EXECUTION COPY
EXHIBIT Q
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3,707,469 Shares
GSI COMMERCE, INC.
COMMON STOCK, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
May 25, 2005
May 25, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
GSI Commerce, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS"), and certain shareholders of the Company (the "SELLING
SHAREHOLDERS") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of 3,707,469 shares of the common stock, par
value $0.01 per share, of the Company (the "FIRM SHARES"), of which 1,791,914
shares are to be issued and sold by the Company and 1,915,555 shares are to be
sold by the Selling Shareholders, each Selling Shareholder selling the amount
set forth opposite such Selling Shareholder's name in Schedule I hereto.
The Company also proposes to issue and sell to the several Underwriters
and the Selling Shareholders severally propose to sell to the several
Underwriters not more than an additional 556,120 shares of its common stock, par
value $0.01 per share, of the Company (the "ADDITIONAL SHARES"), of which
276,548 shares are to be issued and sold by the Company and 279,572 shares are
to be sold by the Selling Shareholders, each Selling Shareholder selling the
amount set forth opposite such Selling Shareholder's name in Schedule I hereto,
if and to the extent that you, as Managers of the offering, shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 3 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "SHARES." The shares of common stock, par value $0.01 per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "COMMON STOCK." The Company and the Selling
Shareholders are hereinafter sometimes collectively referred to as the
"SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of
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1933, as amended (the "SECURITIES ACT"), is hereinafter referred to as the
"REGISTRATION STATEMENT"; the prospectus in the form first used to confirm sales
of Shares is hereinafter referred to as the "PROSPECTUS." 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
(including, in the case of all references to the Registration Statement and the
Prospectus, documents incorporated therein by reference).
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective and the Rule
462 Registration Statement will be filed and become effective on May
26, 2005; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such
purpose are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
incorporated by reference in the Prospectus complied or will comply
when so filed in all material respects with the requirements of the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, (ii) the Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, will
not contain, as of the date of such supplement or amendment, any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of
its
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incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus and
is duly qualified to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated or
organized, is validly existing as a corporation or other entity in good
standing under the laws of the jurisdiction of its incorporation, has
the power and authority to own its property and to conduct its business
as described in the Prospectus and is duly qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock or other
ownership interests of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable
and are owned directly by the Company, or indirectly through a wholly
owned subsidiary of the Company except that the Company owns 67% of the
equity of GSI-Chelsea Solutions, LLC, free and clear of all liens,
encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Shareholders) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of such Shares will not be subject to any preemptive or
similar rights which have not been waived.
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(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene (i) any provision of applicable law, (ii) the
certificate of incorporation or by-laws of the Company, (iii) any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or (iv) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company
or any subsidiary, other than, in the case of clauses (i), (iii) and
(iv), for such contraventions as would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this Agreement,
except such as may be required by the rules of the National Association
of Securities Dealers, Inc. (the "NASD") and by the securities or Blue
Sky laws of the various states in connection with the offer and sale of
the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
so described or any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(m) The Company is not, and after giving effect to the offering and
sale of the Shares and the 3% Convertible Notes due 2025 being offered
concurrently with the Shares and the application of the proceeds
thereof as
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described in the Prospectus will not be, required to register as an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(p) 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 or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement. Each beneficiary of any right to require the Company to
include such securities in the Registration Statement is either
participating in the offering of the Shares or has entered into a
written waiver of such rights.
(q) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, or has the right to use, all material patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with
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asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse affect on the Company
and its subsidiaries, taken as a whole.
(r) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of
the Company and its subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any material
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries, in each case except as
described in the Prospectus.
(s) No labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in the Prospectus, or, to
the knowledge of the Company, is imminent which, in either case, would,
singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries taken as a whole; and the Company is not
aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or
contractors that would have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(t) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as the Company believes are prudent and customary in
the businesses in which they are engaged; and neither the Company nor
any of its subsidiaries has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Prospectus.
(u) The Company and each of its subsidiaries maintain a system of
internal control over financial reporting sufficient to provide
reasonable assurance that (i) the Company's financial records, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets
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of the Company; (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of
the Company are being made only in accordance with authorizations of
management and directors of the Company; and (iii) regarding prevention
or timely detection of unauthorized acquisition, use or disposition of
the Company's assets that could have a material effect on the Company's
financial statements. Except as described in, or incorporated by
reference into, the Prospectus, since the most recent audit of the
effectiveness of the Company's internal control over financial
reporting, there has been (i) no material weakness in the Company's
internal control over financial reporting (whether or not remediated)
and (ii) no change in the Company's internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial
reporting.
2. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents and warrants to and
agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under,
this Agreement will not contravene any provision of applicable law, or
the certificate of incorporation, by-laws or other comparable documents
of such Selling Shareholder (if such Selling Shareholder is a
corporation or other entity), or any agreement or other instrument
binding upon such Selling Shareholder or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by such Selling Shareholder of its obligations
under this Agreement except such as may be required by the conduct
rules of the NASD and by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(c) Such Selling Shareholder has, and on the Closing Date will
have, valid title to, or a valid "security entitlement" within the
meaning of Section 8-501 of the New York Uniform Commercial Code (the
"UCC") in respect of, the Shares (or, in the case of any such Shares
underlying options, such options are, and on the Closing Date will be,
presently exercisable and such Selling Shareholder is the record and
beneficial
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owner of such options and, upon the exercise of such options on the
Closing Date, will be the record and beneficial owner of such
underlying Shares) to be sold by such Selling Shareholder free and
clear of all security interests, claims, liens, equities or other
encumbrances and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement and to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder
or a security entitlement in respect of such Shares.
(d) Upon payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, delivery of such Shares, as
directed by the Underwriters, to Cede & Co. ("CEDE") or such other
nominee as may be designated by the Depository Trust Company ("DTC"),
registration of such Shares in the name of Cede or such other nominee
and the crediting of such Shares on the books of DTC to securities
accounts of the Underwriters (assuming that neither DTC nor any such
Underwriter has notice of any adverse claim (within the meaning of
Section 8-105 of the UCC) to such Shares), (A) DTC shall be a
"protected purchaser" of such Shares within the meaning of Section
8-303 of the UCC, (B) under Section 8-501 of the UCC, the Underwriters
will acquire a valid security entitlement in respect of such Shares and
(C) no action based on any "adverse claim", within the meaning of
Section 8-102 of the UCC, to such Shares may be asserted against the
Underwriters with respect to such security entitlement; for purposes of
this representation, such Selling Shareholder may assume that when such
payment, delivery and crediting occur, (x) such Shares will have been
registered in the name of Cede or another nominee designated by DTC, in
each case on the Company's share registry in accordance with its
certificate of incorporation, bylaws and applicable law, (y) DTC will
be registered as a "clearing corporation" within the meaning of Section
8-102 of the UCC and (z) appropriate entries to the accounts of the
several Underwriters on the records of DTC will have been made pursuant
to the UCC.
(e) Such Selling Shareholder (other than Rustic Canyon Ventures LP,
SOFTBANK Capital Partners LP, SOFTBANK Capital LP and SOFTBANK Capital
Advisors Fund LP) has no reason to believe that the representations and
warranties of the Company contained in Section 1 are not true and
correct, is familiar with the Registration Statement and Prospectus and
has no knowledge of any material fact, condition or information not
disclosed in the Prospectus that has had, or is reasonably likely to
have, a material adverse effect on the Company and its subsidiaries,
taken as a whole. Such Selling Shareholder (other than Rustic Canyon
Ventures LP, SOFTBANK Capital Partners LP, SOFTBANK Capital LP and
SOFTBANK Capital Advisors Fund LP) is
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not prompted by any information known to it concerning the Company or
its subsidiaries which is not set forth in the Prospectus to sell its
Shares pursuant to this Agreement.
(f) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain, as of the date of such amendment or supplement, any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (ii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the representations and
warranties set forth in this paragraph 2(f) are limited to statements
or omissions made in reliance upon information relating to such Selling
Shareholder furnished to the Company in writing by such Selling
Shareholder expressly for use in the Registration Statement, the
Prospectus or any amendments or supplements thereto, it being agreed
that the only information provided by such Selling Shareholder consists
of the name of such Selling Shareholder, the number of offered Shares
and the other information with respect to such Selling Shareholder
(excluding percentages) which appear in the tables under "Principal
Stockholders" and "Selling Stockholders" in the Prospectus.
3. Agreements to Sell and Purchase. Each Seller hereby agrees,
severally and not jointly, to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $14.0238 a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the Underwriters and certain of the Selling Shareholders severally
agree to sell to the Underwriters, and the Underwriters shall have the right to
purchase, severally and not jointly, up to 556,120 Additional Shares, of which
276,548 shares are to be issued and sold by the Company and 279,572 shares are
to be sold by such Selling Shareholders, each Selling Shareholder selling the
amount set forth opposite such Selling Shareholder's name in Schedule I hereto,
at the Purchase Price. You may exercise this right on behalf of the Underwriters
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in whole or from time to time in part by giving written notice of each election
to exercise the option not later than 30 days after the date of this Agreement.
Any exercise notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Each purchase date must be at least one business day after the
written notice is given and may not be earlier than the closing date for the
Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 5 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an "OPTION CLOSING DATE"), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule II hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock ("COMMON STOCK RIGHTS") or (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise.
