(d) such Selling Stockholder has not taken and will not
take, directly or indirectly, any action which is designed to or which
has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares;
(e) the information pertaining to such Selling
Stockholder under the caption "Principal and Selling Stockholders" in
the Prospectus is complete and accurate in all material respects; and
(f) when the Registration Statement becomes effective
and at all times subsequent thereto through the latest of the Closing
Date, the Additional Closing Date or the termination of the offering
of the Shares, such parts of the Registration Statement and
Prospectus, and any supplements or amendments thereto, as they relate
to such Selling Stockholder, and which have been provided in writing
to the Company by such Selling Stockholder, will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
Each of the Selling Stockholders represents and warrants that
certificates in negotiable form representing all of the Selling Stockholder
Underwritten Shares and Selling
14
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Stockholder Option Shares, if applicable, to be sold by such Selling
Stockholders hereunder, other than such Shares to be issued upon the exercise
of Options, have been, and each of the Selling Stockholders who is selling
Shares upon the exercise of Options to each of the Underwriters represents and
warrants that duly completed and executed irrevocable Option exercise notices,
in the forms specified by the relevant Option Agreement, with respect to all of
the Shares to be sold by such Selling Stockholders to each of the Underwriters
hereunder have been, placed in custody under a Custody Agreement relating to
such Shares, in the form heretofore furnished to you, duly executed and
delivered by such Selling Stockholder to Norwest Bank Minnesota, National
Association, as custodian (the "Custodian"), and that such Selling Stockholder
has duly executed and delivered Powers of Attorney, in the form heretofore
furnished to you, appointing Xxxx Xxxxx, Xxxxxxx Xxxxxx and Xxxxxxx Xxxxxx, or
any of them, as such Selling Stockholder's Attorneys-in-Fact (the
"Attorneys-in-Fact" or any one of them the "Attorney-in Fact") with authority
to execute and deliver this Agreement on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the Underwriters to the Selling
Stockholders as provided herein, to authorize the delivery of the Shares to be
sold by such Selling Stockholder hereunder, to effect (if applicable) the
exercise of the Options to be exercised with respect to the Shares to be sold
by such Selling Stockholder and otherwise to act on behalf of such Selling
Stockholder in connection with the transactions contemplated by this Agreement
and the Custody Agreement.
Each of the Selling Stockholders specifically agrees that the
Selling Stockholder Underwritten Shares and Selling Stockholder Option Shares,
if applicable, represented by the certificates or the irrevocable Option
exercise notice, in either case, held in custody for such Selling Stockholder
under the Custody Agreement, are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Stockholder for such
custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable.
Each of the Selling Stockholders specifically agrees that the obligations of
such Selling Stockholder hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling Stockholder, or,
in the case of an estate or trust, by the death or incapacity of any executor
or trustee or the termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event. If any individual Selling
Stockholder or any such executor or trustee should die or become incapacitated,
or if any such estate or trust should be terminated, or if any such partnership
or corporation should be dissolved, or if any other such event should occur,
before the delivery of Selling Stockholder Underwritten Shares and/or Selling
Stockholder Option Shares, if applicable, by it hereunder, certificates
representing such Shares shall be delivered by or on behalf of such Selling
Stockholder in accordance with the terms and conditions of this Agreement and
the Custody Agreement, and actions taken by the Attorneys-in-Fact pursuant to
the Powers of Attorney shall be as valid as if such death, inca-
15
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pacity, termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution or other
event.
