EXHIBIT 1.1
[______] Shares of Common Stock
xxxxxxxx.xxx, inc.
FORM OF
UNDERWRITING AGREEMENT
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[Date]
BEAR, XXXXXXX & CO. INC.
XXXXX XXXXX XXXXXX & COMPANY, LLC
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
xxxxxxxx.xxx, inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of [__________] shares (the
"Firm Shares") of the Company's common stock, par value $0.001 per share (the
"Common Stock") and, for the sole purpose of covering over-allotments in
connection with the sale of the Firm Shares, at the option of the Underwriters,
up to an additional [_________] shares (the "Additional Shares") of Common
Stock. The issuance by the Company and the sale to the Underwriters of the Firm
Shares and the Additional Shares is hereinafter referred to as the "Underwritten
Offering."
The Company has also entered into an agreement (the "Placement Agency
Agreement"), providing for the sale by the Company (the "Concurrent Offering")
of up to a total of [_________] shares of the Common Stock (the "Concurrent
Shares" and collectively with the Firm Shares and any Additional Shares
purchased by the Underwriters, the "Shares") through arrangements with Bear,
Xxxxxxx & Co. Inc. ("Bear Xxxxxxx") and Xxxxx Xxxxx Xxxxxx & Company,
LLC as placement agents (the "Placement Agents"). In connection with the
Concurrent Offering, the Company will also enter into a subscription agreement
(the "Subscription Agreement") with each purchaser of Concurrent Shares
(collectively, the "Purchasers"). The Company acknowledges and agrees with the
Underwriters that as between the Company on the one hand and the Underwriters
(other than the Placement Agents, in their capacity as Placement Agents) on the
other, that the Company is the sole beneficiary of the Concurrent Offering and
that none of the Underwriters (other than the Placement Agents, in their
capacity as Placement Agents) has provided any services to the Company as to the
structure or implementation of the Concurrent Offering. The shares of Common
Stock of the Company to be outstanding after giving effect to the sales
contemplated hereby and the Concurrent Offering are hereinafter collectively
referred to as the "Common Stock." The Underwritten Offering and the Concurrent
Offering are hereinafter collectively referred to as the "Offerings." The
consummation of the Concurrent Offering is contingent upon the consummation of
the Underwritten Offering.
1. Representations and Warranties of the Company. The Company represents
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and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, and has filed amendments thereto, on
Form S-1 (No. 333-59751), for the registration of the Shares under the
Securities Act of 1933, as amended (the "Act"). Such registration statement,
including the prospectus, financial statements and schedules, exhibits and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A
or Rule 434 of the Rules and Regulations of the Commission under the Act (the
"Regulations"), is herein called the "Registration Statement" and the
prospectus, in the form first filed with the Commission pursuant to Rule 424(b)
of the Regulations or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) or Rule 434 filing is required, is herein called
the "Prospectus". The term "preliminary prospectus" as used herein means a
preliminary prospectus as described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration Statement or the
effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and an
Additional Closing Date, if any, (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations and does not or will not
contain an untrue statement of a material fact and does not or will not omit to
state any material fact required to be stated
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therein or necessary in order to make the statements therein (i) in the case of
the Registration Statement, not misleading and (ii) in the case of the
Prospectus, in light of the circumstances under which they were made, not
misleading. When any related preliminary prospectus was first filed with the
Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
of the Regulations) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus and any amendments
thereof and supplements thereto complied in all material respects with the
applicable provisions of the Act and the Regulations and did not contain an
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
The Prospectus and any preliminary prospectus delivered to the Underwriters for
use in connection with the Offerings was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through you as herein stated
expressly for use in connection with the preparation thereof. If Rule 434 is
used, the Company will comply with the requirements of Rule 434.
(c) KPMG Peat Marwick, LLP, who have certified the financial statements
and supporting schedules included in the Registration Statement, are independent
public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has been no change in the
capital stock of the Company or the long-term indebtedness of the Company, and
there has been no material adverse change in the business, prospects,
properties, operations, condition (financial or other), stockholders' equity or
results of operations of the Company (the effect of each such change or
development being referred to herein as a "Material Adverse Effect"), whether or
not arising from transactions in the ordinary course of business, and since the
date of the latest balance sheet presented in the Registration Statement and the
Prospectus, the Company has not incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company, except for
liabilities or obligations which are discussed in the Registration Statement and
the Prospectus.