The restrictions contained in the preceding paragraph shall not apply
to (A) the Shares to be sold hereunder (including the issuance of shares of
Common Stock upon exercise by any Selling Shareholder of any Common Stock Rights
to acquire the Shares to be sold hereunder), (B) up to $57,500,000 aggregate
principal amount of the Company's 3% Convertible Notes due 2025, (C) the
issuance by the Company of shares of Common Stock (i) upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
or (ii) upon conversion of the Company's 3% Convertible Notes due 2025 or (D)
the issuance by the Company of shares of Common Stock or Common Stock Rights (i)
pursuant to the Company's stock option and equity compensation plans outstanding
on the date of this Agreement (including but not limited to the Company's 2005
Stock Equity Incentive Plan), (ii) in connection with any acquisition, partner
agreement or strategic agreement, provided that, in each case, each recipient
agrees in writing with the Company to be bound to the restrictions
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set forth in the next succeeding paragraph (and the Company hereby agrees to
provide a copy of the agreement containing such restrictions to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated and not to waive, amend or terminate such restrictions without
the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated) or (iii) upon
the exercise or conversion of any Common Stock Rights issued pursuant to the
foregoing.
Each Selling Shareholders hereby agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 90 days after the date of the Prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any Common Stock Rights or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise.
The restrictions contained in the preceding paragraph shall not apply
to (A) the shares to be sold hereunder (including the exercise of any Common
Stock Rights to acquire the Shares to be sold hereunder); (B) the exercise of
any stock option, warrant or other right to acquire shares of Common Stock, the
conversion of a security convertible into Common Stock, or any disposition of
shares of Common Stock (i) in lieu of payment of the exercise or conversion
price thereof or (ii) to the Company to satisfy any withholding tax obligation
in connection with such exercise or conversion; (C) transfers to any member of
the immediate family of such Selling Shareholder, to any trust for the direct or
indirect benefit of such Selling Shareholder or as bona fide gifts, provided
that, in each case, each transferee and the trustee of any such trust, as
applicable, agrees to be bound in writing to the restrictions set forth in the
preceding paragraph; (D) in the case of Selling Shareholders who are
individuals, the transfer of any shares as a result of testate or intestate
succession, or in the event that such Selling Shareholder becomes permanently
disabled, provided that, in each case, each transferee agrees to be bound in
writing to the restrictions set forth in the preceding paragraph; or (E)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the offering of the Shares. In
addition, each Selling Shareholder hereby agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 90 days after the date of the Prospectus,
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
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4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$14.84 a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by
you at a price that represents a concession not in excess of $0.53 a share under
the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold by
each Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on June 1, 2005, or at such other time on the same or such other date, not
later than June 8, 2005, as shall be designated in writing by you. The time and
date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to each Seller in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 3 or at such other time on the same or
on such other date, in any event not later than July 11, 2005, as shall be
designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:30 p.m. (New York City time) on the date hereof.
13
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that,
in your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 6(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date. The officer signing
and delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
(c) (1) The Underwriters shall have received on the Closing Date an
opinion of Blank Rome LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business in all
material respects as described in the Prospectus and, based solely
upon its review of certificates of public officials, is duly
qualified to
14
transact business and is in good standing in each jurisdiction
listed on Schedule A to such opinion;
(ii) each subsidiary of the Company which is a "significant
subsidiary" as defined in SEC Regulation S-X (each, a "SIGNIFICANT
SUBSIDIARY") has been duly incorporated or organized, is validly
existing as a corporation or other entity in good standing under
the laws of the jurisdiction of its incorporation, has the power
and authority to own its property and to conduct its business in
all material respects as described in the Prospectus and, based
solely upon its review of certificates of public officials, is duly
qualified to transact business and is in good standing in each
jurisdiction listed on Schedule A to such opinion;
(iii) the Shares to be sold by the Selling Shareholders have
been duly authorized and are validly issued, fully paid and
non-assessable;
(iv) all of the issued shares of capital stock or other
ownership interests of each Significant Subsidiary of the Company
have been duly authorized and validly issued, are fully paid and
non-assessable and are owned directly by the Company, or indirectly
by another wholly owned subsidiary of the Company (except that the
Company owns only 67% of the equity of GSI-Chelsea Solutions, LLC),
free and clear of all liens, encumbrances, equities or claims;
(v) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered against payment therefor
in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights
under (i) the laws of the State of Delaware; (ii) the Certificate
of Incorporation or By-Laws of the Company or (iii) to the
knowledge of such counsel, any agreement or instrument to which the
Company is a party which has not been waived;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or, to such
counsel's knowledge, any agreement or other instrument
15
binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or,
to such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency
is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the NASD
and by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares, as to which no
opinion need be rendered;
(viii) the statements relating to legal matters, documents or
proceedings included in (A) the Prospectus under the captions