5. (A) The Company covenants and agrees with each of
the several Underwriters as follows:
(a) to use its best efforts to cause the Registration
Statement to become effective at the earliest possible time and, if
required, to file the final Prospectus with the Commission within the
time periods specified by Rule 424(b) and Rule 430A under the
Securities Act and to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange
Act") subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Shares; and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 a.m., New York City time,
on the Business Day next succeeding the date of this Agreement in such
quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the
Representatives six signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits, and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment
thereto, in each case without exhibits and, during the period
mentioned in paragraph (e) below, to each of the Underwriters as many
copies of the Prospectus (including all amendments and supplements
thereto) as the Representatives may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for
review and not to file any such proposed amendment or supplement to
which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to
confirm such advice in writing (i) when the Registration Statement has
become effective, (ii) when any amendment to the Registration
Statement has been filed or becomes effective, (iii) when any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof, (iv) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or
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supplement to the Prospectus or for any additional information, (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus or the Prospectus
or the initiation or threatening of any proceeding for that purpose,
(vi) of the occurrence of any event, within the period referenced in
paragraph (e) below, as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, and (vii)
of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and to use its best efforts to prevent the issuance
of any such stop order, or of any order preventing or suspending the
use of any preliminary prospectus or the Prospectus, or of any order
suspending any such qualification of the shares, or notification of
any such order thereof and, if issued, to obtain as soon as possible
the withdrawal thereof;
(e) if, during such period of time after the first date
of the public offering of the Shares as in the opinion of counsel for
the Underwriters a prospectus relating to the Shares is required by
law to be delivered in connection with sales by the Underwriters or
any dealer, any event shall occur as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the
Underwriters and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Shares may have
been sold by the Representatives on behalf of the Underwriters and to
any other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such
qualification in effect so long as reasonably required for
distribution of the Shares; provided that the Company shall not be
required to file a general consent to service of process in any
jurisdiction;
(g) to make generally available to its security holders
and to the Representatives as soon as practicable an earnings
statement covering a period of at least
17
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twelve months beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration Statement,
which shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 of the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to
the Representatives copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange;
(i) for a period of 90 days after the date of the
Prospectus (the "Lock-Up Period") not to (i) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise without the prior written
consent of the Representatives, other than the Shares to be sold by
the Company hereunder and any options granted or to be granted shares
of Common Stock of the Company issued upon the exercise of options
granted under the Company's Amended and Restated 1997 Equity
Compensation Plan and the Amended, Restated 1998 Employee Director and
Consultant Stock Plan and any other stock option plan maintained by
the Company. Notwithstanding the foregoing, the Company may issue
shares of its Common Stock during the Lock-Up Period in connection
with acquisitions, strategic alliances or joint ventures ("Excepted
Transactions"); provided, however, that: (i) the Company shall give
X.X. Xxxxxx Securities Inc. 5 days prior written notice of any such
issuance describing the Excepted Transaction in reasonable detail and
stating the number of shares of Common Stock proposed to be issued in
the Excepted Transaction, (ii) all Common Stock issued in connection
with the Excepted Transaction shall remain subject to the lock-up
restrictions of this paragraph 5(A)(i) for the remainder of the
Lock-up Period, (iii) prior to any such issuance of Common Stock, each
person that is to acquire any such Common Stock shall sign a lock-up
agreement in form and substance reasonably acceptable to X.X. Xxxxxx
Securities Inc. covering all such Securities for the remainder of the
Lock-up Period and (iv) no such issuance shall be made unless and
until the requirements and conditions in the foregoing clauses (i),
(ii) and (iii) have been complied with and satisfied;
18
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(j) to use the net proceeds received by the Company from
the sale of the Shares by the Company pursuant to this Agreement in
the manner specified in the Prospectus under caption "Use of
Proceeds";
(k) to use its best efforts to list for quotation the
Shares on the National Association of Securities Dealers Automated
Quotations National Market (the "Nasdaq National Market"); and
(l) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality
of the foregoing, all costs and expenses (i) incident to the
preparation, reregistration, transfer, execution and delivery of the
Shares, (ii) incident to the preparation, printing and filing under
the Securities Act of the Registration Statement, the Prospectus and
any preliminary prospectus (including in each case all exhibits,
amendments and supplements thereto), (iii) incurred in connection with
the registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including fees of
counsel for the Underwriters and its disbursements), (iv) in
connection with the listing of the Shares on the Nasdaq National
Market, (v) related to the filing with, and clearance of the offering
by, the National Association of Securities Dealers, Inc., (vi) in
connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and the furnishing to the Underwriters
and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided, (vii)
any expenses incurred by the Company in connection with a "road show"
presentation to potential investors, (viii) the cost of preparing
stock certificates and (ix) the cost and charges of any transfer agent
and any registrar.
(B) Each of the Selling Stockholders covenants and
agrees with each of the several Underwriters as follows:
(a) for a period of 90 days after the date of the
Prospectus not to (i) offer, pledge, announce to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise or (iii) make any demand for or exercise any right with
respect to the registration of
19
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any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock without the prior written
consent of the Representatives, in each case other than the Shares to
be sold by such Selling Stockholder hereunder; and
(b) to deliver to the Representatives prior to or at the
Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified
by the Treasury Department regulations in lieu thereof) in order to
facilitate the Underwriters' documentation of their compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated.
