Exhibit 1.1
FORM OF UNDERWRITING AGREEMENT
5,000,000 SHARES
ALLOY, INC.
COMMON STOCK
February __, 2002
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
CIBC WORLD MARKETS CORP.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
▇▇ ▇▇▇▇▇▇▇▇▇ + CO
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
Alloy, Inc., a Delaware corporation (the "COMPANY") and LDIG
ALOY, Inc., a Delaware corporation, ("LDIG") propose to sell an aggregate of
5,000,000 shares (the "FIRM STOCK") of the Company's Common Stock, par value
$.01 per share (the "COMMON STOCK"). Of the 5,000,000 shares of the Firm Stock,
4,000,000 are being sold by the Company and 1,000,000 are being sold by LDIG.
In addition, certain stockholders of the Company named in
Schedule 2 hereto (the "OFFICER SELLING STOCKHOLDERS"), severally and jointly,
propose to grant to the Underwriters named in Schedule 1 hereto (the
"UNDERWRITERS") an option to purchase up to an additional 600,000 shares of the
Common Stock and the Company proposes to grant to the Underwriters an option to
purchase up to an additional 150,000 shares of the Common Stock, each on the
terms and for the purposes set forth in Section 3 (collectively the "OPTION
STOCK"). The Firm Stock and the Option Stock, if purchased, are hereinafter
collectively called the "Stock." The Officer Selling Stockholders and LDIG are
collectively referred to as the "SELLING STOCKHOLDERS" and individually, as a
"SELLING STOCKHOLDER". This is to confirm the agreement concerning the purchase
of the Stock from the Company and the Selling Stockholders by the Underwriters.
SECTION 1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 [and amendments thereto] with
respect to the Stock has (i) been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and the rules and regulations (the "RULES AND REGULATIONS") of the Securities
and Exchange Commission (the "COMMISSION") thereunder, (ii) been filed with the
Commission under
the Securities Act and (iii) become effective under the Securities Act. Copies
of such registration statement and each of the amendments thereto have been
delivered by the Company to you. As used in this Agreement, "EFFECTIVE TIME"
means the date and the time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared effective by the
Commission; "EFFECTIVE DATE" means the date of the Effective Time; "PRELIMINARY
PROSPECTUS" means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company with the consent of the
Underwriters pursuant to Rule 424(a) of the Rules and Regulations; "REGISTRATION
STATEMENT" means such registration statement, as amended at the Effective Time,
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part of
the registration statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations including all material incorporated by reference therein
at such time, and "PROSPECTUS" means the prospectus in the form first used to
confirm sales of Stock. Reference made herein to any Preliminary Prospectus or
to the Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the date of such Preliminary Prospectus or the Prospectus,
as the case may be, and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any document filed under the United States Securities Exchange Act of 1934 (the
"Exchange Act") after the date of such Preliminary Prospectus or the Prospectus,
as the case may be, and incorporated by reference in such Preliminary Prospectus
or the Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual report of the
Company filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement. If the Company has filed an abbreviated registration
statement to register additional shares of Common Stock 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. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations 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 applicable filing date (as to the Prospectus and any supplement
thereto) 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; provided that no representation or warranty is made as
to information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the
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Company through ▇▇▇▇▇▇ Brothers Inc. by or on behalf of any Underwriter
specifically for inclusion therein, and no representation or warranty is made by
the Company as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company or the Underwriters by LDIG.
(c) The documents incorporated by reference in the Prospectus at the
time they were filed with the Commission or if amended by subsequent filings
then as of the time of the filing of such amendment, conformed in all material
respects to the requirements of the Exchange Act, and the rules and regulations
of the Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
any further documents so filed and incorporated by reference in the Prospectus,
when such documents are filed with Commission, will conform in all material
respects to the requirements of the Exchange Act, and the rules and regulations
of the Commission thereunder and 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.
(d) The Company and each of its subsidiaries (as defined in Section 17)
have been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective properties and
to conduct the businesses in which they are engaged except where the failure to
be so qualified to be in good standing would not reasonably be expected to have
a material adverse effect on the financial condition, business, prospects or
results of operations of the Company and its subsidiaries taken as a whole (a
"MATERIAL ADVERSE EFFECT"); and none of the subsidiaries of the Company is a
"significant subsidiary", as such term is defined in Rule 405 of the Rules and
Regulations.
(e) The Company has the authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and validly issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and validly issued and are
fully paid and non-assessable and (except for directors' qualifying shares) are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(f) The shares of the Stock to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor in accordance with this Agreement,
will be duly and
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validly issued, fully paid and non-assessable; and the Stock will conform to the
description thereof contained in the Prospectus.
(g) This Agreement has been duly authorized, executed and delivered by
the Company.
