8,500,000 Shares
Class A Common Stock
($.o1 Par Value)
UNDERWRITING AGREEMENT
December , 1999
UNDERWRITING AGREEMENT
December __, 0000
Xxxxxxx Dillon Read LLC
Xxxxxxxxx & Xxxxx LLC
Xxxxxx Xxxxxx Partners LLC
As Representatives of the several Underwriters
named in Schedule A hereto
c/o Warburg Dillon Read LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
eSpeed, Inc., a Delaware corporation (the "Company") and an indirect
subsidiary of Cantor Xxxxxxxxxx, X.X., a Delaware limited partnership (the
"Parent"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters") an aggregate of 6,000,000 shares (the "Firm
Shares") of its Class A Common Stock, $.01 par value (the "Common Stock"), and
Cantor Xxxxxxxxxx Securities, a New York partnership (the "Selling Stockholder")
and a subsidiary of the Parent, proposes to sell to the Underwriters 2,500,000
shares of Common Stock. In addition, solely for the purpose of covering
over-allotments, the Company and the Selling Stockholder propose to grant to the
Underwriters the option to purchase from the Company and the Selling Stockholder
up to an additional 1,275,000 shares of Common Stock in the aggregate (the
"Additional Shares" and, collectively with the Firm Shares, the "Shares"). Of
the Additional Shares, up to 1,000,000 Shares may be sold by the Company and up
to 275,000 Shares may be sold by the Selling Stockholder. The Shares are
described in the Prospectus as defined below.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively
called the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (Reg. No. 333-87475)
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each thereof being herein called a "Preliminary
Prospectus") relating to the Shares. Except where the context otherwise
requires, the registration statement, as amended when it becomes effective,
including all documents filed as a part thereof, and
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including any information contained in a prospectus subsequently filed with the
Commission pursuant to Rule 424(b) under the Act and deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430(A)
under the Act and also including any registration statement filed pursuant to
Rule 462(b) under the Act, is herein called the "Registration Statement", and
the prospectus, in the form filed by the Company with the Commission pursuant to
Rule 424(b) under the Act on or before the second business day after the date
hereof (or such earlier time as may be required under the Act) or, if no such
filing is required, the form of final prospectus included in the Registration
Statement at the time it became effective, is herein called the "Prospectus".
The Company, the Selling Stockholder, the Parent and the Underwriters agree
as follows:
1. Sale and Purchase. Upon the basis of the warranties, representations and
covenants, and subject to the terms and conditions herein set forth, the Company
agrees to sell to the respective Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company that number of
Firm Shares which bears the same proportion to the aggregate number of Firm
Shares to be issued and sold by the Company as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule A annexed hereto bears
to the aggregate number of Firm Shares to be sold by the Company and the Selling
Stockholder. In addition, upon the basis of the warranties, representations and
covenants and subject to the terms and conditions herein set forth, the Selling
Stockholder agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Selling
Stockholder that number of Firm Shares which bears the same proportion to the
aggregate number of Firm Shares to be sold by the Selling Stockholder as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A annexed hereto bears to the aggregate number of Firm Shares to be
sold by the Company and the Selling Stockholder. The purchase price in respect
of the Shares to be purchased by the Underwriters from the Company and the
Selling Stockholder shall be $ per Share. The Company and the Selling
Stockholder are advised by you that the Underwriters intend (i) to make a public
offering of their respective portions of the Firm Shares as soon after the
effective date of the Registration Statement as in your judgment is advisable
and (ii) initially to offer the Firm Shares upon the terms set forth in the
Prospectus. You may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may determine.
Upon the basis of the warranties, representations and covenants, and
subject to the terms and conditions herein set forth, the Company and the
Selling Stockholder also hereby grant to the several Underwriters the option to
purchase, and the Underwriters shall have the right to purchase, severally and
not jointly, from the Company and the Selling Stockholder, ratably in accordance
with the number of Firm Shares to be purchased by each of
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them, all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company and
the Selling Stockholder for the Firm Shares. This option may be exercised by you
on behalf of the several Underwriters at any time (but not more than once) on or
before the thirtieth day following the date hereof, by written notice to the
Company and the Selling Stockholder. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised, and the
date and time when the Additional Shares are to be delivered (such date and time
being herein referred to as the additional time of purchase); provided, however,
that the additional time of purchase shall not be earlier than the time of
purchase (as defined below) nor earlier than the second business day1 after the
date on which the option shall have been exercised nor later than the tenth
business day after the date on which the option shall have been exercised. To
the extent that the option is exercised in part, Additional Shares shall be sold
by the Company and the Selling Stockholder pro rata. The aggregate number of
Additional Shares to be sold to each Underwriter shall be the number which bears
the same proportion to the aggregate number of Additional Shares being purchased
as the number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made to the Company and the Selling Stockholder by Federal Funds
immediately available wire transfer, against delivery of the certificates for
the Firm Shares to you through the facilities of the Depository Trust Company
for the respective accounts of the Underwriters. Such payment and delivery shall
be made at 10:00 A.M., New York City time, on December __, 1999 (unless another
time shall be agreed to by you and the Company and the Selling Stockholder or
unless postponed in accordance with the provisions of Section 8 hereof). The
time at which such payment and delivery are actually made is hereinafter
sometimes called the time of purchase. Certificates for the Firm Shares shall be
delivered to you in definitive form in such names and in such denominations as
you shall specify on the second business day preceding the time of purchase. For
the purpose of expediting the checking of the certificates for the Firm Shares
by you, the Company and the Selling Stockholder agree to make such certificates
available to you for such purpose at least one full business day preceding the
time of purchase.