(C) The Representatives represent and agree that (i)
they have not offered or sold and, prior to the expiry of the period of six
months from the Closing Date, will not offer or sell, any Shares to persons in
the United Kingdom except persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public within the
meaning of the Public Offers of Securities Regulation 1995, (ii) they have
complied and will comply with all applicable provisions of the Financial
Services Act of 1986 with respect to anything done by them in relation to the
Common Stock in, form or otherwise involving the United Kingdom and (iii) they
have only issued or passed on, and will only issue and pass on, in the United
Kingdom any document received by them in connection with the offering of the
Common Stock to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisement) (Exemptions) Order 1995
or is a person to whom such document may otherwise lawfully be issued or passed
on.
6. The several obligations of the Underwriters
hereunder to purchase the Shares on the Closing Date or the Additional Closing
Date, as the case may be, are subject to the performance by the Company and
each of the Selling Stockholders of their respective obligations hereunder and
to the following additional conditions:
(a) the Registration Statement shall have become
effective (or if a post-effective amendment is required to be filed
under the Securities Act, such post-effective amendment shall have
become effective) not later than 5:00 P.M., New York City time, on the
date hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with Section 5(a) hereof;
20
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and all requests for additional information shall have been complied
with to the satisfaction of the Representatives;
(b) the respective representations and warranties of the
Company and the Selling Stockholders contained herein are true and
correct on and as of the Closing Date or the Additional Closing Date,
as the case may be, as if made on and as of the Closing Date or the
Additional Closing Date, as the case may be, and each of the Company
and the Selling Stockholders shall have complied with all agreements
and all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date or the Additional Closing Date, as the
case may be;
(c) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date or the Additional Closing
Date, as the case may be, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any
downgrading, (ii) any intended or potential downgrading or (iii) any
review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company by
any "nationally recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act;
(d) since the respective dates as of which information
is given in the Prospectus there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any Material Adverse Change, or any development
involving a prospective Material Adverse Change, otherwise than as set
forth or contemplated in the Prospectus, the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares on
the Closing Date or the Additional Closing Date, as the case may be,
on the terms and in the manner contemplated in the Prospectus; and
neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus;
(e) the Representatives shall have received (1) on and
as of the Closing Date or the Additional Closing Date, as the case may
be, a certificate of an executive officer of the Company, with
specific knowledge about the Company's financial matters, satisfactory
to the Representatives to the effect set forth in subsections (a)
through (d) (with respect to the respective representations,
warranties, agreements and conditions of the Company) of this Section
and to the further effect that there has not occurred any Material
Adverse Change, or any development involving a
21
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prospective Material Adverse Change from that set forth or
contemplated in the Registration Statement and (2) on and as of the
Closing Date, a certificate of the Selling Stockholders, satisfactory
to the Representatives to the effect set forth in subsection (b) of
this Section 6 (with respect to the respective representations,
warranties, agreements and conditions of the Selling Stockholders);
(f) Baker, Donelson, Bearman & Xxxxxxxx, special counsel
for the Company, shall have furnished to the Representatives their
written opinion, dated the Closing Date or the Additional Closing
Date, as the case may be, in form and substance satisfactory to the
Representatives, to the effect that:
(i) the Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus;
(ii) the Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have
a Material Adverse Effect;
(iii) each of the Company's subsidiaries has been
duly incorporated or organized and is validly existing as a
corporation under the laws of its jurisdiction of
incorporation or organization with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Prospectus and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification,
other than where the failure to be so qualified and in good
standing would not have a Material Adverse Effect; and all of
the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except, in the case of foreign
subsidiaries, for directors' qualifying shares and except as
otherwise set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iv) other than as set forth or contemplated in
the Prospectus, there are no legal or governmental
investigations, actions, suits or proceedings pending or, to
the best of such counsel's knowledge, threatened against or
affecting the Company or any of its subsidiaries or any of
their respective
22
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properties or to which the Company or any of its subsidiaries
is or may be a party or to which any property of the Company
or its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have, or
reasonably be expected to have, a Material Adverse Effect; to
the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others; and such counsel does not know of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(v) this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(vii) the shares of capital stock of the Company
outstanding prior to the issuance of the Shares to be sold by
the Company hereunder have been duly authorized and are
validly issued, fully paid and non-assessable; (assuming,
with respect to Shares being issued upon the exercise of the
Options, that payment of the exercise price therefor is made
to the Company as provided in the Custody Agreement);