"Description of Capital Stock" and, to the extent it describes the
matters contained in this Agreement, "Underwriters" and (B) the
Registration Statement in Item 15, to the extent they constitute
summaries of legal matters or documents referred to therein in each
case fairly summarize in all material respects such matters and
documents;
(ix) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of
the Company or any of its subsidiaries is subject that are required
by SEC Regulation S-K to be described in the Registration Statement
or the Prospectus and are not so described or of any contracts or
other documents that are required by Regulation S-K to be described
in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required; and
(x) the Company is not, and after giving effect to the
offering and sale of the Shares and the 3% Convertible Notes due
2025 being offered concurrently with the Shares and the application
of the proceeds thereof as described in the Prospectus will not be,
required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(2) Said opinion shall also include a statement that nothing has
come to the attention of such counsel that causes such counsel to
believe that (A) any document filed pursuant to the Exchange Act and
incorporated by reference in the Registration Statement and Prospectus
(except for the financial statements, notes and financial schedules and
16
other financial and statistical data included therein, as to which such
counsel need not express any belief) did not comply when so filed as to
form in all material respects with the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder, (B) the Registration Statement or the Prospectus (except
for the financial statements, notes and financial schedules and other
financial and statistical data included therein, as to which such
counsel need not express any belief) do not comply as to form in all
material respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, (C) the
Registration Statement or the Prospectus included therein (except for
the financial statements, notes and financial schedules and other
financial and statistical data included therein, as to which such
counsel need not express any belief) at the time the Registration
Statement became effective contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or (D) the
Prospectus (except for the financial statements, notes and financial
schedules and other financial and statistical data included therein, as
to which such counsel need not express any belief) as of its date or as
of the Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. With respect to such
statement, Blank Rome LLP may state that their beliefs are based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto and documents
incorporated by reference and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified.
(d) The Underwriters shall have received on the Closing Date an
opinion of counsel for each Selling Shareholder, dated the Closing
Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder;
(ii) the execution and delivery by each Selling Shareholder
of, and the performance by such Selling Shareholder of its
obligations under, this Agreement will not result in any violation
of any provision of applicable law, or the certificate of
incorporation or by-laws or other comparable documents of such
Selling Shareholder (if such Selling Shareholder is a corporation
or other entity), or, to such counsel's knowledge, any agreement
or other instrument binding upon such Selling Shareholder or,
to such counsel's
17
knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement, except such as may be required
by the rules of the NASD and by the securities or Blue Sky laws
of the various states in connection with offer and sale of the
Shares; and
(iii) upon payment for the Shares to be sold by the Selling
Shareholders pursuant to this Agreement, delivery of such Shares,
as directed by the Underwriters, to Cede or such other nominee as
may be designated by DTC, registration of such Shares in the name
of Cede or such other nominee and the crediting of such Shares on
the books of DTC to securities accounts of the Underwriters
(assuming that neither DTC nor any such Underwriter has notice of
any adverse claim within the meaning of Section 8-105 of the UCC to
such Shares), (A) DTC shall be a "protected purchaser" of such
Shares within the meaning of Section 8-303 of the UCC, (B) under
Section 8-501 of the UCC, the Underwriters will acquire a valid
security entitlement in respect of such Shares and (C) no action
based on any "adverse claim" (within the meaning of Section 8-102
of the UCC) to such Shares may be asserted against the Underwriters
with respect to such security entitlement; in giving this opinion,
counsel for the Selling Shareholders may assume that when such
payment, delivery and crediting occur, (x) such Shares will have
been registered in the name of Cede or another nominee of DTC
designated by DTC, in each case on the Company's share registry in
accordance with its certificate of incorporation, bylaws and
applicable law, (y) DTC will be a "clearing corporation" within the
meaning of Section 8-102 of the UCC and (z) appropriate entries to
the accounts of the several Underwriters on the records of DTC will
have been made pursuant to the UCC.
(e) The Underwriters shall have received on the Closing Date an
opinion of Cravath, Swaine & ▇▇▇▇▇ LLP, counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in Sections
6(c)(v), 6(c)(vi), 6(c)(viii) (but only as to the statements in the
Prospectus under "Description of Capital Stock" and "Underwriters") and
clauses (B), (C) and (D) of Section 6(c)(2) above.
With respect to clauses (B), (C) and (D) of Section 6(c)(2),
Cravath, Swaine & ▇▇▇▇▇ LLP may state that their beliefs are based
upon their participation in the preparation of the Registration
18
Statement and Prospectus and any amendments or supplements
thereto (other than documents incorporated by reference) and upon
review and discussion of the contents thereof (including documents
incorporated by reference), but are without independent check or
verification except as specified. With respect to Section 6(d) above,
counsel for the Selling Shareholders may rely upon an opinion or
opinions of counsel for any Selling Shareholders and, with respect to
factual matters and to the extent such counsel deems appropriate, upon
the representations of each Selling Shareholder contained herein and
in other documents and instruments; provided that (A) each such
counsel for the Selling Shareholders is satisfactory to your counsel,
(B) a copy of each opinion so relied upon is delivered to you and is
in form and substance satisfactory to your counsel, (C) copies of any
such other documents and instruments shall be delivered to you and
shall be in form and substance satisfactory to your counsel and (D)
counsel for the Selling Shareholders shall state in their opinion that
they are justified in relying on each such other opinion.