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Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as the
payment for the Firm Shares. Certificates for the Additional Shares shall be
delivered to you in definitive form in such names and in such denominations as
you shall specify no later than the second business day preceding the additional
time of purchase. For the purpose of expediting the checking of the certificates
for the Additional Shares by you, the Company and the Selling Stockholder agree
to make such certificates available to you for such purpose at least one full
business day preceding the additional time of purchase.
3. Representations and Warranties of the Company, the Parent and the
Selling Stockholder.
(i) The Company and the Parent jointly and severally represent and warrant
to each of the Underwriters that:
(a) none of the Company, the Selling Stockholder or the Parent has
received, or has notice of, any order of the Commission preventing or suspending
the use of any Preliminary Prospectus, or instituting proceedings for that
purpose, and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act; and when the
Registration Statement becomes effective, the Registration Statement and the
Prospectus will conform in all material respects with the provisions of the Act,
and the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Prospectus will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that each of the Company and the Parent makes no warranty or
representation with respect to any statement contained in or
omitted from the Registration Statement or the Prospectus in reliance upon and
in conformity with information concerning the Underwriters (in their capacity as
such) and furnished in writing by or on behalf of any Underwriter (in its
capacity as such) through you (in your capacity as representatives of the
several Underwriters) to the Company expressly for use in the Registration
Statement or the Prospectus; and none of the Company, the Selling Stockholder,
the Parent nor any of their respective affiliates has distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the Preliminary Prospectus, the Prospectus or any other
materials, if any, permitted by the Act;
(b) as of the date of this Agreement, the Company has an authorized
capitalization as set forth under the heading entitled "Actual" in the section
of the
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Registration Statement and the Prospectus entitled "Capitalization" and, as of
the time of purchase and the additional time of purchase, as the case may be,
the Company shall have an authorized capitalization as set forth under the
heading entitled "As Adjusted" in the section of the Registration Statement and
the Prospectus entitled "Capitalization"; all of the issued and outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable, have been issued in compliance in
all material respects with all federal and state securities laws and were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right;
(c) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with the
requisite corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Registration Statement;
(d) the Company is duly qualified to do business as a foreign corporation
in good standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to so qualify would not reasonably be expected to have a
material adverse effect on the business, operations, prospects, properties,
condition (financial or otherwise) or results of operation of the Company and
the Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect"). The Company has no subsidiaries (as defined in the Act) other than
eSpeed Securities, Inc., eSpeed Government Securities, Inc., eSpeed Securities
International Limited and eSpeed Markets, Inc. (collectively, the
"Subsidiaries"); the Company owns 100% of the outstanding capital stock of the
Subsidiaries; other than the Subsidiaries, the Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt of any
corporation or have any direct or indirect equity interest or ownership of
long-term debt in any firm, partnership, joint venture, association or other
entity; complete and correct copies of the certificates of incorporation and of
the bylaws of the Company and the Subsidiaries and all amendments thereto have
been delivered to you; each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with the requisite corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement; each Subsidiary is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction where the ownership or
leasing of the properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not reasonably be
expected to have a Material Adverse Effect; all of the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable and are owned by the Company subject
to no security interest, other
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encumbrance or adverse claims; no options, warrants or other rights to purchase,
agreements or other obligations to issue or rights to convert any obligation
into shares of capital stock or ownership interests in the Subsidiaries are
outstanding.
(e) the Company and each of the Subsidiaries are in compliance in all
material respects with the applicable laws, rules, regulations and directives,
and applicable orders, issued or administered by each jurisdiction in which they
conduct their respective businesses;
(f) none of the Company or any of the Subsidiaries or the Selling
Stockholder or the Parent or any of their respective subsidiaries is in breach
or violation of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would result in any breach or violation of, or
constitute a default under) (each such breach, violation, default or event, a
"Default Event"), (i) its respective charter or by-laws or (ii) in the
performance or observance of any obligation, agreement, covenant or condition
contained in any license, permit, indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any lease, contract or
other agreement or instrument to which the Company, the Selling Stockholder, the
Parent or any of their respective subsidiaries is a party or by which any of
them or any of their properties is bound or affected or under any federal,
state, local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company, the Selling Stockholder, the Parent or any of their
respective subsidiaries, other than such Default Events as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (A) in the case of the Selling Stockholder and the Parent and
their respective subsidiaries (other than the Company and the Subsidiaries),
with respect to clause (i) and (B) in the case of the Company, the Selling
Stockholder and the Parent and their respective subsidiaries, with respect to
clause (ii); and the execution, delivery and performance of this Agreement, the
issuance and sale of the Shares and the consummation of the transactions
contemplated hereby does not constitute and will not result in a Default Event
under (x) any provisions of the charter or by-laws of the Company, the Selling
Stockholder or the Parent or any of their respective subsidiaries or (y) under
any provision of any license, permit, indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company, the Selling
Stockholder or the Parent or any of their respective subsidiaries is a party or
by which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company, the Selling Stockholder, or
the Parent or any of their respective subsidiaries, except for such Default
Events as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect (a) in the case of the Selling Stockholder
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and the Parent and their respective subsidiaries (other than the Company and the
Subsidiaries), with respect to clause (x) and (b) in the case of the Company,
the Selling Stockholder and the Parent and their respective subsidiaries, with
respect to clause (y);
(g) this Agreement has been duly authorized, executed and delivered by each
of the Company, the Selling Stockholder and the Parent and is a legal, valid and