(viii) the Shares to be issued and sold by the
Company hereunder have been duly authorized, and when
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, will be validly issued,
fully paid and non-assessable and the issuance of such Shares
is not subject to any preemptive or similar rights;
(ix) the Common Stock conforms in all material
respects as to legal matters to the description thereof
contained in the Registration Statement and the Prospectus
under the heading "Description of Capital Stock;"
(x) such counsel is of the opinion that the
Registration Statement and the Prospectus and any amendments
and supplements thereto (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material
respects with the requirements of the Securities Act and
believes that (other than the financial statements and
related schedules therein, as to which such counsel need
express no belief) the Registration Statement and the
prospectus included therein at the time the Registration
Statement became effective did not con-
23
-23-
tain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that the
Prospectus, as amended or supplemented, if applicable, does
not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading;
(xi) neither the Company nor any of its
subsidiaries is, or with the giving of notice or lapse of
time or both would be, in violation of or in default under,
its certificate or articles of incorporation or by-laws or,
to such counsel's knowledge, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which it or any of them or any
of their respective properties is bound, except for
violations and defaults which individually and in the
aggregate are not material to the Company and its
subsidiaries taken as a whole; the issue and sale of the
Shares being delivered on the Closing Date or the Additional
Closing Date, as the case may be, to be sold by the Company
hereunder, the issuance by the Company of the Shares to be
issued upon the exercise of Options, and the performance by
the Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will any such action result in any violation of
the provisions of the certificate or articles of
incorporation or the by-laws of the Company or, to such
counsel's knowledge, any applicable law or statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company, its
subsidiaries or any of their respective properties;
(xii) no consent, approval, authorization, order,
license, registration or qualification of or with any court
or governmental agency or body is required for the issuance
by the Company of the Shares to be sold by it hereunder, the
issuance by the Company of the Shares to be issued upon the
exercise of the Options or the consummation by the Company of
the other transactions contemplated by this Agreement, except
such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under
the Securities Act and as may be required under state se-
24
-24-
curities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(xiii) the Company is not and, after giving effect
to the offering and sale of the Shares, will not be an
"investment company" or entity "controlled" by an "investment
company", as such terms are defined in the Investment Company
Act;
(xiv) to such counsel's knowledge, each of the
Company and its subsidiaries owns, possesses or has obtained
all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts
and other tribunals, domestic or foreign, necessary to own or
lease, as the case may be, and to operate its properties and
to carry on its business as conducted as of the date hereof,
and neither the Company nor any such subsidiary has received
any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as
described in the Registration Statement and the Prospectus;
and, to such counsel's knowledge, each of the Company and its
subsidiaries is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of
the date of the Prospectus;
(xv) to such counsel's knowledge, the Company
and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to
all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as
are described or referred to in the Prospectus or such as do
not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and, to such
counsel's knowledge, any real property and buildings held
under lease by the Company and its subsidiaries are held by
them under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and
buildings by the Company or its subsidiaries;
(xvi) to such counsel's knowledge, each of the
Company and its subsidiaries is in compliance with all
Environmental Laws, except, in each case, where
noncompliance, individually or in the aggregate, would not
have a Material Adverse Effect; there are no legal or
governmental proceedings pending or, to the knowledge of such
counsel, threatened against or affecting
25
-25-
the Company or any of its subsidiaries under any
Environmental Law which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse
Effect;
(xvii) all holders of securities of the Company
having rights to the registration of shares of Common Stock,
or other securities, because of the filing of the
Registration Statement by the Company have waived such rights
or such rights have expired by reason of lapse of time
following notification of the Company's intent to file the
Registration Statement; and
(xviii) the Registration Statement has been
declared effective under Securities Act and, to such
counsel's knowledge, no stop order proceedings with respect
thereto are pending before or threatened by the Commission
under the Securities Act.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States, the State of Tennessee and Delaware General Corporation
Law, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to Underwriters' counsel)
of other counsel reasonably acceptable to the Underwriters' counsel,
familiar with the applicable laws; (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements
of officials of jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company. The opinion
of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to
such counsel and, in such counsel's opinion, the Underwriters and they
are justified in relying thereon. With respect to the matters to be
covered in subparagraphs (vi), (ix) and (x) above counsel may state
their opinion and belief is based upon their participation in the
preparation of the Registration Statement and the Prospectus and any
amendment or supplement thereto and review and discussion of the
contents thereof but is without independent check or verification
except as specified.