The opinions of Blank Rome LLP and counsel for the Selling
Shareholders described in Sections 6(c) and 6(d) above (and any
opinions of counsel for any Selling Shareholder referred to in the
immediately preceding paragraph) shall be rendered to the Underwriters
at the request of the Company or one or more of the Selling
Shareholders, as the case may be, and shall so state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Deloitte & Touche LLP, independent registered
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A, Exhibit B or Exhibit C hereto, as applicable, between you
and the shareholders, executive officers and directors of the Company
listed on Schedule III hereto relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
19
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares to be sold by the Company on such Option Closing Date, the
ownership and passage of title of the Additional Shares to be sold by the
Selling Shareholders on such Option Closing Date and other matters related to
the issuance or sale of such Additional Shares.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated by reference) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto
but including documents incorporated by reference) and to furnish to
you in New York City, without charge, prior to 10:00 a.m. New York City
time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 7(c) below, as many copies of
the Prospectus, any documents incorporated by reference, and any
supplements and amendments thereto or to the Registration Statement as
you may reasonably request. The terms "supplement" and "amendment" or
"amend" as used in this Agreement shall include all documents
subsequently filed by the Company with the Commission pursuant to
the Exchange Act of 1934, as amended, that are deemed to be
incorporated by reference in the Prospectus.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the
Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such
Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion
20
of counsel for the Underwriters, it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare,
file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending July 1, 2006 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of
the Commission thereunder.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants in connection with
the registration and delivery of the Company's Shares under the Securities Act
and all other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Company's Shares
to the Underwriters, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of the
Shares for offer and sale under state securities laws as provided in Section
7(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all filing
fees and the reasonable fees and disbursements of counsel to the Underwriters
incurred in connection with the review and qualification of the offering of the
Shares by the NASD (which fee and expenses of counsel for the Underwriters
21
shall not exceed $5,000 in the aggregate under clause (iii) and this clause
(iv)), (v) all fees and expenses incident to listing the Shares on the Nasdaq
National Market, (vi) the cost of printing certificates representing the Shares,
(vii) the costs and charges of any transfer agent, registrar or depositary,
(viii) 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 Shares, 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
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, (ix) the
document production charges and expenses associated with printing this Agreement
and (x) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution", and the last paragraph
of Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them and any advertising expenses connected
with any offers they may make. Each Selling Shareholder agrees to pay or cause
to be paid all expenses incident to the performance of its obligations under
this Agreement (excluding any expenses for which provision is made pursuant to
clauses (i)-(ix) of the immediately preceding sentence, which are to be borne by
the Company), including: (i) the fees, disbursements and expenses of the counsel
for such Selling Shareholder, and (ii) all costs and expenses related to the
transfer and delivery of such Selling Shareholder's Shares to the Underwriters,
including any transfer or other taxes payable thereon.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, 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, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have
22
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except that the
Company shall not be required to indemnify any Underwriter, controlling person
or affiliate thereof insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter expressly for use therein, provided,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 7(a) hereof.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, 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, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Selling Shareholder furnished in writing by or on behalf of
such Selling Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto,
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or
23
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 7(a) hereof. The liability
of each Selling Shareholder under the indemnity agreement contained in this
paragraph shall be limited to an amount equal to the aggregate Public Offering
Price of the Shares, minus the related underwriting discounts and commissions,
sold by such Selling Shareholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any
24
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for, as applicable (i) the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act or who are affiliates of any Underwriter within the meaning of Rule 405
under the Securities Act, (ii) the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii) the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons and
affiliates of any Underwriters, such firm shall be designated in writing by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Shareholders and such control persons of any
Selling Shareholders, such firm shall be designated in writing by the holders of
a majority of the Shares sold by all Selling Shareholders hereunder. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b)or 9(c) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein (other than
because such Sections are not applicable in accordance with their terms), then
each indemnifying party under such paragraph, in lieu of indemnifying such
25
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(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 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint. The
aggregate liability of each Selling Shareholder under the contribution agreement
contained in this paragraph and the indemnification provisions of Section 9(b)
shall be limited to an amount equal to the aggregate Public Offering Price of
the Shares, minus the related underwriting discounts and commissions, sold by
such Selling Shareholder under this Agreement, and is not joint with any other
Selling Shareholder or the Company.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or
26
defending any such action or claim. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. 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 remedies provided
for in this Section 9 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(g) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company and
the Selling Shareholders contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
10. Termination. The Underwriters may terminate this Agreement by
notice given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
27
If, on the Closing Date or an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Shareholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Shareholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
Option Closing Date, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase the Additional Shares to be
sold on such Option Closing Date or (ii) purchase not less than the number of
Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement (as applicable, a "DEFAULTING SELLER"), the Company and any Selling
Shareholder who was a Defaulting Seller (a "DEFAULTING SHAREHOLDER") will
reimburse the Underwriters
28
or such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder; provided,
however, that a Selling Shareholder who was not a Defaulting Shareholder shall
not have any liability under this paragraph. The liability of the Company and
each Defaulting Shareholder under this paragraph shall be several and pro rata
based upon the proportion that the number of Shares proposed to be sold by the
Company or such Defaulting Shareholder, respectively, bears to the total number
of Shares to be sold by the Company and all Defaulting Shareholders.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
29
Very truly yours,
GSI COMMERCE, INC.