(h) The execution, delivery and performance of this Agreement and by
the Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation 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 such actions result in any
violation of (i) the provisions of the charter or by-laws of the Company or any
of its subsidiaries or (ii) any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets; and except for the
registration of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby other than such consents, approvals,
authorizations, orders, filings or registrations the failure to make or obtain
would not have a Material Adverse Effect.
(i) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(j) Except as described in the Prospectus, the Company has not sold or
issued any shares of Common Stock during the six-month period preceding the date
of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(k) 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
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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; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or development which has or could reasonably be
expected to have a Material Adverse Effect, otherwise than as set forth or
contemplated in the Prospectus.
(l) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly the financial
condition and results of operations of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved, subject in the case of the
interim financial statements incorporated by reference to the Company's
quarterly reports on From 10-Q, to the absence of complete footnote disclosure
as required by GAAP and subject to changes resulting from normal year-end audit
adjustments, which adjustments shall not in any event result in a material
adverse change thereto.
(m) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who have
delivered the initial letter referred to in Section 9(f) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations; and ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and BDO ▇▇▇▇▇▇▇, LLP, each of
whose reports are incorporated by reference in the Prospectus and each who have
delivered one of the letters referred to in Section 9(g) hereof, were
independent accountants as required by the Securities Act and the Rules and
Regulations during the periods covered by the financial statements on which they
reported.
(n) The Company and each of 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 in the Prospectus or
would not reasonably be expected to have a Material Adverse Effect; and all real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases.
(o) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company believes is
adequate for the conduct of their respective businesses and the value of their
respective properties.
(p) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective businesses
will conflict with, and have not received any
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notice of any claim of conflict with, any such rights of others in each such
case except as have not had and would not reasonably be expected to have a
Material Adverse Effect.
(q) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would have or could 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.
(r) The conditions for use of Form S-3 by the Company, as set forth
in the General Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed or incorporated by reference as exhibits to
the Registration Statement or incorporated therein by reference as permitted by
the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus which is not so described.
(u) No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent.
(v) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "REPORTABLE EVENT" (as defined in ERISA) has occurred
with respect to any "PENSION PLAN" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "PENSION PLAN" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "PENSION PLAN" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification, except as would not reasonably be expected to have a
Material Adverse Effect.
(w) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes
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due thereon which were required to have been paid prior to the date hereof, and
no tax deficiency has been determined adversely to the Company or any of its
subsidiaries.
(x) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities other than
shares issued pursuant to employee benefit plans, qualified stock options or
other employee compensation plans or pursuant to outstanding options, rights or
warrants, (ii) incurred any liability or obligation, direct or contingent, other
than liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(y) The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable assurance that
(A) transactions are executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing assets at
reasonable intervals.
(z) Neither the Company nor any of its subsidiaries (i) is in violation
of its charter or by-laws, (ii) is in default in any material respect, and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject that would, individually or
in the aggregate, have a Material Adverse Effect or (iii) is in violation of any
law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its business
that would, individually or in the aggregate, have a Material Adverse Effect.
(aa) Neither the Company nor any of its subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(bb) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from
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any of the property now or previously owned or leased by the Company or its
subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit; there has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge; and the terms "HAZARDOUS WASTES", "TOXIC WASTES",
"HAZARDOUS SUBSTANCES" and "MEDICAL WASTES" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(cc) Neither the Company nor any subsidiary is, or, as of the First
Delivery Date after giving effect to the offering and sale of the Stock and the
application of the net proceeds therefrom will be, an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended.
SECTION 2. Representations, Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder severally and not jointly represents,
warrants and agrees that:
(a) The Selling Stockholder has, and immediately prior to the First
Delivery Date (as defined in Section 6 hereof) will have, good and valid title
to the shares of Stock to be sold by the Selling Stockholder hereunder on such
date, free and clear of all liens, encumbrances, equities or claims other than
those created pursuant to this Agreement or the Custody Agreement; and upon
delivery of such shares and payment therefor pursuant hereto, good and valid
title to such shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters.
(b) The Selling Stockholder has placed in custody under a custody
agreement (the "Custody Agreement" and, together with all other similar
agreements executed by the other Selling Stockholders, the "Custody Agreements")
with American Stock Transfer & Trust Company, as custodian (the "Custodian"),
for delivery under this Agreement, certificates in negotiable form (with
signature guaranteed by a commercial bank or trust company having an office or
correspondent in the United States or a member firm of the New York or American
Stock Exchanges) representing the shares of Stock to be sold by the Selling
Stockholder hereunder.