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(e) This Agreement and the transactions contemplated herein have been duly
and validly authorized by the Company and this Agreement has been duly and
validly executed and delivered by the Company.
(f) The execution, delivery, and performance of this Agreement, the
Placement Agency Agreement and the Subscription Agreements and the consummation
of the transactions contemplated hereby do not and will not (i) conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, require approval or consent under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, the terms of (A) any agreement, instrument,
contract, indenture, mortgage, lease, license, arrangement or understanding to
which the Company is a party, or to which any of its properties or assets are
subject, that is material to the Company (collectively, "Material Contracts")
or (B) any governmental franchise, license, permit heretofore issued to the
Company, or (ii) violate or conflict with any provision of the Second Amended
and Restated Certificate of Incorporation or Bylaws of the Company or any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Company is required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, including
the issuance, sale and delivery of the Shares to be issued, sold and delivered
by the Company hereunder, except the registration under the Act of the Shares
and such consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters.
(g) All of the outstanding shares of Common Stock are duly and validly
authorized and issued, fully paid and non-assessable and were not issued and are
not now in violation of or subject to any preemptive rights. The Shares, when
issued, delivered and sold to the Underwriters or the Purchasers in accordance
with this Agreement, the Placement Agency Agreement or the Subscription
Agreements, will be duly and validly issued and outstanding, fully paid and non-
assessable, and will not have been issued in violation of or be subject to any
preemptive or similar rights; and, except as described in or expressly
contemplated by the Prospectus, there are no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital stock or
other equity interests in the Company, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital
stock of the Company. The Company had, at [_________], 1998, an authorized and
outstanding capitalization as set forth
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in the Registration Statement and the Prospectus. The Common Stock, the Firm
Shares, the Additional Shares and the Concurrent Shares conform to the
descriptions thereof contained in the Registration Statement and the Prospectus.
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned, leased
or licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing
which, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect. The Company has all requisite power
and authority, and all material consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, to own, lease and operate its
properties and conduct its business as now being conducted and as described in
the Registration Statement and the Prospectus, and no such consent, approval,
authorization, order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. There are no statutes, regulations, contracts or
other documents applicable to the Company that are required to be described in
the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(i) Except for WebGenesis, Inc. (the "Subsidiary"), a wholly-owned
subsidiary of the Company duly organized and validly existing as a corporation
in good standing under the laws of the State of Delaware, the Company does not
have any subsidiaries and does not own or control, directly or indirectly, any
interest in any other corporation, association or other business entity. The
Subsidiary, which was capitalized with $1000 in cash, presently conducts no
business operations and has no material assets.
(j) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company is a party or to which any property
of the Company is subject or which is pending or, to the knowledge of the
Company, contemplated, threatened against or otherwise affecting the Company
which, individually or in the aggregate, may reasonably be expected to have a
Material Adverse Effect or which is required to be disclosed in the Registration
Statement and the Prospectus.
(k) The Company has not taken and will not take, directly or indirectly,
any action designed to cause or result in, or which constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale of the Shares.
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(l) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the dates indicated
and the results of operations of the Company for the periods specified; except
as otherwise stated in the Registration Statement, said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis; and the supporting schedules included in
the Registration Statement present fairly the information required to be stated
therein. The selected financial data and the summary financial data included in
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the financial statements included in
the Registration Statement. No other financial statements are required by Form
S-1 or otherwise to be included in the Registration Statement or the Prospectus
other than those included therein.
(m) Except as described in the Prospectus, no holder of securities of the
Company has any rights to the registration of such securities of the Company
because of the filing of the Registration Statement or otherwise in connection
with the sale of the Shares contemplated hereby.
(n) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940.
(o) Except as described in the Prospectus, the Company owns or
possesses or reasonably believes it can acquire on reasonable terms, patents,
licenses (but excluding any required regulatory licenses or approvals),
inventions (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), copyrights,
trademarks, service marks, trade names or other intellectual property,
registrations and applications to register any of the foregoing, or that it can
contract on reasonable terms with third parties who can acquire such
intellectual property which is material to the business now operated, or
proposed to be operated, by the Company (collectively, "Intellectual Property")
and the Company has not received any notice and is not otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would have or may reasonably be expected to have a Material Adverse
Effect.
(p) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, stockholders, customers
or suppliers of the Company, on the other hand, which is required by the Act to
be described in the Registration Statement and the Prospectus which is not so
described.