By:
--------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Jordan ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
30
RUSTIC CANYON VENTURES LP
By:
--------------------------------
Name:
Title:
SOFTBANK CAPITAL PARTNERS LP
By:
--------------------------------
Name:
Title:
SOFTBANK CAPITAL LP
By:
--------------------------------
Name:
Title:
SOFTBANK CAPITAL ADVISORS FUND LP
By:
--------------------------------
Name:
Title:
31
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Actingseverally on behalf of themselves and
the several Underwriters named in
Schedule II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:
------------------------------------
Name:
Title:
SCHEDULE I
SELLING SHAREHOLDER FIRM SHARES ADDITIONAL SHARES
------------------- ----------- -----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇........................... 912,055 139,915
Rustic Canyon Ventures LP.................. 400,000 62,070
SOFTBANK Capital Partners LP............... 248,950 38,631
SOFTBANK Capital LP........................ 244,700 37,971
SOFTBANK Capital Advisors Fund LP.......... 6,350 985
▇▇▇▇▇▇▇ ▇. ▇▇▇▇............................ 33,500 -
Jordan ▇. ▇▇▇▇▇▇▇.......................... 30,000 -
▇▇▇▇▇ ▇▇▇▇▇▇▇.............................. 40,000 -
Total............................. 1,915,555 279,572
SCHEDULE II
NUMBER OF FIRM SHARES TO BE
UNDERWRITER PURCHASED
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.......................... 1,668,361
Bear, ▇▇▇▇▇▇▇ & Co. Inc.................................... 1,112,240
CIBC World Markets Corp.................................... 370,747
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc...................... 370,747
Pacific Crest Securities................................... 185,374
Total:............................................ 3,707,469
SCHEDULE III
PARTIES TO LOCK-UP AGREEMENTS
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Gold
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Comcast QIH, Inc.
QK Holdings, Inc.
SOFTBANK Capital LP
SOFTBANK Capital Advisors Fund LP
SOFTBANK Capital Partners LP
Rustic Canyon Ventures LP
EXHIBIT A
[FORM OF LOCK-UP LETTER]
May _____, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇") and certain other
underwriters severally propose to enter into Underwriting Agreements (each, an
"UNDERWRITING AGREEMENT") with GSI Commerce, Inc., a Delaware corporation (the
"COMPANY"), and certain existing shareholders (with respect to the Equity
Offering, as defined below) of the Company providing for the concurrent public
offerings (the "PUBLIC OFFERINGS") by the several Underwriters, including ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Bear ▇▇▇▇▇▇▇ (the "UNDERWRITERS"), of 3,103,500 shares (the
"SHARES") of the common stock, par value $0.01 per share, of the Company (the
"COMMON STOCK") (such offering referred to as the "EQUITY OFFERING"), and
$50,000,000 principal amount of Convertible Notes of the Company (the
"CONVERTIBLE NOTES") (such offering referred to as the "NOTE OFFERING"). The
Convertible Notes will be convertible into shares of Common Stock.