The opinion of Baker, Donelson, Bearman & Xxxxxxxx described
above shall be rendered to the Underwriters at the request of the
Company and shall so state therein;
(g) Counsel or counsels for each of the Selling
Stockholders (each such counsel being satisfactory to the
Representatives), shall have furnished to the Representatives their
written opinion, dated the Closing Date, in form and substance
satisfactory to the Representatives, to the effect that:
26
-26-
(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of each of the Selling
Stockholders;
(ii) a Power of Attorney and a Custody Agreement
have been duly authorized, executed and delivered by each
Selling Stockholder and constitute valid and binding
agreements of each Selling Stockholder in accordance with
their terms;
(iii) Selling Stockholder is the sole record
owner of all of the Shares to be sold by such Selling
Stockholder, and upon the crediting of such Shares to the
designated Underwriters' accounts at the Depository Trust
Company and payment by X.X. Xxxxxx Securities, Inc., on
behalf of the Underwriters, for such Shares, no action based
on an adverse claim to such Shares, may be asserted against
the Underwriters, assuming that the Underwriters acquire such
Shares without notice of any adverse claims; and
(iv) the sale of the Shares to be sold by such
Selling Stockholder and the execution and delivery by such
Selling Stockholder of, and the performance by such Selling
Stockholder of its obligations under, this Agreement, and the
consummation of the transactions contemplated herein, (i)
have been duly authorized on the part of such Selling
Stockholder, and (ii) will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which
such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or
assets of such Selling Stockholder is subject, nor will any
such action result in any violation of any applicable law or
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over such
Selling Stockholder or any of his properties of which such
counsel is aware; and no consent, approval, authorization,
order, registration or qualification of or with any such
court or governmental agency or body is required for the sale
of such Shares or the consummation by such Selling
Stockholders of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations,
registrations or qualifications as have been obtained under
the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of such Shares by the Underwriters.
In rendering such opinions, such counsel may rely as to
matters involving the application of laws other than the laws of the
United States, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to
Underwriters'
27
-27-
counsel) of other counsel reasonably acceptable to the Underwriters'
counsel, familiar with the applicable laws; (B) rely as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and certificates or other written
statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company.
Such counsel may rely, without further investigation, upon the
representations and warranties of the Selling Stockholders contained
in their respective Custody Agreements and in this Agreement, stating
that nothing has come to such counsel's attention that causes them to
believe that they are not justified in relying upon such
representations and warranties. The opinion of such counsel for the
Selling Stockholders shall state that the opinion of any such other
counsel upon which they relied is in form satisfactory to such counsel
and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon.
Each opinion of counsel described above shall be rendered to
the Underwriters at the request of the Company and shall so state
therein;
(h) Banner & Wittcoff, special intellectual property
counsel for the Company, shall have furnished to the Representatives
their written opinion, dated the Closing Date or additional Closing
Date, as the case may be, in form and substance satisfactory to the
Representatives, to the effect that the Company and each of its
subsidiaries owns, is licensed to use or otherwise possesses adequate
rights to use the Intellectual Property reasonably necessary to carry
on the business conducted by it, except to the extent that the failure
to own, be licensed to use or otherwise possess adequate rights to use
such Intellectual Property would not have a Material Adverse Effect;
except as set forth in the Prospectus, the Company has not received
any notice of infringement of or conflict with, and to the best of the
such counsel's knowledge, there is no infringement of or conflict
with, asserted rights of others with respect to the Intellectual
Property; the discoveries, inventions, products or processes of the
Company referred to in the Registration Statement and the Prospectus
do not, to the best of such counsel's knowledge, infringe or conflict
with any right or patent of any third party, or any discovery, patent
product or process which is the subject of a patent application filed
by any third party; to the knowledge of such counsel, the Company and
each of its subsidiaries owns, is licensed to use or otherwise
possesses adequate rights to use patents and patent rights reasonably
necessary to carry on the business conducted by it;
(i) on the effective date of the Registration Statement
and the effective date of the most recently filed post-effective
amendment to the Registration Statement and also on the Closing Date
or Additional Closing Date, as the case may be, PricewaterhouseCoopers
shall have furnished to you letters, dated the respective
28
-28-
dates of delivery thereof, in form and substance satisfactory to you,
containing statements and information of the type customarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus;
(j) the Representatives shall have received on and as of
the Closing Date or Additional Closing Date, as the case may be, an
opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Underwriters, with
respect to the due authorization and valid issuance of the Shares, the
Registration Statement, the Prospectus and other related matters as
the Representatives may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(k) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for listing on the Nasdaq National Market, subject to official notice
of issuance;
(l) on or prior to the Closing Date or Additional
Closing Date, as the case may be, the Company and the Selling
Stockholders shall have furnished to the Representatives such further
certificates and documents as the Representatives shall reasonably
request; and
(m) the Lock-Up Agreements shall be in full force and
effect on the Closing Date or Additional Closing Date, as the case may
be.