binding agreement of each of the Company, the Selling Stockholder and the
Parent;
(h) the capital stock of the Company, including the Shares, conforms in all
material respects to the description thereof contained in the Registration
Statement and Prospectus;
(i) the Shares have been duly and validly authorized by the Company and,
when issued by the Company and delivered by the Company or the Selling
Stockholder, as the case may be, against payment therefor as provided herein,
will be validly issued, fully paid and non-assessable;
(j) no approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board, body,
authority or agency is required to be obtained or made by the Company, the
Selling Stockholder, the Parent or any of their respective affiliates in
connection with the issuance and sale of the Shares or the consummation by the
Company, the Selling Stockholder and the Parent of the transactions contemplated
hereby other than registration of the Shares under the Act and under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively called the "Exchange Act"), and any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters or under Rule 2710 and
Rule 2720 of NASD Regulation, Inc. ("NASDR");
(k) except as disclosed in the Prospectus, no person has the right,
contractual or otherwise, to cause the Company to issue to it, or register
pursuant to the Act, any shares of capital stock of the Company upon the issue
and sale of the Shares to the Underwriters hereunder, nor does any person have
preemptive rights, co-sale rights, rights of first refusal or other rights to
purchase any of the Shares or to underwrite the offer and sale of the Shares;
(l) Deloitte & Touche LLP, whose report on the consolidated financial
statements of the Company and the Subsidiaries is filed with the Commission as
part of the Registration Statement and Prospectus, are independent public
accountants as required by the Act;
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(m) each of the Company and the Subsidiaries has all necessary licenses,
permits, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation or
rule (collectively, "Permits"), and has obtained all necessary authorizations,
consents and approvals from other persons (collectively, "Approvals"), in order
to conduct its respective business as described in the Prospectus, other than
such Permits and Approvals the failure to obtain which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
neither the Company nor any of the Subsidiaries is in violation of, or in
default under, any such license, permit, authorization, consent or approval or
any federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of the Subsidiaries the
effect of which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect;
(n) all legal or governmental proceedings, contracts, leases or documents
of a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have been
so described or filed as required;
(o) except as disclosed in the Prospectus, there are no actions, suits,
claims, investigations or proceedings pending or threatened to which the
Company, the Selling Stockholder or the Parent or any of their respective
subsidiaries or any of their respective officers or directors is a party or of
which any of their respective properties is subject at law or in equity, or
before or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency which, if adversely decided, could
reasonably be expected to result in a judgment, decree or order having a
Material Adverse Effect or prevent consummation of the transactions contemplated
hereby;
(p) the audited financial statements included in the Registration Statement
and the Prospectus present fairly in all material respects the consolidated
financial position of the Company and the Subsidiaries as of the dates indicated
and the consolidated results of operations and cash flows of the Company and the
Subsidiaries for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis during the periods involved; and the pro forma financial data
included in the Registration Statement and the Prospectus present fairly in all
material respects the information purported to be shown therein and have been
prepared in conformity with the requirements of the Act;
(q) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development with respect to the Company, the
Selling Stockholder or Parent which, in the reasonable judgment of the Company
or the
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Parent, as the case may be, is likely to cause a material adverse change, in the
business, properties or assets described or referred to in the Registration
Statement, or the results of operations, condition (financial or otherwise),
business, operations or prospects of the Company and the Subsidiaries taken as a
whole, (ii) any transaction which is material to the Company or the Subsidiaries
(other than the completion of the transactions relating to the contribution to
and the acquisition by the Company and the Subsidiaries of assets from the
Parent and its subsidiaries as described in the Prospectus under the caption
"Relationship with Cantor - The Formation Transactions" (the "Formation
Transactions")), (iii) any obligation, direct or contingent, which is material
to the Company and the Subsidiaries taken as a whole, incurred by the Company or
the Subsidiaries, (iv) any change in the capital stock or outstanding
indebtedness of the Company or the Subsidiaries or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company. Neither the Company nor the Subsidiaries has any material contingent
obligation which is not disclosed in the Registration Statement.
(r) the Company has obtained agreements substantially in the forms included
in Exhibit I hereto of the Parent, the Selling Stockholder and each of its other
holders of Class A Common Stock and Class B Common Stock (collectively, "Common
Stock") and securities convertible into or exchangeable or exercisable for
Common Stock not to sell, offer to sell, contract to sell, hypothecate, grant
any option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock or warrants or other rights to purchase Common Stock for a
period of 180 days after the date of the Prospectus without the prior written
consent of Warburg Dillon Read LLC ("WDR"), subject to such exceptions as may be
set forth in Exhibit I hereto;
(s) the Company is not and, after giving effect to the offering and sale of
the Shares, will not be an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(t) any statistical and market-related data included in the Prospectus are
based on or derived from sources that the Company and the Parent believe to be
reliable and accurate, and the Company has obtained the written consent to the
use of such data from such sources to the extent required;
(u) none of the Company, the Selling Stockholder, the Parent or any of
their respective affiliates has taken, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected to
cause or result in
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stabilization or manipulation of the price of any security of the Company in
violation of the Exchange Act or any other laws to facilitate the sale or resale
of the Shares;
(v) the Company and the Subsidiaries maintain insurance of the types and in
amounts reasonably adequate for their respective businesses, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company and the Subsidiaries against theft, damage, destruction, acts of
vandalism and other risks customarily insured against, all of which insurance is
in full force and effect, except as would not have a Material Adverse Effect;
(w) none of the Company, the Parent or any of their respective subsidiaries
has sustained since the date of the latest audited financial statements included
in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or other than any loss or
interference which would not have a Material Adverse Effect;
(x) upon completion of the Formation Transactions, the Company and the
Subsidiaries will have good title to all personal property to be owned by them
as described in the Prospectus free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and, upon completion of the Formation Transactions, any real