To induce the Underwriters that may participate in the Public Offerings
to continue their efforts in connection with the Public Offerings, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the final prospectuses
relating to the Public Offerings (the "PROSPECTUSES"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing
sentence shall not apply to (a) the sale of any Common Stock or Convertible
Notes to the Underwriters pursuant to the Underwriting Agreements; (b)
transactions relating to shares of Common Stock or other securities of the
Company acquired in open market transactions after the completion of the Public
Offerings; (c) the exercise of any stock option, warrant or other right to
acquire shares of Common Stock, the conversion of a security convertible into
Common Stock, or any disposition of shares of Common Stock (i) in lieu of
payment of the exercise or conversion price thereof or (ii) to the Company to
satisfy any withholding tax obligation in connection with such exercise or
conversion; (d) transfers by the undersigned to any member of the immediate
family of the undersigned, to any trust for the direct or indirect benefit of
the undersigned or as bona fide gifts, provided that, in each case, each
transferee and the trustee of any such trust, as applicable, agrees to be bound
in writing to the restrictions set forth in this Lock-Up Agreement; or (e) if
the undersigned is an individual, the transfer of any shares as a result of
testate or intestate succession, or in the event that the undersigned becomes
permanently disabled, provided, that, in each case, each transferee agrees to be
bound in writing to the restrictions set forth in this Lock-Up Agreement. In
addition, the undersigned agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the
Prospectuses, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's shares of Common
Stock except in compliance with the foregoing restrictions. This Lock-Up
Agreement shall remain in full force regardless of any delay in any of the
Public Offerings, any increase or reduction in the size of, or other change in,
the Public Offerings, or the termination of either the Note Offering or the
Equity Offering; provided, however, that, notwithstanding any other provision
contained herein, this Lock-Up Agreement, including the provisions of this
paragraph, shall be automatically terminated and shall cease to be of any force
and effect unless the Company, the selling shareholders (with respect to the
Equity Offering) and the Underwriters have entered into either the Underwriting
Agreement with respect to the Note Offering, or the Underwriting Agreement with
respect to the Equity Offering (or both) on or before July 31, 2005.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offerings. The undersigned further understands that this Lock-Up
Agreement is irrevocable and shall be binding upon the undersigned's heirs,
legal representatives, successors and assigns.
The undersigned understands that whether or not either Public Offering
actually occurs depends on a number of factors, including market conditions. Any
Public Offering will only be made pursuant to an Underwriting Agreement, the
terms of which are subject to negotiation between the Company, the selling
shareholders and the Underwriters.
Very truly yours,
------------------------------------
(Name)
------------------------------------
(Address)
EXHIBIT B
[FORM OF LOCK-UP LETTER OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇]
May _____, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇") and certain other
underwriters severally propose to enter into Underwriting Agreements (each, an
"UNDERWRITING AGREEMENT") with GSI Commerce, Inc., a Delaware corporation (the
"COMPANY"), and certain existing shareholders (with respect to the Equity
Offering, as defined below) of the Company providing for the concurrent public
offerings (the "PUBLIC OFFERINGS") by the several Underwriters, including ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Bear ▇▇▇▇▇▇▇ (the "UNDERWRITERS"), of 3,103,500 shares (the
"SHARES") of the common stock, par value $0.01 per share, of the Company (the
"COMMON STOCK") (such offering referred to as the "EQUITY OFFERING"), and
$50,000,000 principal amount of Convertible Notes of the Company (the
"CONVERTIBLE NOTES") (such offering referred to as the "NOTE OFFERING"). The
Convertible Notes will be convertible into shares of Common Stock.
To induce the Underwriters that may participate in the Public Offerings
to continue their efforts in connection with the Public Offerings, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the final prospectuses
relating to the Public Offerings (the "PROSPECTUSES"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Common Stock or Convertible
Notes to the Underwriters pursuant to the Underwriting Agreements;
(b) transactions relating to shares of Common Stock or other securities of the
Company acquired in open market transactions after the completion of the Public
Offerings; (c) the exercise of any stock option, warrant or other right to
acquire shares of Common Stock, the conversion of a security convertible into
Common Stock, or any disposition of shares of Common Stock (i) in lieu of
payment of the exercise or conversion price thereof or (ii) to the Company to
satisfy any withholding tax obligation in connection with such exercise or
conversion; (d) transfers by the undersigned to any member of the immediate
family of the undersigned, to any trust for the direct or indirect benefit of
the undersigned or as bona fide gifts, provided that, in each case, each
transferee and the trustee of any such trust, as applicable, agrees to be bound
in writing to the restrictions set forth in this Lock-Up Agreement; or (e) if
the undersigned is an individual, the transfer of any shares as a result of
testate or intestate succession, or in the event that the undersigned becomes
permanently disabled, provided, that, in each case, each transferee agrees to be
bound in writing to the restrictions set forth in this Lock-Up Agreement. In
addition, the undersigned agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the
Prospectuses, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's shares of Common
Stock except in compliance with the foregoing restrictions. This Lock-Up
Agreement shall remain in full force regardless of any delay in any of the
Public Offerings, any increase or reduction in the size of, or other change in,
the Public Offerings, or the termination of either the Note Offering or the
Equity Offering; provided, however, that, notwithstanding any other provision
contained herein, this Lock-Up Agreement, including the provisions of this
paragraph, shall be automatically terminated and shall cease to be of any force
and effect unless the Company, the selling shareholders (with respect to the
Equity Offering) and the Underwriters have entered into either the Underwriting
Agreement with respect to the Note Offering, or the Underwriting Agreement with
respect to the Equity Offering (or both) on or before July 31, 2005.