7. Each of the Company and each of the Management
Selling Stockholders agrees, jointly and severally, to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to (i) any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein or (ii) in the case of a Management
Selling Stockholder, any other Selling Stockholder furnished to the Company in
writing by such other Selling Stockholder expressly for use therein; provided,
how-
29
-29-
ever, that the obligations of each of the Management Selling Stockholders under
the foregoing indemnity shall not exceed the net proceeds received by such
Management Selling Stockholder from the sale of Shares sold by such Management
Selling Stockholder hereunder.
Each of the Other Selling Stockholders agrees, severally and
not jointly, to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Management Selling Stockholders to
each Underwriter, but only with reference to information furnished to the
Company in writing by or on behalf of such Other Selling Stockholder expressly
for use in the Registration Statement, the Prospectus, any amendment and
supplement thereto, or any preliminary prospectus; provided, however, that the
obligations of each of the Other Selling Stockholders under the foregoing
indemnity shall not exceed the net proceeds received by such Other Selling
Stockholder from the sale of Shares sold by such Other Selling Stockholder
hereunder.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
and each of the Selling Stockholders to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter,
but only with reference to information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement, the Prospectus, any amendment
or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to the
preceding paragraphs of this Section 7, such person (the "Indemnified Person")
shall promptly notify the person or persons against whom such indemnity may be
sought (each an "Indemnifying Person") in writing, and such Indemnifying
Persons, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Persons may designate in such proceeding
and shall pay the fees and expenses of such counsel related to such proceeding.
In any such proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person and not the Indemnifying Persons unless (i)
the Indemnifying Persons and the Indemnified Person shall have mutually agreed
to the contrary, (ii) the Indemnifying Persons has failed within a reasonable
time to retain counsel reasonably satisfactory to the Indemnified Person or
(iii) the named parties in
30
-30-
any such proceeding (including any impleaded parties) include both an
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that no Indemnifying Person
shall, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters, each affiliate of any Underwriter which
assists such Underwriter in the distribution of the Shares and such control
persons of Underwriters shall be designated in writing by X.X. Xxxxxx
Securities Inc. and any such separate firm for the Company, its directors, its
officers who sign the Registration Statement and such control persons of the
Company shall be designated in writing by the Company and any such separate
firm for the Selling Stockholders shall be designated in writing by the
Attorney-in-Fact. No Indemnifying Person shall 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, each Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the second and third sentences of this
paragraph, such Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not
have reimbursed the Indemnified Person in accordance with such request prior to
the date of such settlement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject
matter of such proceeding.
If the indemnification provided for in the first four
paragraphs of this Section 7 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other
31
-31-
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders and the total underwriting discounts and the commissions received
by the Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company and the Selling Stockholders on the one hand and
the Underwriters on the other hand 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 and the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the Selling
Stockholders or the Underwriters were treated as one entity for such purposes)
or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, (i) in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) in no event
shall a Selling Stockholder be required to contribute any amount in excess of
the amount by which the net proceeds received by it through the sale of its
Shares to the Underwriters exceeds the amount of any damages that such Selling
Stockholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I
hereto, and not joint.