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(q) The Company is in compliance with all environmental, safety or
similar laws or regulations applicable to them or their business or property
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants and the
disposal of hazardous or toxic substances, wastes, pollutants and contaminants,
except those which, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect.
(r) To the knowledge of the Company, it is not in violation or breach
of, or in default under (nor has an event occurred that with notice, lapse of
time or both, would constitute a default under), any Material Contract, and each
Material Contract is in full force and effect, and is the legal, valid and
binding obligation of the Company, and (subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or similar laws
affecting the enforceability of creditors' rights generally and (ii) general
principles of equity, including without limitation, standards of materiality,
good faith, fair dealing and reasonableness and limits on the availability of
equitable remedies) is enforceable as to the Company in accordance with its
terms.
(s) The Company maintain systems of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) the access to the respective assets of the Company is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company which are likely,
individually or in the aggregate, to have or may reasonably be expected to have
a Material Adverse Effect.
(u) Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
is maintained, administered or contributed to by the Company for employees or
former employees of the Company has been maintained in compliance with its terms
and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended ("Code"). No prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975 of the Code has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or administrative
exemption. For each such plan which is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA no "accumulated funding deficiency" as
defined in Section 412 of the Code has incurred, whether or not waived, and the
fair market value of the assets of each such plan (excluding for these
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purposes accrued but unpaid contributions) exceeded the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions.
(v) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions therefor
(except in any case in which the failure to so file would not have or reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect) and the Company has paid all material taxes required to be paid by it
and any other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith.
(w) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company is engaged. The Company
does not have any reason to believe that it will not be able to renew its
existing insurance coverage from similar insurers as may be necessary to
continue in its business.
(x) Except as described in the Registration Statement and as shall be
described in the Prospectus, the Company has (i) good and marketable title to
all real and personal properties owned by it, free and clear of all liens,
security interests, pledges, charges, encumbrances and mortgages, and (ii)
valid, subsisting and enforceable leases for all real and personal properties
leased by it, in either case (i) or (ii) above, subject to such exceptions as,
individually or in the aggregate, would not have or reasonably be expected to
have a Material Adverse Effect. No real property owned, leased, licensed or
used by the Company lies in an area that is, or to the best knowledge of the
Company will be, subject to zoning, use or building code restrictions that would
prohibit, and no state of facts relating to the actions or inaction of another
person or entity or his, her or its ownership, leasing, licensing or use of such
real property in the business of the Company as presently conducted or as the
Prospectus indicates are contemplated to be conducted, subject to such
exceptions as, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect.
(y) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes and the Company agrees to
comply with such Section if prior to the completion of the distribution of the
Shares it commences doing such business.
(z) The Concurrent Offering conforms, and will conform in all
material respects to the requirements of the Act and the Exchange Act, and the
rules and regulations of the Commission thereunder.
(aa) Each of the Subscription Agreements has been duly authorized,
executed and delivered by the Company and, when accepted by the Company, is a
valid and binding agreement of the Company, enforceable with its terms.
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2. Purchase, Sale and Delivery of the Shares.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of [$_______], the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates for,
the [Firm] Shares shall be made at the office of Xxxxxxxx & Xxxxxxxx LLP, 1290
Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000-0000, or at such other place as
shall be agreed upon by Bear Xxxxxxx and the Company, at 9:30 A.M. on the third
or fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Regulations, the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
after the determination of the initial public offering price of the Shares), or
such other time not later than ten business days after such date as shall be
agreed upon by you and the Company (such time and date of payment and delivery
being herein called the "Closing Date"). Payment shall be made to the Company
by wire transfer in same day funds, against delivery to you for the respective
accounts of the Underwriters of the Shares to be purchased by them.
Certificates for the Shares shall be registered in such name or names and in
such authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
such certificates for delivery at least one full business day prior to the
Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the option
to purchase up to [_______] Additional Shares at the same purchase price per
share to be paid by the Underwriters to the Company for the Firm Shares as set
forth in this Section 2, for the sole purpose of covering over-allotments in the
sale of Firm Shares by the Underwriters. This option may be exercised at any
time, in whole or in part and from time to time, on or before the thirtieth day
following the date of the Prospectus, by written notice by you to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (any such date
and time being herein sometimes referred to as an "Additional Closing Date");
provided, however, that an Additional Closing Date shall not be earlier than the
Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall
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have been exercised (unless such time and date are postponed in accordance with
the provisions of Section 9 hereof). Certificates for the Additional Shares
shall be registered in such name or names and in such authorized denominations
as you may request in writing at least two full business days prior to an
Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall be the
number which bears the same ratio to the aggregate number of Additional Shares
being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to [insert the total number of Firm Shares being
purchased by the Company], subject, however, to such adjustments to eliminate
any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by wire transfer in same
day funds upon delivery of the Additional Shares to you for the respective
accounts of the Underwriters.