property and buildings to be held under lease by the Company or any Subsidiary
will be held by it under valid, subsisting and, with respect to the Company or
such Subsidiary, enforceable leases, subleases or rights of use agreements 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 or such
Subsidiary;
(y) other than as set forth in the Prospectus, or as would not reasonably
be expected individually or in the aggregate to have a Material Adverse Effect,
upon completion of the Formation Transactions, the Company and the Subsidiaries
will own, possess, license or have other rights to use, or will be able to
acquire, license or otherwise obtain rights to use, on reasonable terms, all
patents, trademarks, servicemarks, trade names, copyrights, trade secrets,
information, proprietary rights and processes ("Intellectual Property")
necessary for their business as described in the Prospectus and, to the
Company's and the Parent's knowledge, necessary in connection with the products
and services under development, without, to the Company and the Parent's
knowledge after due inquiry, any conflict with or infringement of the interests
of others, and have taken all reasonable steps necessary to secure interests in
such
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Intellectual Property with respect to the business as described in the
Prospectus; except as set forth in the Prospectus, neither the Company nor the
Parent is aware of any options, licenses or agreements of any kind relating to
the Intellectual Property of the Company or any Subsidiary that are, or upon
completion of the Formation Transactions will be, outstanding and which are
required to be set forth in the Prospectus, and, except as set forth in the
Prospectus, upon completion of the Formation Transactions, neither the Company
nor any Subsidiary will be a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property of any other person or
entity which are required to be set forth in the Prospectus; none of the
technology to be employed by the Company and the Subsidiaries upon completion of
the Formation Transactions has been or will be obtained or is or will be used by
the Company, the Parent or any of their respective subsidiaries in violation of
any contractual obligation binding (or to be binding upon completion of the
Formation Transactions) on the Company, the Parent or any of their respective
subsidiaries or any of their respective directors or executive officers or, to
the Company's and the Parent's knowledge, any employees of the Company, the
Parent or any of their respective subsidiaries or otherwise in knowing violation
after due inquiry of the rights of any persons, other than any violation which
would not individually or in the aggregate have a Material Adverse Effect;
except as disclosed in the Prospectus, none of the Company, the Parent or any of
their respective subsidiaries has received any written communications alleging
that the Company, the Parent or any of their respective subsidiaries has
violated, infringed or conflicted with, or, by conducting its business as set
forth in the Prospectus, would violate, infringe or conflict with any of the
Intellectual Property of any other person or entity other than any such
violation, infringement or conflict which would not individually or in the
aggregate have a Material Adverse Effect;
(z) the Parent and the Company have reviewed the operations of the Company,
the Parent and their respective subsidiaries and any third parties with which
the Company, the Parent and their respective subsidiaries have a material
relationship to evaluate the extent to which the business or operations of the
Company and the Subsidiaries will be affected by the Year 2000 Problem (as
defined below). As a result of such review, the Parent and the Company have no
reason to believe, and do not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference with the
business or operations of the Company and the Subsidiaries. The "Year 2000
Problem" means any significant risk that computer hardware or software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates
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or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000;
(aa) none of the Company, the Parent or any of their respective
subsidiaries has violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants, nor any
federal or state law relating to discrimination in the hiring, promotion or pay
of employees nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which individually or in the aggregate might
result in a Material Adverse Effect;
(bb) the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(cc) all tax returns required to be filed by the Company and each of the
Subsidiaries in any jurisdiction have been filed, other than those filings being
contested in good faith, and all taxes, including withholding taxes, penalties
and interest, assessments, fees and other charges due pursuant to such returns
or pursuant to any assessment received by the Company or any of the Subsidiaries
have been paid, other than those being contested in good faith and for which
adequate reserves have been provided;
(dd) each of eSpeed Securities, Inc. and eSpeed Government Securities, Inc.
is registered under the Exchange Act as a broker-dealer and is a member in good
standing of the National Association of Securities Dealers, Inc. and neither the
Company nor any other Subsidiary is required to be so registered; and to the
extent required in connection with their respective businesses, each of the
Company and the Subsidiaries is also registered as a broker-dealer in each state
and other jurisdiction in which such registration is required;
(ee) each of the Assignment and Assumption Agreements, the Joint Services
Agreement and the Administrative Services Agreement (each as defined in the
Prospectus) has been duly authorized, executed and delivered by each of the
12
Company, the Parent and each other party thereto and constitutes a legal, valid
and binding agreement of each of the Company, the Parent and each other party
thereto; none of the execution, delivery and performance of the Assignment and
Assumption Agreements, the Joint Services Agreement and the Administrative
Services Agreement, the consummation of the transactions contemplated thereby or
the consummation of the Formation Transactions constitute or will result in a
Default Event (i) under any provisions of the charter or by-laws of the Company,
the Selling Stockholder or the Parent or any of their respective subsidiaries or
(ii) under any provision of any license, permit, indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument to which the Company, the
Selling Stockholder or the Parent or any of their respective subsidiaries is a
party or by which any of them or their respective properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to the Company, the Selling
Stockholder or the Parent or any of their respective subsidiaries, except for
such Default Events as would not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect (a) in the case of the Selling
Stockholder and the Parent and their respective subsidiaries (other than the
Company and the Subsidiaries), with respect to clause (i) and (b) in the case of
the Company, the Selling Stockholder and the Parent and their respective
subsidiaries, with respect to clause (ii), and all consents required in
connection with such transactions have been obtained other than such consents
the failure to obtain which could not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect; and
(ff) the descriptions of the transactions and agreements described in the
Prospectus under the caption "Relationship with Cantor" are accurate and
complete in all material respects; and there are no material agreements or
understandings between or among the Company, the Parent or any of their
respective subsidiaries or affiliates relating to or affecting the Company or
its Subsidiaries or their respective businesses other than as described in the
Prospectus.