(c) (i) LDIG has duly and irrevocably executed and delivered a power of
attorney (the "Power of Attorney" and, together with all other similar
agreements executed by the other Selling Stockholders, the "Powers of Attorney")
appointing [ ] and one or more other persons, as attorneys-in-fact, with full
power of substitution, and with full authority (exercisable by any one or more
of them) to execute and deliver this Agreement and to take such other action as
may be necessary or desirable to carry out the provisions hereof on behalf of
the Selling Stockholder; and (ii) the
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Officer Selling Stockholders have duly and irrevocably executed and delivered
the Powers of Attorney appointing ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
one or more other persons, as attorneys-in-fact, with full power of
substitution, and with full authority (exercisable by any one or more of them)
to execute and deliver this Agreement and to take such other action as may be
necessary or desirable to carry out the provisions hereof on behalf of the
Officer Selling Stockholders; provided, that each Selling Stockholder makes the
representation contained in the paragraph only with respect to its or his own
actions.
(d) The Selling Stockholder has full right, power and authority,
corporate or otherwise, to enter into this Agreement, the Power of Attorney and
the Custody Agreement; the execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by the Selling
Stockholder and the consummation by the Selling Stockholder of the transactions
contemplated hereby will not conflict with or result in a breach or violation 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 Selling Stockholder is a party or by which the Selling Stockholder is
bound or to which any of the property or assets of the Selling Stockholder is
subject, nor will such actions result in any violation of the provisions of the
constituent documents of the Selling Stockholder if other than a natural person
or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Selling Stockholder or the property
or assets of the Selling Stockholder except for such conflicts, breaches or
violations that would not have a material adverse effect on the business,
prospects, financial conditions, net worth or results of operations of the
Selling Stockholder; and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state or
foreign securities laws in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement, the
Power of Attorney or the Custody Agreement by the Selling Stockholder and the
consummation by the Selling Stockholder of the transactions contemplated hereby.
(e) The Registration Statement and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus, when
they become effective or are filed with the Commission, as the case may be, do
not and will not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing date (as to
the Prospectus and any amendment or supplement thereto) 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;
provided that no representation or warranty is made as to information contained
in or omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter specifically for inclusion therein and provided
further that
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this paragraph (e) shall apply to LDIG only to the extent that the statements or
omissions from the Registration Statement or the Prospectus, or any amendments
or supplements to the Registration Statement or the Prospectus, were based
solely on written information provided by LDIG specifically for inclusion
therein.
(f) The Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 hereof are
not materially true and correct, is familiar with the Registration Statement and
the Prospectus (as supplemented) and has no knowledge of any material fact,
condition or information not disclosed in the Registration Statement, as of the
effective date, or the Prospectus (or supplement thereto), as of the applicable
filing date, which could reasonably be expected to have a Material Adverse
Effect and the Selling Stockholder is not prompted to sell shares of Common
Stock by any information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
(g) The 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 the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the shares of the Stock.
SECTION 3. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 4,000,000 shares of
the Firm Stock and LDIG hereby agrees to sell 1,000,000 shares of the Firm Stock
to the several Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase the number of shares of the Firm Stock set forth
opposite that Underwriter's name in Schedule 1 hereto. Each Underwriter shall be
obligated to purchase from the Company, and from LDIG, that number of shares of
the Firm Stock which represents the same proportion of the number of shares of
the Firm Stock to be sold by the Company, and by LDIG, as the number of shares
of the Firm Stock set forth opposite the name of such Underwriter in Schedule 1
represents of the total number of shares of the Firm Stock to be purchased by
all of the Underwriters pursuant to this Agreement. The respective purchase
obligations of the Underwriters with respect to the Firm Stock shall be rounded
among the Underwriters to avoid fractional shares, as the Underwriters may
determine.
In addition, the Officer Selling Stockholders grant to the Underwriters
an option to purchase up to 600,000 shares of Option Stock in the amount of
shares of the Option Stock set forth opposite his name in Schedule 2 and the
Company grants to the Underwriters an option to purchase up to 150,000 shares of
Option Stock. Such options are granted for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 4 hereof. The Underwriters may exercise their option with respect to the
150,000 shares of Option Stock of the Company only after they have previously or
concurrently exercised in full their option to acquire the shares of Option
Stock of the Officer Selling Stockholders. The Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set forth opposite the name of such Underwriters
in Schedule 1
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hereto. The respective purchase obligations of each Underwriter with respect to
the Option Stock shall be adjusted by the Underwriters so that no Underwriter
shall be obligated to purchase Option Stock other than in 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $[ ] per share.
The Company and the Selling Stockholders shall not be obligated to
deliver any of the Stock to be delivered on any Delivery Date (as hereinafter
defined), except upon payment for all the Stock to be purchased on such Delivery
Date as provided herein.
SECTION 4. Offering of Stock by the Underwriters.