3. Offering.
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(a) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to offer the Firm Shares and the Additional Shares for sale
to the public upon the terms set forth in the Prospectus.
(b) The Company and the Underwriters hereby agree that up to five
percent (5%) of the [Firm] Shares to be purchased by the Underwriters (the
"Directed Shares") shall be reserved for sale by the Underwriters to eligible
employees of and certain persons designated by the Company ("the Directed Shares
Purchasers"), as part of the distribution of the Shares by the Underwriters
subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. and all
other applicable laws, rules and regulations, provided, however, that under no
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circumstances will Bear Xxxxxxx or any other Underwriter be liable to the
Company or to any of the Directed Shares Purchasers for any action taken or
omitted in good faith in connection with transactions effected with regard to
the Directed Shares Purchasers. To the extent that such Directed Shares are not
orally confirmed for purchase by such persons by the end of the first day after
the date of this Agreement, such Directed Shares will be offered to the public
as part of the Underwritten Offering contemplated hereby.
4. Covenants of the Company. The Company covenants and agrees with the
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Underwriters that:
(a) If the Registration Statement has not yet been declared effective,
the Company will use its best efforts to cause the Registration Statement and
any amendments thereto to become effective as promptly as possible, and if Rule
430A is used or the filing of the Prospectus is otherwise required under Rule
424(b)
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or Rule 434, the Company will file the Prospectus (properly completed if Rule
430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed
time period and will provide evidence satisfactory to you of such timely filing.
If the Company elects to rely on Rule 434, the Company will prepare and file a
term sheet that complies with the requirements of Rule 434.
The Company will notify you as promptly as possible (and, if requested by
you, will confirm such notice in writing) (i) when the Registration Statement
and any amendments thereto become effective, (ii) of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of the initiation, or the threatening,
of any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing in a timely fashion based on the
circumstances after being timely furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the Act any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would, in the judgment of the
Company include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it shall be necessary at any time to amend or supplement the
Prospectus or Registration Statement to comply with the Act or the Regulations,
the Company will notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to you)
which will correct such statement or omission and will use its best efforts to
have any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will promptly deliver to you two signed copies of the
Registration Statement, including exhibits and all amendments thereto, and the
Company will promptly deliver to each of the Underwriters such number of
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copies of any preliminary prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, as
you may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with you, at
or prior to the time of effectiveness of the Registration Statement, to qualify
the Shares for offering and sale under the securities laws relating to the
offering or sale of the Shares of such jurisdictions (domestic or foreign) as
you may designate and to maintain such qualification in effect for so long as
required for the distribution thereof; except that in no event shall the Company
be obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus, the
Company will not, without your prior written consent, directly or indirectly,
issue, sell, offer or agree to sell, except pursuant to any stock option or
incentive plan described in the Prospectus, grant any option for the sale of,
pledge, make any short sale, establish an open "put equivalent position" within
the meaning of Rule 16a-1(h) under the Exchange Act or otherwise dispose of any
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock), and the Company will obtain the undertaking of
each of its officers and directors as have been heretofore designated by you and
listed on Schedule II attached hereto not to engage in any of the aforementioned
transactions on their own behalf, other than the Company's sale of Shares
hereunder and the Company's issuance of Common Stock upon the exercise of
presently outstanding stock options. The Company agrees not to waive any
undertaking obtained pursuant to this paragraph.
(g) The Company will apply the proceeds from the sale of the Shares as set
forth under "Use of Proceeds" in the Prospectus.
(h) The Company will use its best efforts to cause the Shares to be
approved for quotation on the National Association of Securities Dealers
Automated Quotation National Market System ("Nasdaq").
(i) The Company will comply with Rule 463 of the Regulations.
12
(j) The Company will use its best efforts to ensure that the Directed
Shares are restricted as required by the National Association of Securities
Dealers, Inc. or the National Association of Securities Dealers, Inc. rules from
sale, transfer, assignment, pledge or hypothecation for a period of three (3)
months following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request of
the Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such a period of time. Should the
Company release, or seek to release, from such restrictions any of the Directed
Shares, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(k) The Company agrees to not terminate the Concurrent Offering without
the prior written consent of Bear Xxxxxxx.