(ii) The Selling Stockholder represents and warrants to each of the
Underwriters that:
(a) immediately prior to the time of purchase, the Selling Stockholder will
be the lawful owner of the Shares to be sold by the Selling Stockholder
hereunder and upon sale and delivery of, and payment for, the Shares to be sold
by the Selling Stockholder hereunder, as provided herein, the Selling
Stockholder will convey to the Underwriters good and marketable title to such
Shares, free and clear of all liens, encumbrances and defects;
13
(b) the Selling Stockholder has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
security of the Company in violation of the Exchange Act or any other laws to
facilitate the sale or resale of the Shares;
(c) no approval, authorization, consent or order of any court or filing
with any national, state or local governmental or regulatory commission, board,
body, authority or agency is required to be obtained or made by the Selling
Stockholder in connection with the sale of the Shares to be sold by Selling
Stockholder or for the consummation by the Selling Stockholder of the
transactions contemplated hereby other than registration of the Shares under the
Act and under the Exchange Act, and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriters or under Rule 2710 and Rule 2720 of the NASDR;
(d) this Agreement has been duly authorized, executed and delivered by the
Selling Stockholder and is a legal, valid and binding agreement of the Selling
Stockholder;
(e) the execution, delivery and performance of this Agreement, the sale of
the Shares to be sold by the Selling Stockholder and the consummation of the
transactions contemplated hereby by the Selling Stockholder does not and will
not constitute a Default Event under any provisions of the charter or by-laws of
the Selling Stockholder or any of its subsidiaries or under any provision of any
license, permit, indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any lease, contract or other
agreement or instrument to which the Selling Stockholder or any of its
subsidiaries is a party or by which it or its properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to it or any of its subsidiaries,
except for such Default Events as would not individually or in the aggregate
reasonably be expected to have a material adverse effect on the ability of the
Selling Stockholder to consummate the transactions contemplated hereby;
(f) the Selling Stockholder has no reason to believe that the
representations and warranties of the Company and the Parent contained in this
Section 3 are not true and correct, has reviewed the Registration Statement and
has no reason to believe that the Registration Statement contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary
14
to make the statements therein not misleading, or that the Prospectus contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the Selling Stockholder makes no warranty or representation with
respect to any statement contained in or omitted from the Registration Statement
or the Prospectus in reliance upon and in conformity with information concerning
the Underwriters (in their capacity as such) and furnished in writing by or on
behalf of any Underwriter (in its capacity as such) through you (in your
capacity as representatives of the several Underwriters) to the Company
expressly for use in the Registration Statement or the Prospectus;
(g) the Selling Stockholder has not distributed any offering material in
connection with the offering or sale of the Shares other than the Registration
Statement, the Preliminary Prospectus, the Prospectus or any other materials, if
any, permitted by the Act; and
(h) the Selling Stockholder has not received, and has no notice of, any
order of the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose.
4. Certain Covenants of the Company and the Selling Stockholder.
(i) The Company hereby agrees (and, with respect to Section 4(i)(l),
the Parent and the Selling Stockholder jointly and severally agree with the
Company):
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as you may designate and to maintain such
qualifications in effect so long as required for the distribution of the Shares;
provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares); and to promptly advise you 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 such purpose;
(b) to make available to the Underwriters in New York City, as soon as
practicable after the Registration Statement becomes effective, and thereafter
from time to time to furnish to the Underwriters, as many copies of the
Prospectus (or of the Prospectus as amended or supplemented if the Company shall
have made any amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriters may request for the purposes
contemplated by the Act; in case any Underwriter is required to deliver a
prospectus after the nine-month period
15
referred to in Section 10(a)(3) of the Act in connection with the sale of the
Shares, the Company will prepare promptly upon request, but at the expense of
such Underwriter, such amendment or amendments to the Registration Statement and
such prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Act;
(c) to advise you promptly and (if requested by you) to confirm such advice
in writing, (i) when the Registration Statement has become effective and when
any post-effective amendment thereto becomes effective and (ii) if Rule 430A
under the Act is used, when the Prospectus is filed with the Commission pursuant
to Rule 424(b) under the Act (which the Company agrees to file in a timely
manner under such Rules);
(d) to advise you promptly, confirming such advice in writing (if requested
by you), of any request by the Commission for amendments or supplements to the
Registration Statement or Prospectus or for additional information with respect
thereto, or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if the
Commission should enter a stop order suspending the effectiveness of the
Registration Statement, to make every reasonable effort to obtain the lifting or
removal of such order as soon as possible; to advise you promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which you shall object in writing;
(e) if necessary or appropriate, to file a registration statement pursuant
to Rule 462(b) under the Act;
(f) to furnish to you and, upon request, to each of the other Underwriters
for a period of five years from the date of this Agreement (i) copies of any
reports or other communications which the Company shall send to its stockholders
or shall from time to time publish or publicly disseminate, (ii) copies of all
annual, quarterly and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar form as may be designated by the Commission,
(iii) copies of documents or reports filed with any national securities exchange
on which any class of securities of the Company is listed, and (iv) such other
information as you may reasonably request regarding the Company or the
Subsidiaries, in each case as soon as reasonably practicable after such reports,
communications, documents or information become available;
(g) to advise the Underwriters promptly of the happening of any event known
to the Company within the time during which a Prospectus relating to the
16
Shares is required to be delivered under the Act which, in the judgment of the
Company, would require the making of any change in the Prospectus then being
used so that the Prospectus would not include an untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they are made, not misleading,
and, during such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as may
be necessary to reflect any such change and to furnish you a copy of such
proposed amendment or supplement before filing any such amendment or supplement
with the Commission;
(h) to make generally available to its security holders, and to deliver to
you, an earning statement of the Company (which will satisfy the provisions of