Upon authorization by the Underwriters of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
SECTION 5. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the offices of Weil, Gotshal &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M., New York
City time, on the third full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Underwriters and the Company. This date and time are sometimes referred to as
the "FIRST DELIVERY DATE." On the First Delivery Date, the Company and the
Custodian (on behalf of LDIG) shall deliver or cause to be delivered
certificates representing the Firm Stock to the Underwriters for the account of
each Underwriter against payment to or upon the order of the Company and LDIG of
the purchase price by wire transfer in immediately available funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names and
in such denominations as the Underwriters shall request in writing not less than
two full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company and the Custodian (on behalf of LDIG) shall make the certificates
representing the Firm Stock available for inspection by the Underwriters in New
York, New York, not later than 2:00 P.M., New York City time, on the business
day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Underwriters. Such notice shall
set forth the aggregate number of shares of Option Stock as to which the option
is being exercised (which shall be pro rata as among the Selling Stockholders
selling Option Stock), the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Underwriters, when the shares
of Option Stock are to be delivered; provided, however, that this date and time
shall not be earlier than the First Delivery Date nor earlier than the second
business day after the date on which the option shall have been
11
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as a "SECOND DELIVERY DATE" and the
First Delivery Date and any Second Delivery Date are sometimes each referred to
as a "DELIVERY DATE".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Underwriters,
on the one hand, and the Company and the Custodian, on the other) at 10:00 A.M.,
New York City time, on such Second Delivery Date. On such Second Delivery Date,
the Company and/or Custodian, as the case may be, shall deliver or cause to be
delivered the certificates representing the Option Stock to the Underwriters for
the account of each Underwriter against payment to or upon the order of the
Custodian and/or the Company, as the case may be, of the purchase price by wire
transfer in immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Option Stock shall be registered in such names and in such denominations as the
Underwriters shall request in the aforesaid written notice. For the purpose of
expediting the checking and packaging of the certificates for the Option Stock,
the Company and/or Custodian, as the case may be, shall make the certificates
representing the Option Stock available for inspection by the Underwriters in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to such Second Delivery Date.
SECTION 6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Underwriters
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than Commission's close of business on the second business day following
the execution and delivery of this Agreement or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to the
Prospectus except as permitted herein; to advise the Underwriters, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Underwriters with copies thereof; 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
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 Stock to advise the Underwriters, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or
12
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) To furnish promptly to each of the Underwriters and to counsel for
the Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits other than this
Agreement), (ii) each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus, and (iii) any document incorporated by reference in the
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Stock and if
at such time any events shall have occurred 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 under which they were made
when such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in order
to comply with the Securities Act or the Exchange Act, to notify the
Underwriters and, upon their request, to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of a
supplemented Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Underwriters, be required by the
Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus any document incorporated
by reference in the Prospectus or any Prospectus pursuant to Rule 424 of the
Rules and Regulations, to furnish a copy thereof to the Underwriters and counsel
for the Underwriters and obtain the consent of the Underwriters to the filing,
which consent will not be unreasonably withheld, conditioned or delayed;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's security holders and to deliver to the Underwriters
an earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158);
13
(g) For a period of five years following the Effective Date, to furnish
to the Underwriters copies of all materials furnished by the Company to its
shareholders and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange upon
which the Common Stock may be listed pursuant to requirements of or agreements
with such exchange or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the Underwriters
may reasonably request to qualify the Stock for offering and sale under the
securities laws of such jurisdictions as the Underwriters may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Stock;
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) (A) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Stock and shares issued pursuant
to employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights), or (B) sell or grant options, rights
or warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof), or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of ▇▇▇▇▇▇ Brothers
Inc. on behalf of the Underwriters and to cause each officer, director and
shareholder of the Company identified on Schedule 2 to furnish to the
Underwriters, prior to the First Delivery Date, a letter or letters,
substantially in the form of Exhibit A hereto, to which each such person shall
agree not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case for a
period of 90 days from the date of the Prospectus, without the prior written
consent of ▇▇▇▇▇▇ Brothers Inc. on behalf of the Underwriters;
(j) Prior to the Effective Date, to apply for the listing of the Stock
on The Nasdaq National Market and use its best efforts to complete that listing,
subject only
14
to official notice of issuance and evidence of satisfactory distribution, prior
to the First Delivery Date.
(k) To apply the net proceeds from the sale of the Stock being sold by
the Company as set forth in the Prospectus; and
(l) To take such steps as shall be necessary to ensure that neither the
Company nor any of its subsidiaries shall become an "investment company" within
the meaning of such term under the Investment Company Act of 1940, as amended.
SECTION 7. Further Agreements of the Selling Stockholders. Each Selling
Stockholder agrees:
(a) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than the Stock) or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
in each case without the prior written consent of ▇▇▇▇▇▇ Brothers Inc. other
than as permitted by the Lock-up Agreement; provided, however, that for LDIG,
[agreed terms of lock-up to be described
(b) That the Stock to be sold by the Selling Stockholder hereunder
which is represented by the certificates held in custody for the Selling
Stockholder is subject to the interest of the Underwriters and the other Selling
Stockholders thereunder; that the arrangements made by the Selling Stockholder
for such custody pursuant to the terms of the Custody Agreement are to that
extent irrevocable, and that the obligations of the Selling Stockholder
hereunder shall not be terminated by any act of the Selling Stockholder, by
operation of law, by the death or incapacity of any individual Selling
Stockholder or, in the case of a trust, by the death or incapacity of any
executor or trustee or the termination of such trust, or the occurrence of any
other event.