5. Payment of Expenses. Whether or not the transactions contemplated in
-------------------
the Placement Agency Agreement or in this Agreement are consummated, or the
Placement Agency Agreement or this Agreement is terminated, the Company hereby
agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Agreement Among Underwriters [and the Selling Agreement]) and all
other documents related to the public offering of the Shares (including those
supplied to the Underwriters in quantities as hereinabove stated), (ii) the
issuance, transfer and delivery of the Shares to the Underwriters and to the
Placement Agents, including any transfer or other taxes payable thereon, (iii)
the qualification of the Shares under state or foreign securities or Blue Sky
laws, including the costs of printing and mailing a preliminary and final "Blue
Sky Survey" and the fees of counsel for the Underwriters and the Placement
Agents and such counsel's disbursements in relation thereto, (iv) quotation of
the Shares on Nasdaq, (v) filing fees of the Commission and the National
Association of Securities Dealers, Inc.; (vi) the cost of printing certificates
representing the Shares, (vii) the cost and charges of any transfer agent or
registrar, and (viii) cost and expenses (including the out-of-pocket expenses of
the Underwriters) associated with the Company's "road show" and any internet
broadcasts thereof (if any).
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares, the Additional Shares and
the Concurrent Shares, as provided herein, shall be subject to the accuracy of
the representations and warranties of the Company herein contained, as of the
date
13
hereof and as of the Closing Date (for purposes of this Section 6 "Closing
Date" shall refer to the Closing Date for the Firm Shares and the Concurrent
Shares and all Additional Closing Dates, if different, for the Additional
Shares), to the absence from any certificates, opinions, written statements or
letters furnished to you or to Xxxxxxxx & Xxxxxxxx LLP ("Underwriters' Counsel")
pursuant to this Section 6 of any misstatement or omission, to the performance
by the Company of its obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later than
if pricing pursuant to Rule 430A -- 5:30 P.M., New York time, on the date of
this Agreement, or at such later time and date as shall have been consented to
in writing by you; if the Company shall have elected to rely upon Rule 430A or
Rule 434 of the Regulations, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof; and, at
or prior to the Closing Date no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof shall have been
issued and no proceedings therefor shall have been initiated or threatened by
the Commission.
(b) At the Closing Date you shall have received the opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel for the Company, dated the Closing
Date addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Company is validly existing as a corporation in good standing
under the laws of the State of Delaware, with all requisite corporate power
and authority to own its properties and conduct its business as described
in the Prospectus.
(ii) The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing which will not in the aggregate have a
material adverse effect on the Company.
(iii) The Company has an authorized capital stock as set forth in the
Prospectus under the caption "Capitalization," and all of the issued shares
of capital stock of the Company (including the Shares being delivered on
the date hereof) have been duly authorized, validly issued and are fully
paid and non-assessable (assuming, with respect to the Shares to be sold by
the Company, that they are paid for in accordance with the terms of this
Agreement or the Subscription Agreements) and will not be issued in
violation of or subject to any preemptive rights under the Second Amended
and Restated Certificate of Incorporation of the Company; and the Common
Stock, the Firm Shares, the Additional Shares
14
and the Concurrent Shares conform as to legal matters to the descriptions
thereof contained in the Prospectus.
(iv) The Shares have been approved for quotation on Nasdaq.
(v) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
(vi) The Company has taken all necessary corporate action to authorize
the execution, delivery and performance of its obligations under this
Agreement, the Placement Agency Agreement and the Subscription Agreements
and has dully executed and delivered this Agreement, the Placement Agency
Agreement and the Subscription Agreements.
(vii) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator against the Company, of a
character required to be disclosed in the Registration Statement which is
not adequately disclosed in the Prospectus.