Section 11(a) of the Act) covering a period of twelve months beginning after the
effective date of the Registration Statement (as defined in Rule 158(c) of the
Act) as soon as is reasonably practicable after the termination of such
twelve-month period but not later than March 31, 2001;
(i) to furnish to you four signed copies of the Registration Statement, as
initially filed with the Commission, and of all amendments thereto (including
all exhibits thereto) and sufficient conformed copies of the foregoing (other
than exhibits) for distribution of a copy to each of the other Underwriters;
(j) to furnish to you as early as reasonably practicable prior to the time
of purchase and the additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements, if any, of the Company and
the Subsidiaries which have been read by the Company's independent certified
public accountants, as stated in their letter to be furnished pursuant to
Section 6(d) hereof;
(k) to apply the net proceeds from the sale of the Shares in the manner set
forth under the caption "Use of Proceeds" in the Prospectus;
(l) to pay all costs, expenses, fees and taxes (other than any transfer
taxes and fees and disbursements of counsel for the Underwriters, except as set
forth under Section 5 hereof and (iv) and (vi) below) in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the registration, issue,
sale and delivery of the Shares, (iii) the printing of this Agreement, any
Agreement Among Underwriters, any dealer agreements, any Powers of Attorney and
any closing documents (including compilations thereof) and
17
the reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and (except closing documents) to dealers (including costs of
mailing and shipment), (iv) the qualification of the Shares for offering and
sale under state laws and the determination of their eligibility for investment
under state law as aforesaid (including the legal fees and filing fees and other
disbursements of counsel for the Underwriters not to exceed $10,000) and the
printing and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriters and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on NASDAQ (as
defined herein) and any registration thereof under the Exchange Act, (vi) any
filing for review of the public offering of the Shares by NASDR and (vii) the
performance of the other obligations of the Company and the Selling Stockholder
hereunder;
(m) for so long as the delivery of the Prospectus is required in connection
with the offering or sale of the Shares, to furnish to you, before filing with
the Commission, a copy of any document proposed to be filed pursuant to Section
13, 14 or 15(d) of the Exchange Act;
(n) not to sell, offer or agree to sell, contract to sell, grant any option
to sell or otherwise dispose of, directly or indirectly, any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock or
permit the registration under the Act of any shares of Common Stock, except for
the registration of the Shares and the sales to the Underwriters pursuant to
this Agreement or on Form S-8 and except for issuances of Common Stock upon the
exercise of outstanding options, warrants and debentures, for a period of 180
days after the date hereof (the "Lock-up Period"), without the prior written
consent of WDR, other than shares registered and/or issued by the Company in
connection with acquisitions of complementary operations or assets, provided,
that the recipients thereof agree to the restrictions on transfer and disposal
set forth in this paragraph for the remainder of the Lock-up Period; and
(o) to use its best efforts to cause the Common Stock to be listed for
quotation on the Nasdaq Stock Market's National Market System ("NASDAQ").
(ii) The Selling Stockholder hereby agrees:
(a) to execute and deliver to the Underwriters a letter in the form
contemplated by Section 3(i)(r);
18
(b) to advise the Underwriters promptly of the happening of any event known
to the Selling Stockholder within the time during which a Prospectus relating to
the Shares is required to be delivered under the Act which, in the judgment of
the Selling Stockholder, would require the making of any change in the
Prospectus then being used so that the Prospectus would not include an untrue
statement of material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading; and
(c) to pay all federal and other taxes, if any, on the transfer and sale of
the Shares being sold by the Selling Stockholder to the Underwriters.
5. Reimbursement of Underwriters' Expenses. If the Shares are not delivered
for any reason other than the termination of this Agreement pursuant to Section
8 hereof, the Company, the Selling Stockholder and the Parent, jointly and
severally, shall, in addition to paying the amounts described in Section 4(i)(l)
hereof, reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company, the Parent and the Selling Stockholder on
the date hereof and at the time of purchase (and the several obligations of the
Underwriters at the additional time of purchase are subject to the accuracy of
the representations and warranties on the part of the Company, the Parent and
the Selling Stockholder on the date hereof and at the time of purchase (unless
previously waived) and at the additional time of purchase, as the case may be),
the performance by the Company, the Parent and the Selling Stockholder of their
obligations hereunder and to the following additional conditions precedent:
(a) You shall have received, at the time of purchase and at the additional
time of purchase, as the case may be, an opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP,
counsel for the Company, addressed to the Underwriters, and dated the time of
purchase or the additional time of purchase, as the case may be, with reproduced
copies for each of the other Underwriters and in form reasonably satisfactory to
Xxxxx Xxxxxxxxxx LLP, counsel for the Underwriters, stating that:
(i) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
the requisite corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as herein contemplated;
19
(ii) each of the Subsidiaries, other than eSpeed Securities
International Limited (as to which such counsel need not opine), has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation with the
requisite corporate power and authority to own, lease and operate its
respective properties and to conduct its respective business;
(iii) the Company and the Subsidiaries, other than eSpeed Securities
International Limited (as to which such counsel need not opine), are duly
qualified to do business as a foreign corporation in good standing in
______________;
(iv) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as enforcement of rights
to indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the
qualification that the enforceability of obligations of the Company
hereunder may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles;
(v) the Shares have been duly authorized by the Company and, when
issued by the Company and delivered by the Company or the Selling
Stockholder, as the case may be, to and paid for by the Underwriters in
accordance with the terms hereof, will be validly issued and will be fully
paid and non-assessable;
(vi) the Company has an authorized capitalization as set forth in the
Registration Statement and the Prospectus; the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid, nonassessable and free of statutory and, to such
counsel's knowledge, contractual preemptive rights, resale rights, rights
of first refusal and similar rights; the Shares when issued by the Company
will be free of statutory and, to such counsel's knowledge, contractual
preemptive rights; the certificates for the Shares are in proper form under
the Delaware General Corporation Law ("DGCL") and the holders of the Shares
will not be subject to personal liability by reason of being such holders;
p
(vii) the Company is the sole registered owner of _____ shares of