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The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any other person controlling the Company or the Selling Stockholders and (iii)
acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this
Agreement (or the obligations of the several Underwriters with respect to the
Option Shares) may be terminated in the absolute discretion of the
Representatives, by notice given to the Company and the Selling Stockholders,
if after the execution and delivery of this Agreement and prior to the Closing
Date (or, in the case of the Option Shares, prior to the Additional Closing
Date) (i) trading generally shall have been suspended or materially limited on
or by, as the case may be, any of the New York Stock Exchange or the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (ii) trading of any securities of or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered at
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later
of (x) execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the
number of Shares set forth opposite their respective names in Schedule I bears
to the aggregate number of
33
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Underwritten Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Representatives may specify,
to purchase the Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the number of Shares that any Underwriter has agreed to purchase pursuant to
Section 1 be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If on the Closing Date or the Additional Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date,
and arrangements satisfactory to the Representatives, the Company and the
Selling Stockholders for the purchase of such Shares are not made within 36
hours after such default, this Agreement (or the obligations of the several
Underwriters to purchase the Option Shares, as the case may be) shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Stockholder. In any such case either you or the Company and the
Selling Stockholders shall have the right to postpone the Closing Date (or, in
the case of the Option Shares, the Additional Closing Date), but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the
Underwriters, or any of them, because of any failure or refusal on the part of
the Company or the Selling Stockholders to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason any of the
Company or the Selling Stockholders shall be unable to perform its obligations
under this Agreement or any condition of the Underwriters' obligations cannot
be fulfilled, the Company and the Selling Stockholders agree to reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and expenses of its counsel) reasonably incurred by the Underwriter in
connection with this Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be
binding upon the Company, the Selling Stockholders and the Underwriters, each
affiliate of any Underwriter which assists such Underwriter in the distribution
of the Shares, any controlling persons referred to herein and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person, firm or corporation
any legal or equitable right, remedy or claim under or in respect of this
Agree-
34
-34-
ment or any provision herein contained. No purchaser of Shares from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. Any action by the Underwriters hereunder may be
taken by the Representatives jointly or by X.X. Xxxxxx Securities Inc. alone on
behalf of the Underwriters, and any such action taken by the Representatives
jointly or by X.X. Xxxxxx Securities Inc. alone shall be binding upon the
Underwriters. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
given to the Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (telefax: (000) 000-0000); Attention: Syndicate
Department. Notices to the Company and/or the Selling Stockholders (through the
Attorneys-in-Fact) shall be given to them at 0000 Xxxxxxxx Xxxx Xxxxx, Xxx
Xxxxx, Xxxxxxxxx (telefax: (000) 000-0000); Attention: President, with a copy
to Baker, Donelson, Bearman & Xxxxxxxx, 000 Xxxxxxxx Xx., Xxxxx 0000,
Xxxxxxxxxxx, Xxxxxxxxx 00000 (telefax: (000) 000-0000); Attention: X. Xxxxxx
Durham, Jr. and, if to the Selling Stockholders, to the Company at 0000
Xxxxxxxx Xxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxx (telefax: (000) 000-0000); Attention:
Attorney-in-Fact.
13. This Agreement may be signed in counterparts, each
of which shall be an original and all of which together shall constitute one
and the same instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
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If the foregoing is in accordance with your understanding,
please sign and return four counterparts hereof.
Very truly yours,
INTERNET PICTURES CORPORATION
By:
---------------------------------------
Name:
Title:
THE SELLING STOCKHOLDERS
By:
---------------------------------------
Name:
Title: Attorney-in-Fact
As Attorney-in-Fact acting on behalf
of each of the Selling Stockholders
named in Schedule II to this Agree-
ment.
Accepted the date first written above:
X.X. XXXXXX SECURITIES INC.
CHASE SECURITIES INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: X.X. XXXXXX SECURITIES INC.
By:
-----------------------------------
Name:
Title:
36
SCHEDULE I
Number of
Underwritten Shares
Underwriter To Be Purchased
----------- -------------------
X.X. Xxxxxx Securities Inc.........................................................
Chase Securities Inc...............................................................
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.................................................
Xxxx Xxxxxxxx Incorporated.........................................................
Prudential Securities Incorporated.................................................