(c) To deliver to the Underwriters prior to the First Delivery Date a
properly completed and executed United States Treasury Department Form W-8 (if
the Selling Stockholder is a non-United States person or Form W-9 (if the
Selling Stockholder is a United States person.)
SECTION 8. Expenses. The Company agrees to pay (a) the costs incident
to the authorization, issuance, sale and delivery of the Stock and any stamp
duties or other taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto; (c) the costs of distributing
the Registration Statement as originally filed and
15
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus any document incorporated by reference
therein, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement, and any other related documents in connection with
the offering, purchase, sale and delivery of the stock; (e) the costs of
delivering and distributing the Custody Agreements and the Powers of Attorney;
(f) the filing fees incident to securing the review by the National Association
of Securities Dealers, Inc. of the terms of sale of the Stock; (g) any
applicable listing or other fees; (h) the fees and expenses (not in excess, in
the aggregate, of $2,500) of qualifying the Stock under the securities laws of
the several jurisdictions as provided in Section 6(h), if any; (i) the costs and
expenses of the Company relating to investor presentations on any "ROAD SHOW"
undertaken in connection with the marketing of the offering of the Stock,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the Underwriters and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show and (j) all other costs and expenses incident to
the performance of the obligations of the Company and the Selling Stockholders
under this Agreement; provided that, except as provided in this Section 8 and in
Section 13 the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters and each Selling Stockholder shall pay the fees and expenses of
its own counsel, the Custodian (and any other attorney-in-fact), and any
transfer taxes payable in connection with their respective sales of Stock to the
Underwriters.
SECTION 9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Stockholders contained herein, to the performance by the Company
and the Selling Stockholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a); no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Custody Agreements, the
Powers of Attorney, the Stock, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement, the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the
16
Company and the Selling Stockholders shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(c) Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. shall have
furnished to the Underwriters its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Underwriters, to the effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification except where
the failure to be so qualified to be in good standing would not reasonably be
expected to have a Material Adverse Effect and have all power and authority
necessary to own or hold their respective properties and conduct the businesses
in which they are engaged;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid,
non-assessable and (except for directors' qualifying shares) are owned directly
or indirectly by the Company, and to such counsel's knowledge, free and clear of
all liens, encumbrances, equities or claims;
(iii) The shares of the Stock being delivered on such Delivery
Date to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor will be duly and validly
issued, fully paid and non-assessable;
(iv) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any shares
of the Stock pursuant to the Company's charter or by-laws or any agreement or
other instrument known to such counsel;
(v) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect; and, to the best of
such counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
17
(vi) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph of Rule
424(b) of the Rules and Regulations specified in such opinion on the date
specified therein and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened by the Commission;
(vii) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to such
Delivery Date (except for the financial statements and related schedules and
other financial data included therein, as to which such counsel need express no
belief) comply as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations; and the documents incorporated by
reference in the Prospectus (other than the financial statements and related
schedules and other financial data included therein, as to which such counsel
need express no opinion), when they were filed with the Commission complied as
to form in all material respects with the requirements of the Exchange Act, and
the rules and regulations of the Commission thereunder;
(viii) The statements contained in the Prospectus under the
caption "Description of Capital Stock", insofar as it describes federal
statutes, rules and regulations, constitute a fair summary thereof and the
opinion of such counsel filed as Exhibit 5.1 to the Registration Statement is
confirmed and the Underwriters may rely upon such opinion as if it were
addressed to them;
(ix) To the best of such counsel's knowledge, there are no
contracts, licenses, agreements, leases or other documents of a character which
are required (a) to be filed as exhibits to the Registration Statements, or (b)
to be summarized or described in the Prospectus which have not been so filed,
summarized or described and summaries thereof and references thereto are correct
in all material respects;
(x) This Agreement has been duly authorized, executed and
delivered by the Company;
(xi) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company pursuant to this Agreement, and the
execution, delivery and compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation 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 such actions result
in any violation of the provisions of the charter or by-laws of the Company or
any of its subsidiaries or any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or body having jurisdiction
over the
18
Company or any of its subsidiaries or any of their properties or assets; and,
except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby and thereby, except for such consents,
approvals, authorizations, orders, filings or registrations as have been
obtained or made;
(xii) To the best of such counsel's knowledge and except as
set forth in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act;
(xiii) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware. Such opinion shall also be to the effect that (x) such counsel has
acted as counsel to the Company on a regular basis, has acted as counsel to the
Company in connection with previous financing transactions and has acted as
counsel to the Company in connection with the preparation of the Registration
Statement and such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the
contents of the Registration Statement and Prospectus were discussed and (y)
based on the foregoing, no facts have come to the attention of such counsel
which lead it to believe (I) that the Registration Statement as of the Effective
Date, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus (except as stated
above) contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (II) any document incorporated by reference in the prospectus
when they were filed with the Commission contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances is which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that
19
such counsel does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus (other than as set forth in clause (viii) above).