common stock of eSpeed Government Securities, Inc., _____ shares of
20
common stock of eSpeed Securities Inc., ____ shares of common stock of
eSpeed Securities International Limited and ____ shares of common stock of
eSpeed Markets, Inc. Such shares of capital stock (other than those of
eSpeed Securities International Limited (as to which such counsel need not
opine)) have been duly authorized and validly issued and are fully paid and
non-assessable; such counsel has no knowledge of any other outstanding
shares of capital stock of the Subsidiaries or any security interest, other
encumbrance or adverse claim with respect to the shares of capital stock of
the Subsidiaries owned by the Company; and such counsel has no knowledge of
any options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into shares
of capital stock or ownership interests in the Subsidiaries;
(viii) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and Prospectus;
(ix) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial, statistical and
accounting data contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the requirements
of the Act;
(x) the Registration Statement has become effective under the Act and,
to such counsel's knowledge, no stop order proceedings with respect thereto
are pending or threatened under the Act and any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424 under the Act
has been made in the manner and within the time period required by such
Rule 424;
(xi) no approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board,
body, authority or agency is required to be made or obtained by the Company
in connection with the issuance and sale of the Shares and consummation by
the Company of the transactions contemplated hereby other than registration
of the Shares under the Act and the Exchange Act and under Rule 2710 and
Rule 2720 of NASDR (except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters);
21
(xii) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby do not constitute, and will not result in, a Default
Event (a) under any provisions of the charter or by-laws of the Company or
any of the Subsidiaries, other than eSpeed Securities International Limited
(as to which such counsel need not opine), or (b) under any provision of
any license, permit, indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, or any lease, contract
or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected and which is filed as an exhibit to the
Registration Statement, other than, in the case of clause (b), such Default
Events as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(xiii) to such counsel's knowledge, (a) none of the Company or any of
the Subsidiaries is in violation of its charter or by-laws and (b) no
Default Event exists under any license, permit, indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of indebtedness,
or any lease, contract or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or
their respective properties may be bound or affected and which is filed as
an exhibit to the Registration Statement, except, in the case of clause
(b), any such Default Events as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(xiv) to such counsel's knowledge, there are no contracts, licenses,
agreements, leases or documents of a character which are required to be
filed as exhibits to the Registration Statement or to be summarized or
described in the Prospectus which have not been so filed, summarized or
described as required;
(xv) to such counsel's knowledge, there are no actions, suits, claims,
investigations or proceedings pending, or, to such counsel's knowledge,
threatened to which the Company or any of the Subsidiaries is subject or of
which any of their respective properties is subject at law or in equity or
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency which are required
to be described in the Prospectus but are not so described as required;
(xvi) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
22
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act;
(xvii) such counsel has read the statements in the Prospectus under the
captions "Business Regulation", "Business Legal Proceedings",
"Management 1999 Long-Term Incentive Plan", "Management Stock
Purchase Plan", "Relationship with Cantor Assignment and Assumption
Agreements", "Relationship with Cantor Joint Services Agreement",
"Relationship with Cantor Administrative Services Agreement",
"Description of Capital Stock" and "Shares Eligible for Future Sale", and
insofar as such statements constitute summaries of legal matters,
contracts, agreements, documents or proceedings referred to therein, or
refer to statements of law or legal conclusions, such statements are
accurate in all material respects and fairly present the information
purported to be shown;
(xviii) each of the Assignment and Assumption Agreements, the Joint
Services Agreement and the Administrative Services Agreement has been duly
authorized, executed and delivered by the Company and each of the
Subsidiaries party thereto, other than eSpeed Securities International
Limited (as to which such counsel need not opine), and constitutes a legal,
valid and binding agreement of the Company and each of the Subsidiaries
party thereto, other than eSpeed Securities International Limited (as to
which such counsel need not opine), enforceable against the Company and
each such Subsidiary in accordance with its terms, subject to the
qualification that the enforceability of the obligations of the Company and
each of such Subsidiaries thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable principles;
none of the execution, delivery and performance of the Assignment and
Assumption Agreements, the Joint Services Agreement and the Administrative
Services Agreement, the consummation of the transactions contemplated
thereby or the contribution to and the acquisition by the Company and its
Subsidiaries of assets as described in the Prospectus under the caption
"Relationship with Cantor -- The Formation Transactions," constitutes or
will result in a Default Event (a) under any provisions of the charter or
by-laws of the Company or any of the Subsidiaries, other than eSpeed
Securities International Limited (as to which such counsel need not opine)
or (b) under any provision of any license, permit, indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to
which the Company or the Subsidiaries is a party or by which any of them or
their respective properties may be bound or affected and which is filed as
an exhibit to the Registration
23
Statement, other than, in the case of clause (b), such Default Events that
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect; and
(xix) to the knowledge of such counsel, except as described in the
Prospectus, no person is entitled to registration rights under the Act with
respect to shares of capital stock or other securities of the Company.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Parent, representatives of the independent public accountants of
the Company and representatives of the Underwriters at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs
(vi), (viii) and (xvii) above), on the basis of the foregoing nothing has come
to the attention of such counsel that causes them to believe that the
Registration Statement or any amendment thereto at the time such Registration
Statement or amendment 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 that the
Prospectus or any supplement thereto at the date of such Prospectus or such
supplement, and at all times up to and including the time of purchase or
additional time of purchase, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief with respect to the financial
statements and schedules and other financial, statistical and accounting data
included in the Registration Statement or Prospectus).
(b) You shall have received, at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Xxxxxxx X.