(viii) The execution and delivery by the Company of this Agreement, the
Placement Agency Agreement and the Subscription Agreements and the
performance by the Company of its obligations hereunder (i) do not require
under the federal laws of the United States of America or the laws of the
States of New York or Delaware any filing or registration by the Company
with, or approval or consent to the Company of, any governmental agency or
authority of the United States of America or the States of New York or
Delaware that has not been made or obtained, the failure of which to make
or obtain would not have a material adverse effect on the Company, (ii) do
not contravene any provision of the Second Amended and Restated Certificate
of Incorporation or the By-Laws of the Company, and (iii) do not violate
(A) any present law, or present regulation of any governmental agency or
authority, of the States of New York or Delaware or the United States of
America known by such counsel to be applicable to the Company or its
property or (B) any agreement or any court decree or order binding upon the
Company or its property (such opinion being limited (x) to those
agreements, decrees or orders, if any, that have been listed in an
officer's certificate as the only such agreements, decrees or orders
binding upon the Company, or that are otherwise known to such counsel and
(y) in that such counsel need express no opinion with respect to any
violation not readily ascertainable from the face of any such agreement or
court decree or order, or arising under or
15
based upon any cross-default provision insofar as it relates to a default
under an agreement or court order or decree not so listed, or arising under
or based upon any covenant of a financial or numerical nature or requiring
computation); which violation would have a material adverse effect on the
Company.
(ix) The Registration Statement and the Prospectus, as of their
respective effective or issue dates (other than the financial statements,
notes or schedules included or omitted in the Registration Statement or the
Prospectus or other financial or accounting data included in or omitted
from the Registration Statement or Prospectus, as to which we express no
opinion) appeared on their face to be responsive as to form in all material
respects with the applicable requirements of the Act.
(x) The Registration Statement has been declared effective by the
Commission under the Act. To the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the Act and no proceedings for such purpose have been instituted or
are pending or are contemplated or threatened by the Commission. Any
required filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the timer period
required by such Rule 424(b).
(xi) In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus such counsel
participated in conferences with certain of the officers and
representatives of, and the independent public accountants for, the
Company. Such counsel shall state that between the date of the
Registration Statement and the time of delivery of their opinion, they
participated in additional conferences with certain officers and
representatives of the Company at which the contents of the Registration
Statement and the Prospectus were discussed. Such counsel may state that
given the limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration
process, they are not passing upon and do not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus. Such counsel shall state that
subject to the foregoing and on the basis of the information they gained in
the course of the performance of the services referred to above, including
information obtained from offices and representatives of the Company, no
facts have come to their attention that cause them to believe that the
Registration Statement, at the time the Registration Statement became
effective, contained any 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 that the Prospectus, as of its
date,
16
contained any untrue statement of a materials fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Also, such counsel shall state that, subject to the foregoing, no facts
have come to their attention in the course of the proceedings described in
the second sentence of this paragraph that cause them to believe that the
Prospectus, as of the date and time of delivery of their opinion letter,
contains any untrue statement of a material fact or omits to state any
material necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. In each case,
however, such counsel shall not be required to express any view or belief
with respect to (i) financial statements, notes or schedules included or
omitted in the Registration Statement or the Prospectus or (ii) other
financial or accounting data included in the Registration Statement or the
Prospectus.
(xii) The Concurrent Offering conforms, in all material respects, to
the requirements of the Act and the Exchange Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon
an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to
Underwriters' Counsel, familiar with the applicable laws; (B) as to matters
of fact, to the extent they deem proper, on certificates of officers of the
Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is in form satisfactory to
such counsel and, in their opinion, you and they are justified in relying
thereon.
(c) At the Closing Date you shall have received the opinion of Xxxxxx
Godward LLP, special intellectual property counsel for the Company, dated the
Closing Date addressed to the Underwriters and in form and substance
satisfactory to the Underwriters' counsel.
(d) All proceedings taken in connection with the sale of the Firm Shares,
the Additional Shares and the Concurrent Shares as herein contemplated shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and the
Underwriters shall have received from said Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Firm Shares, and
17
as of the Additional Closing Date with respect to the Additional Shares, the
Registration Statement and the Prospectus and such other related matters as you
may reasonably require, and the Company shall have furnished to Underwriters'
Counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(e) At the Closing Date you shall have received a certificate of either
Co-Chief Executive Officer and the Chief Financial Officer of the Company, dated
the Closing Date to the effect that (i) the condition set forth in subsection
(a) of this Section 6 has been satisfied, (ii) as of the date hereof and as of
the Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate in all material respects, (iii) as of the Closing
Date the obligations of the Company to be performed hereunder on or prior
thereto have been duly performed in all material respects and (iv) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not sustained any material loss or
interference with its respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or any development involving a material
adverse change, in the business prospects, properties, operations, condition
(financial or otherwise), or results of operations of the Company, except in
each case as described in or contemplated by the Prospectus.