(d) The counsel for each of the Selling Stockholders shall have
furnished to the Underwriters its written opinion, as counsel to such Selling
Stockholder for whom they are acting as counsel, addressed to the Underwriters
and dated the First Delivery Date, in form and substance reasonably satisfactory
to the Underwriters, to the effect that:
(i) Such Selling Stockholder has full right, power and
authority to enter into this Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of this Agreement, the Power
of Attorney and the Custody Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument known
to such counsel 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 actions result in any violation of
the provisions of the Restated Certificate of Incorporation of such Selling
Stockholder or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over
such Selling Stockholder or the property or assets of such Selling Stockholder
except for such conflicts, breaches or violations that would not have a material
adverse effect on the business, prospects, financial conditions, net worth or
results of operations of the Selling Stockholder; and, except for the
registration of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state or foreign securities laws in connection with
the purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Power of Attorney or the Custody Agreement by
such Selling Stockholder and the consummation by such Selling Stockholder of the
transactions contemplated hereby;
(ii) This Agreement has been duly executed and delivered by or
on behalf of such Selling Stockholder;
(iii) A Power-of-Attorney and a Custody Agreement have been
duly authorized, executed and delivered by such Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder, enforceable
in accordance with their respective terms except (A) to the extent that
enforcement thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium and similar laws now or hereafter in effect relating
to creditors' rights generally and (y) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity)
20
and (B) the rights to indemnity and contribution thereunder may be limited by
United States federal or state securities laws or the public underlying such
laws;
(iv) To the best of such counsel's knowledge after due
inquiry, immediately prior to the First Delivery Date, such Selling Stockholder
had good and valid title to the shares of Stock to be sold by such Selling
Stockholder under this Agreement, free and clear of all liens, encumbrances,
equities or claims, and full right, power and authority to sell, assign,
transfer and deliver such shares to be sold by such Selling Stockholder
hereunder as herein contemplated; and
(v) To the best of such counsel's knowledge after due inquiry,
good and valid title to the shares of Stock to be sold by such Selling
Stockholder under this Agreement, free and clear of all liens, encumbrances,
equities or claims, has been transferred to each of the several Underwriters.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and that such counsel is not admitted
in the State of Delaware and (ii) in rendering the opinion in Section 9(d)(iv)
and 9(d)(v) above, rely upon a certificate of each Selling Stockholder in
respect of matters of fact as to ownership of and liens, encumbrances, equities
or claims on the shares of Stock sold by such Selling Stockholder, provided that
such counsel shall furnish copies thereof to the Underwriters and state that it
believes that both the Underwriters and it is justified in relying upon such
certificate.
(e) The Underwriters shall have received from Weil, Gotshal & ▇▇▇▇▇▇
LLP, counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the Underwriters may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(f) At the time of execution of this Agreement, the Underwriters shall
have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
21
(g) At the time of execution of this Agreement, the Underwriters shall
have received from each of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and BDO ▇▇▇▇▇▇▇ LLP a
letter, in form and substance satisfactory to the Underwriters, addressed to the
Underwriters and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date hereof, such financial statements audited by them and
incorporated by reference in the Prospectus, comply as to form in all material
respect with the applicable accounting requirements of the Exchange Acts and the
Securities Act and the related published rules and regulations.
(h) With respect to the letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP referred to in
the paragraph (f) and delivered to the Underwriters concurrently with the
execution of this Agreement (the "INITIAL LETTER"), the Company shall have
furnished to the Underwriters a letter (the "BRING-DOWN LETTER") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii) confirming
in all material respects the conclusions and findings set forth in the initial
letter.
(i) The Company shall have furnished to the Underwriters a certificate,
dated such Delivery Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 9(a) and 9 (k) have been fulfilled;
and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective Date,
the Registration Statement did not, and as of its date and of the
Delivery Date, the Prospectus did not and does not, include any untrue
statement of a material fact and did not or does not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective Date no
event has occurred which should have been set forth in an amendment to
the Registration Statement or a supplement to the Prospectus.
22
(j) Each Selling Stockholder (or the Custodian or one or more
attorneys-in-fact on behalf of the Selling Stockholders) shall have furnished to
the Underwriters on the First Delivery Date a certificate, dated the First
Delivery Date, signed by, or on behalf of, the Selling Stockholder (or the
Custodian or one or more attorneys-in-fact on behalf of the Selling
Stockholders) stating that the representations, warranties and agreements of the
Selling Stockholder contained herein are true and correct as of the First
Delivery Date and that the Selling Stockholder has complied with all agreements
contained herein to be performed by the Selling Stockholder at or prior to the
First Delivery Date.