Furthermore, pursuant to the letter agreement between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and Deutsche Bank Securities Inc. ("DBSI") dated May 6, 2005, the undersigned
agrees that, prior to or concurrent with the closing of the Equity Offering (the
"CLOSING TIME"), he will have (i) deposited cash or U.S. Government obligations
into his margin account at DBSI (the "MARGIN ACCOUNT") in an amount equal to or
greater than $5.6 million (the "CASH COLLATERAL") and will retain the Cash
Collateral in the Margin Account for a period ending not less than 90 days after
the Closing Time, or (ii) repaid all amounts outstanding under any loans
provided by DBSI or its affiliates which are secured by such Margin Account.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offerings. The undersigned further understands that this Lock-Up
Agreement is irrevocable and shall be binding upon the undersigned's heirs,
legal representatives, successors and assigns.
The undersigned understands that whether or not either Public Offering
actually occurs depends on a number of factors, including market conditions. Any
Public Offering will only be made pursuant to an Underwriting Agreement, the
terms of which are subject to negotiation between the Company, the selling
shareholders and the Underwriters.
Very truly yours,
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o GSI Commerce, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT C
[FORM OF LOCK-UP LETTER OF COMCAST QIH, INC.]
May _____, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("BEAR ▇▇▇▇▇▇▇") and certain other
underwriters severally propose to enter into Underwriting Agreements (each, an
"UNDERWRITING AGREEMENT") with GSI Commerce, Inc., a Delaware corporation (the
"COMPANY"), and certain existing shareholders (with respect to the Equity
Offering, as defined below) of the Company providing for the concurrent public
offerings (the "PUBLIC OFFERINGS") by the several Underwriters, including ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Bear ▇▇▇▇▇▇▇ (the "Underwriters"), of 3,103,500 shares (the
"SHARES") of the common stock, par value $0.01 per share, of the Company (the
"COMMON STOCK") (such offering referred to as the "Equity Offering"), and
$50,000,000 principal amount of Convertible Notes of the Company (the
"CONVERTIBLE NOTES") (such offering referred to as the "NOTE OFFERING"). The
Convertible Notes will be convertible into shares of Common Stock.
To induce the Underwriters that may participate in the Public Offerings
to continue their efforts in connection with the Public Offerings, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the final prospectuses
relating to the Public Offerings (the "PROSPECTUSES"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing
sentence shall not apply to (a) the sale of any Common Stock or Convertible
Notes to the Underwriters pursuant to the Underwriting Agreements; (b)
transactions relating to shares of Common Stock or other securities of the
Company acquired in open market transactions after the completion of the Public
Offerings; (c) the exercise of any stock option, warrant or other right to
acquire shares of Common Stock, the conversion of a security convertible into
Common Stock, or any disposition of shares of Common Stock (i) in lieu of
payment of the exercise or conversion price thereof or (ii) to the Company to
satisfy any withholding tax obligation in connection with such exercise or
conversion; (d) transfers by the undersigned to any member of the immediate
family of the undersigned, to any trust for the direct or indirect benefit of
the undersigned or as bona fide gifts, provided that, in each case, each
transferee and the trustee of any such trust, as applicable, agrees to be bound
in writing to the restrictions set forth in this Lock-Up Agreement; (e) if the
undersigned is an individual, the transfer of any shares as a result of testate
or intestate succession, or in the event that the undersigned becomes
permanently disabled, provided, that, in each case, each transferee agrees to be
bound in writing to the restrictions set forth in this Lock-Up Agreement; or (f)
distributions or transfers to Comcast Corporation, a Pennsylvania corporation,
or any direct or indirect subsidiary thereof, provided that, in each case, each
recipient agrees to be bound in writing to the restrictions set forth in this
Lock-Up Agreement. In addition, the undersigned agrees that, without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 90 days after the
date of the Prospectuses, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
shares of Common Stock except in compliance with the foregoing restrictions.
This Lock-Up Agreement shall remain in full force regardless of any delay in any
of the Public Offerings, any increase or reduction in the size of, or other
change in, the Public Offerings, or the termination of either the Note Offering
or the Equity Offering; provided, however, that, notwithstanding any other
provision contained herein, this Lock-Up Agreement, including the provisions of
this paragraph, shall be automatically terminated and shall cease to be of any
force and effect unless the Company, the selling shareholders (with respect to
the Equity Offering) and the Underwriters have entered into either the
Underwriting Agreement with respect to the Note Offering, or the Underwriting
Agreement with respect to the Equity Offering (or both) on or before June 30,
2005.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offerings. The undersigned further understands that this Lock-Up
Agreement is irrevocable and shall be binding upon the undersigned's heirs,
legal
representatives, successors and assigns.
The undersigned understands that whether or not either Public Offering
actually occurs depends on a number of factors, including market conditions. Any
Public Offering will only be made pursuant to an Underwriting Agreement, the
terms of which are subject to negotiation between the Company, the selling
shareholders and the Underwriters. This Lock-Up Agreement supersedes in all
respects the previous Lock-Up Agreement of the undersigned dated May 12, 2005.
Very truly yours,
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