(f) [DELETE SPECIFIC LANGUAGE OF KPMG OPINION CONTAINED IN THIS PARAGRAPH
ONCE SUCH OPINION HAS BEEN REVIEWED AND IS ACCEPTABLE TO THE UNDERWRITERS.] At
the time this Agreement is executed and at the Closing Date, you shall have
received a letter, from KPMG Peat Marwick, LLP, independent public accountants
for the Company, dated, respectively, as of the date of this Agreement and as of
the Closing Date addressed to the Underwriters and in form and substance
satisfactory to you, to the effect that: (i) they are independent certified
public accountants with respect to the Company within the meaning of the Act and
the Regulations and stating that the answer to Item 10 of the Registration
Statement is correct insofar as it relates to them; (ii) stating that, in their
opinion, the financial statements and schedules of the Company included in the
Registration Statement and the Prospectus and covered by their opinion therein
comply as to form in all material respects with the applicable accounting
requirements of the Act and the applicable published rules and regulations of
the Commission thereunder; (iii) on the basis of procedures consisting of a
reading of the latest available unaudited interim consolidated financial
statements of the Company, a reading of the minutes of meetings and consents of
the shareholders and boards of directors of the Company and the committees of
such boards subsequent to [___________], inquiries of officers and other
employees of the Company who have responsibility for financial and accounting
matters of the Company with respect to transactions and events subsequent to
[___________] and other specified procedures and inquiries to a date not more
than five days prior to the date of such letter, nothing has come to their
attention that would cause them to believe that: (A) the unaudited consolidated
financial statements and schedules of the Company presented in the
18
Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and, if
applicable, the Exchange Act and the applicable published rules and regulations
of the Commission thereunder or that such unaudited consolidated financial
statements are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited consolidated financial statements included in the Registration
Statement and the Prospectus; (B) with respect to the period subsequent to
[__________] there were, as of the date of the most recent available monthly
consolidated financial statements of the Company, if any, and as of a specified
date not more than five days prior to the date of such letter, any changes in
the capital stock or long-term indebtedness of the Company or any decrease in
the net current assets or stockholders' equity of the Company, in each case as
compared with the amounts shown in the most recent balance sheet presented in
the Registration Statement and the Prospectus, except for changes or decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter or (B) that during the period
from [date following the date of the most recent consolidated balance sheet of
the Company included in the Registration Statement and the Prospectus] to the
date of the most recent available monthly consolidated financial statements of
the Company, and to a specified date not more than five days prior to the date
of such letter, there was any decrease, as compared with the corresponding
period in the prior fiscal year, in total revenues, or total or per share net
income, except for decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such letter; and
(iv) stating that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, and other financial information pertaining
to the Company set forth in the Registration Statement and the Prospectus, which
have been specified by you prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages, and information may be derived from the
general accounting and financial records of the Company or from schedules
furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries, and other appropriate procedures specified by
you set forth in such letter, and found them to be in agreement.
(g) Prior to the Closing Date the Company shall have furnished to you such
further information, certificates and documents as you may reasonably request.
(h) You shall have received from each person who is a director or officer
of the Company or such shareholder as have been heretofore designated by you and
listed on Schedule II hereto an agreement to the effect that such person will
not, without your prior written consent, directly or indirectly, issue, sell,
offer or agree to sell, grant any option for the sale of, pledge, make any short
sale, establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Exchange Act or otherwise dispose of any Common Stock (or any
securities convertible into, exercisable for or exchangeable for Common Stock)
for a period of 180 days after the date of the
19
Prospectus. The Company agrees not to waive any undertaking obtained pursuant to
this paragraph.
(i) At the Closing Date, the Shares shall have been approved for
quotation on Nasdaq, subject to official notice of issuance.
(j) The Company shall have satisfied all of the conditions with respect
to the sale of the Concurrent Shares pursuant to the Placement Agency Agreement
and the Subscription Agreements and the Company shall have complied with all
obligations under the Placement Agency Agreement and the Subscription
Agreements.
(k) Prior to the Closing Date, and with respect to the Additional
Shares, prior to an Additional Closing Date, the Company shall have furnished to
you such further information, certificates and documents as you may reasonably
request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be cancelled by you
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Shares may be cancelled by you at, or at
any time prior to, an Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
7. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any and all losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
reasonable attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration statement for
the registration of the Shares, as originally filed or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
-------- -------
that the Company will not be liable in any such case to the extent but
20
only to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through you expressly for use therein.