(k) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus (A) any 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, which loss
or interference could reasonably be expected to have a Material Adverse Effect,
otherwise than as set forth or contemplated in the Prospectus or (B) since such
date 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 change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (A) or
(B), is, in the judgment of the Underwriters, so material and adverse as to make
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery Date on the terms and in
the manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or the
settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions, including without limitation as a result of terrorist
activities after the date hereof (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
judgment of a majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner contemplated in
the Prospectus.
23
(m) The Nasdaq National Market shall have approved the Stock for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers, employees and agents, each of its directors, 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 loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, director,
officer, employee, agent or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any materials or information provided to investors by, or
with the approval of, the Company in connection with the marketing of the
offering of the Stock ("MARKETING MATERIALS"), including any road show or
investor presentations made to investors by the Company (whether in person or
electronically), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Marketing Materials, any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any act or failure to act or any alleged act or failure
to act by any Underwriter in connection with, or relating in any manner to, the
Stock or the offering contemplated hereby, and that is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such director, officer, employee, agent or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, director, officer, employee, agent or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any such amendment or supplement, in reliance upon and
in conformity with written
24
information concerning such Underwriter furnished to the Company through the
Underwriters by or on behalf of any Underwriter specifically for inclusion
therein which information consists solely of the information specified in
Section 10(f). The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to any Underwriter or to any director,
officer, employee, agent or controlling person of that Underwriter.
(b) The Selling Stockholders severally in proportion to the number of
shares of stock to be sold by them hereunder, shall indemnify and hold harmless
each Underwriter, its officers, employees and agents, each of its directors 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 loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Stock), to which that
Underwriter, director, officer, employee, agent or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, Registration Statement or the Prospectus,
or in any amendment or supplement thereto, any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse each Underwriter, its directors, officers, employees and agents
and each such controlling person for any legal or other expenses reasonably
incurred by that Underwriter, its directors, officers, employees and agents or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that LDIG shall be liable in any such
case only to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any such amendment or
supplement in reliance upon and in conformity with written information
concerning LDIG furnished to the Company by LDIG specifically for inclusion
therein; provided, further, the aggregate amount of LDIG's indemnity and
contribution obligations under this paragraph 10(b) shall not exceed the net
cash proceeds (before deducting expenses) received by LDIG from its sale of
Stock. The foregoing indemnity agreement is in addition to any liability which
the Selling Stockholders may otherwise have to any Underwriter or any director,
officer, employee, agent or controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and each Selling Stockholder, their officers and
employees, each of their directors, and each person, if any, who controls the
Company and each Selling Stockholder within the meaning of either Section 15 the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
claim, damage or liability, joint or
25
several, or any action in respect thereof, to which the Company and each Selling
Stockholder or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Underwriters by or on behalf of that
Underwriter specifically for inclusion therein, and shall reimburse the Company,
each Selling Stockholder and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the Company or any
Selling Stockholder, or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any Selling Stockholder or any
such director, officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under Section 10(a),
10(b) or 10(c) hereof of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under Section 10(a), 10(b) or 10(c) hereof, notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under Section 10(a), 10(b) or
10(c) hereof except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an indemnified
party otherwise than under Section 10(a), 10(b) or 10(c) hereof. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Underwriters shall have the right to employ counsel to represent jointly the
Underwriters and their respective directors, officers, employees, agents and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the Company
or any Selling Stockholders under this
26
Section 10 if, in the reasonable judgment of the Underwriters, it is advisable
for the Underwriters, directors, officers, employees and controlling persons to
be jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the indemnifying party. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, 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 with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company and the Selling Stockholders
on the one hand, and the total underwriting discounts and commissions received
by the Underwriters with respect to the shares of the Stock purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the shares of the Stock under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Selling Stockholders or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the
27
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 10 were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 10(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10(e), (A) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission, and (B) LDIG
shall not be required to contribute any amount in excess of the net cash
proceeds (before deducting expenses) received by LDIG from the sale of its
Stock. 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 as provided in this Section 10(e) are
several in proportion to their respective underwriting obligations and not
joint.