----------
Total 10,000,000
==========
37
SCHEDULE II
Number of Number of
Selling Stockholders Underwritten Shares Option Shares
-------------------- ------------------- -------------
Lanek Limited
Xxxxxxx X. XxXxxxx................................... 100,000
Xxxxx X. Xxxxxxx.......................................... 50,000
Xxxxxxx X. Xxxxxx......................................... 25,000
Xxxx X. Xxxxx............................................. 25,000
Xxxx X. Xxxxxx............................................ 25,000
Xxxxx X. Xxxxxxx, Xx...................................... 35,000
Xxxxx X. XxXxxxx.......................................... 75,000
Xxxxxx Field.............................................. 60,000
Xxxxxxx X. Xxxxxx......................................... 25,000
Xxxxxxx Xxxxxxxxx......................................... 50,000
Xxxxxx Xxxxxxxxxx......................................... 100,000
Advance Publications, Inc................................. 135,000
American Express, Inc..................................... 97,320
GE Capital Equity
Investments, Inc....................................... 296,280
Liberty IP, Inc........................................... 194,530
MediaOne Interactive Services,
Inc.................................................. 190,000
Pictureworks stockholders................................. 1,016,870
--------- ---------
Total 2,500,000
========= =========
38
SCHEDULE III
Management Selling Stockholders
-------------------------------
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
39
SCHEDULE IV
Other Selling Stockholders
--------------------------
Any Selling Stockholder not listed on Schedule III
40
EXHIBIT 1
LOCK-UP AGREEMENT
, 2000
X.X. XXXXXX SECURITIES INC.
CHASE SECURITIES INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several
Underwriters named in Schedule I to
the Underwriting Agreement referred to below
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Internet Pictures Corporation - Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of
the several Underwriters, propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Internet Pictures Corporation, a Delaware
corporation (the "Company"), providing for the public offering (the "Public
Offering") by the several Underwriters named in Schedule I to the Underwriting
Agreement (the "Underwriters"), of common stock, par value $.001 per share (the
"Common Stock"), of the Company. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Underwriting
Agreement.
In consideration of the Underwriters' agreement to purchase
and make the Public Offering of the Common Stock, and for other good and
valuable consideration receipt of which is hereby acknowledged, the undersigned
hereby agrees that, without the prior written consent of X.X. Xxxxxx Securities
Inc. on behalf of the Underwriters, the undersigned will not, during the period
ending 90 days after the date of the prospectus relating to the Public Offering
(the "Prospectus"), (1) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock of the Company, or any securities of the Company which are substantially
similar to the Common Stock, or any securities convertible into or exercisable
or
41
exchangeable for Common Stock (including, but not limited to, Common Stock
which may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
securities which may be issued upon exercise of a stock option or warrant) or
(2) enter into any swap, option, future, forward or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership
of the Common Stock or any securities of the Company which are substantially
similar to the Common Stock, including, but not limited to, any security
convertible into or exercisable or exchangeable for Common Stock, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. In
addition, the undersigned agrees that, without the prior written consent of
X.X. Xxxxxx Securities Inc. on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, make any demand for
or exercise any right with respect to, the registration of any shares of Common
Stock or any substantially similar securities of the Company, including but not
limited to, any security convertible into or exercisable or exchangeable for
Common Stock.
In furtherance of the foregoing, the Company and any duly
appointed transfer agent for the registration or transfer of the securities
described herein are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-up Agreement.
All authority herein conferred or agreed to be conferred and any obligations of
the undersigned shall be binding upon the successors, assigns, heirs or
personal representatives of the undersigned.
The undersigned understands that, if the Underwriting
Agreement does not become effective, on or prior to June 30, 2000, or if the
Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Common Stock to be sold thereunder, the undersigned shall be released
from all obligations under this Lock-Up Agreement.
The undersigned understands that the Underwriters are
entering into the Underwriting Agreement and proceeding with the Public
Offering in reliance upon this Lock-Up Agreement.
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THIS LOCK-UP AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
Very truly yours,
--------------------------------------------
By: (1)
----------------------------------------
Name:
Title:
Accepted as of the date
first set forth above:
X.X. XXXXXX SECURITIES INC.
CHASE SECURITIES INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf of themselves
and the several Underwriters to be named in
Schedule I to the Underwriting Agreement
By: X.X. XXXXXX SECURITIES INC.
By:
--------------------------------------
Name:
Title:
-------------------------------------
(1) To be completed by an entity other than an individual.