(b) Each Underwriter severally, and not jointly, agrees to indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), jointly or several, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder. This indemnity will be in addition to any
liability which any Underwriter may otherwise have including under this
Agreement. The Company acknowledges that the statements set forth in the last
paragraph of the cover page of the Prospectus, the last paragraph set forth on
the inside front cover, and in the third paragraph, the last sentence of the
seventh paragraph and the eighth paragraph under the caption "Underwriting" in
the Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for use in the registration statement
relating to the Shares as originally filed or in any amendment thereof, any
related preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
(c) In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of the
Directed Shares Purchasers to pay for and accept delivery of the Directed Shares
which, by the end of the day following
21
the date of this Agreement, were subject to a properly confirmed agreement to
purchase such Directed Shares.
(d) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, which counsel shall be selected
by Bear Xxxxxxx. Anything in this subsection to the contrary notwithstanding,
an indemnifying party shall not be liable for any settlement of any claim or
action effected without its written consent; provided, however, that such
consent was not unreasonably withheld.
8. Contribution.
------------
(a) In order to provide for contribution in circumstances in which the
indemnification provided for in Section 7 hereof is for any reason held to be
unavailable from any indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, the Company and the Underwriters shall contribute
to the aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or
22
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the Offerings
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8
and the preceding sentence, 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. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case
23
to clauses (i) and (ii) of this Section 8. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
-------- -------
withheld.
(b) The obligations of the Company under Sections 8 and 9 herein shall
be in addition to any liability which the Company may otherwise have, including
under the Placement Agency Agreement.
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the Firm
Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any non-
defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which the
default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or an Additional Closing Date,
as the case may be for
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a period, not exceeding five business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents and arrangements, and the Company agrees to file promptly
any amendment or supplement to the Registration Statement or the Prospectus
which, in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
10. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective, upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
price of the Underwritten Offering or the purchase price per Share has not been
agreed upon prior to 5:00 P.M., New York time, on the fifth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company or the Underwriters
except as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you
notifying the Company. Notwithstanding the foregoing, the provisions of this
Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in full
force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to an Additional Closing Date, as the case
may be, if (A) any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, the market for the Company's securities or securities in general; or
(B) if trading on the New York Stock Exchange or Nasdaq shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required by the New
York Stock Exchange or Nasdaq or by order of the Commission or any other
governmental authority having jurisdiction; or (C) if a banking moratorium has
25
been declared by a state or federal authority or if any new restriction
materially adversely affecting the distribution of the Firm Shares, the
Additional Shares or the Concurrent Shares, as the case may be, shall have
become effective; or (D) (i) if the United States becomes engaged in hostilities
or there is an escalation of hostilities involving the United States or there is
a declaration of a national emergency or war by the United States or (ii) if
there shall have been such change in political, financial or economic conditions
if the effect of any such event in (i) or (ii) as in your judgment makes it
impracticable or inadvisable to proceed with the offering, sale and delivery of
the Firm Shares, the Additional Shares or the Concurrent Shares, as the case may
be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all out-
of-pocket expenses (including the fees and expenses of their counsel), incurred
by the Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or faxed and confirmed in
writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, X.X. 00000, Fax (000) 000-0000, Attention: [_____________], with a copy to
Xxxxx Xxxxxxxxxx, Esq. c/o Morrison & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to xxxxxxxx.xxx, inc., 00 Xxxx 00xx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax (000) 000-0000, Attention: Xxxx Xxxxxxxxx
and Xxxxxxx Xxxxxxxx, with a copy to Xxxxxx Xxxxxxx, Esq. c/o Fried Frank,
Harris, Xxxxxxx & Xxxxxxxx, 0 Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
13. Parties. This Agreement shall inure solely to the benefit of, and
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shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
26
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
27
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
xxxxxxxx.xxx, inc.
By________________________
Accepted as of the date first above written.
BEAR, XXXXXXX & CO. INC.
VOLPE, BROWN, XXXXXX & COMPANY, LLC
on behalf of themselves and the other
Underwriters named in Schedule I hereto.
Bear, Xxxxxxx & Co. Inc.
By ___________________________
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SCHEDULE I
Name of Underwriter Number of Firm Shares to be Purchased
----------------------------------- -------------------------------------
Bear, Xxxxxxx & Co. Inc.
Volpe, Brown, Xxxxxx & Company, LLC
Total
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SCHEDULE II
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxxx
H. Xxxxx Xxxxxxxx
30