(f) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, the concession and reallowance
figures and the ninth, tenth and eleventh paragraphs appearing under the caption
"Underwriting" in, the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
SECTION 11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, shall have the right,
28
but shall not be obligated, to purchase, in such proportion as may be agreed
upon among them, all the Stock to be purchased on such Delivery Date. If the
remaining Underwriters do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Selling Stockholders and the Company to
sell, the Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 13. As used in this Agreement, the term
"UNDERWRITER" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to
this Section 11, purchases Firm Stock which a defaulting Underwriter agreed but
failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Stockholders for damages
caused by its default. If other Underwriters are obligated or agree to purchase
the Stock of a defaulting or withdrawing Underwriter, either the Underwriters or
the Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
SECTION 12. Termination. The obligations of the Underwriters hereunder
may be terminated by the Underwriters by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 9(k) or 9(l), shall have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
SECTION 13. Reimbursement of Underwriters' Expenses. If the Company or
any Selling Stockholder shall fail to tender the Stock for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of the
Company or the Selling Stockholders to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Stockholders is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Underwriters. If this Agreement is terminated pursuant to Section 11 by reason
of the default of one or more Underwriters, neither the Company nor any Selling
Stockholder shall be obligated to reimburse any defaulting Underwriter on
account of those expenses.
SECTION 14. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
29
(a) if to ▇▇▇▇▇▇ Brothers Inc., shall be delivered or sent by mail,
telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department (Fax:
201524-5980), with a copy, in the case of any notice pursuant to Section 10(d),
to the Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers
Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; if to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, shall be
delivered or sent by mail telex or facsimile transmission to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ , if to CIBC World
Markets shall be delivered or sent by mail telex or facsimile transmission to
CIBC World Markets, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (facsimile (212)
885-4901), if to RBC Capital Markets shall be delivered or sent by mail telex or
facsimile transmission to RBC Capital Markets, Corporate Finance, ▇▇▇ ▇▇▇▇▇▇
▇▇▇., ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, if to ▇▇ ▇▇▇▇▇▇▇▇▇ + Co., shall be
delivered or sent by mail telex or facsimile transmission to ▇▇ ▇▇▇▇▇▇▇▇▇ + Co.,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇.
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: ▇▇▇▇ DiGloia (Fax: (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to any Selling Stockholders, shall be delivered or sent by mail,
or facsimile transmission to such Selling Stockholder at the address set forth
on Schedule 2 hereto;
(d) provided, however, that any notice to an Underwriter pursuant to
Section 10(d) shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in Section 14(a)
above. Any such statements, requests, notices or agreements shall take effect at
the time of receipt thereof. The Company and the Selling Stockholders shall be
entitled to act and rely upon any request, consent, notice or agreement given or
made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers Inc. on behalf of the
Underwriters and the Underwriters shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the Selling
Stockholder by the Custodian.
SECTION 15. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Selling Stockholders and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company and the Selling Stockholders contained
in this Agreement shall also be deemed to be for the benefit of the
Underwriters, its directors and officers and any person or persons, if any, who
control any Underwriter within the meaning of Section 15 of the Securities Act
and (B) the indemnity agreement of the Underwriters contained in Section 10(c)
of this Agreement shall be deemed to be for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than
30
the persons referred to in this Section 15, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
SECTION 16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Stockholders and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Stock and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
SECTION 17. Definition of the Terms "BUSINESS DAY" and "SUBSIDIARY".
For purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 20. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
31
If the foregoing correctly sets forth the agreement among the Company,
the Selling Stockholders and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
ALLOY, INC.
By
------------------------
Name:
Title:
The Officer Selling Stockholders
named in Schedule 2 to this
Agreement
By______________________
Attorney-in-fact
LDIG ALOY, Inc.
By
--------------------------------
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
CIBC WORLD MARKETS CORP.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇ ▇▇▇▇▇▇▇▇▇ + CO
For the several Underwriters named
in Schedule 1 hereto
By ▇▇▇▇▇▇ BROTHERS INC.
By
Authorized Representative
33
SCHEDULE 1
Number of Shares
Underwriters
▇▇▇▇▇▇ Brothers Inc. .....................................
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. .................................
CIBC World Markets Corp. .................................
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. ...................................
▇▇ ▇▇▇▇▇▇▇▇▇ + Co.........................................
Total.....................................................
===============
34
SCHEDULE 2
Name and Address of Selling Stockholder Number of Shares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Alloy, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Alloy, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Alloy, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
LDIG ALOY, Inc.
c/o Liberty Digital, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT A
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
CIBC WORLD MARKETS CORP.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇ ▇▇▇▇▇▇▇▇▇ + CO.
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing
for the purchase by you and such other firms (the "UNDERWRITERS") of shares (the
"SHARES") of Common Stock, par value $.01 per share (the "COMMON STOCK"), of
Alloy, Inc. a Delaware corporation (the "COMPANY"), and that the Underwriters
propose to reoffer the Shares to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock (other
than the Shares) owned by the undersigned on the date of execution of this
Lock-Up Letter Agreement or on the date of the completion of the Offering, or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, for a period of 90 days after the date of the
final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, 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 Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal Underwriters, successors and assigns of the
undersigned.
Very truly yours,
By:______________________________
Name:
Title:
Dated: _______________
2