Xxxxxx, General Counsel of the Company and the Parent, addressed to the
Underwriters, and dated the time of purchase or the additional time of purchase,
as the case may be, with reproduced copies for each of the other Underwriters
and in form reasonably satisfactory to Xxxxx Xxxxxxxxxx LLP, counsel for the
Underwriters, stating that:
(i) this Agreement has been duly authorized, executed and delivered by
each of the Parent and the Selling Stockholder and is a legal, valid and
binding agreement of each of the Parent and the Selling Stockholder
enforceable in accordance with its terms, except as enforcement of rights
to
24
indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the
qualification that the enforceability of obligations of the Parent and the
Selling Stockholder hereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles;
(ii) no approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board,
body, authority or agency is required to be made or obtained by the Parent,
the Selling Stockholder or any of their respective subsidiaries in
connection with the issuance and sale of the Shares and consummation by the
Parent and the Selling Stockholder of the transactions contemplated hereby
other than registration of the Shares under the Act and the Exchange Act
and under Rule 2710 and Rule 2720 of NASDR (except such counsel need
express no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters);
(iii) the execution, delivery and performance of this Agreement by the
Parent and the Selling Stockholder and the consummation by the Company, the
Parent and the Selling Stockholder of the transactions contemplated hereby
do not constitute, and will not result in, a Default Event (a) under any
provisions of the charter or by-laws of the Company, the Parent or the
Selling Stockholder or any of their respective subsidiaries or (b) under
any provision of any license, permit, indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument to which the Company, the
Parent or the Selling Stockholder or any of their respective subsidiaries
is a party or by which any of them or their respective properties may be
bound or affected and, in any such case, which is known to such counsel, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order known by such counsel to be applicable to the
Company, the Parent or the Selling Stockholder or any of their respective
subsidiaries, other than, in the case of clause (b), such Default Events as
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect;
(iv) to such counsel's knowledge, (a) none of the Company, the Parent
or the Selling Stockholder or any of their respective subsidiaries is in
violation of its charter or by-laws and (b) no Default Event exists under
any license, permit, indenture, mortgage, deed of trust, bank loan or
credit
25
agreement or other agreement or instrument to which the Company, the Parent
or the Selling Stockholder or any of their respective subsidiaries is a
party or by which any of them or their respective properties may be bound
or affected and which is known to such counsel or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
known by such counsel to be applicable to the Company, the Parent or the
Selling Stockholder or any of their respective subsidiaries, except in all
such cases with respect to clauses (a) and (b) as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect;
(v) to such counsel's knowledge, there are no actions, suits, claims,
investigations or proceedings pending or, to such counsel's knowledge,
threatened to which the Parent or the Selling Stockholder or any of their
respective subsidiaries is subject or of which any of their respective
properties is subject at law or in equity or before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency which are required to be described in the Prospectus
but are not so described as required;
(vi) each of the Assignment and Assumption Agreements, the Joint
Services Agreement and the Administrative Services Agreement has been duly
authorized, executed and delivered by the Company, the Parent and each
other party thereto and constitutes a legal, valid and binding agreement of
the Company, the Parent and each other party thereto enforceable in
accordance with its terms, subject to the qualification that the
enforceability of the obligations of the Company, the Parent and each other
party thereto thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles; none of
the execution, delivery and performance of the Assignment and Assumption
Agreements, the Joint Services Agreement and the Administrative Services
Agreement, the consummation of the transactions contemplated thereby or the
contribution to and the acquisition by the Company of assets as described
in the Prospectus under the caption "Relationship with Cantor -- The
Formation Transactions," constitutes or will result in a Default Event
under any provisions of the charter or by-laws of the Company, the Parent
or any other party thereto or any of their respective subsidiaries or under
any provision of any license, permit, indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument to which the Company, the
Parent or any other party thereto or any of their respective subsidiaries
is a party or by which any of them or their respective properties may be
bound or
26
affected and which is known to such counsel or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
known by such counsel to be applicable to the Company, the Parent or any
other party thereto or any of their respective subsidiaries, other than
such Default Events that would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect;
(vii) such counsel has read the statements in the Prospectus under the
captions "Risk Factors -- Risks Related to Our Business -- If Cantor or we
are unable to protect the intellectual property rights we license from
Cantor, our ability to operate electronic trading marketplaces may be
materially adversely affected", "Risk Factors -- Risks Related to Our
Business -- If it becomes necessary to protect or defend our intellectual
property rights, we may have to resort to costly litigation", "Risk
Factors -- Risks Related to Our Business -- If our software licenses from
third parties are terminated, our ability to operate our business may be
materially adversely affected", "Risk Factors -- Risks Related to Our
Business -- If the strength of our domain names is diluted, the value of
our proprietary rights may decrease", "Risk Factors -- Risks Related to Our
Business -- If we infringe on patent rights or copyrights of others, we
could become involved in costly litigation", "Business Our Intellectual
Property", "Business -- Regulation", "Business -- Legal Proceedings" and
"Relationship with Cantor" and insofar as such statements constitute
summaries of legal matters, contracts, agreements, documents or proceedings
referred to therein, or refer to statements of law or legal conclusions,
such statements are accurate in all material respects and fairly present
the information purported to be shown;
(viii) the Selling Stockholder has full legal right and authority to
sell, transfer and deliver in the manner provided in this Agreement the
Shares being sold by the Selling Stockholder hereunder; and
(ix) delivery by the Selling Stockholder to the several Underwriters of
certificates for the Shares being sold hereunder by the Selling
Stockholder, against payment therefor as provided herein, assuming each of
the Underwriters has purchased the Selling Stockholder's shares in good
faith and without notice of any adverse claim, will pass good and
marketable title to such Shares to the several Underwriters, free and clear
of all liens, encumbrances and defects.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Parent,
27
representatives of the independent public accountants of the Company and
representatives of the Underwriters at which the contents of the Registration
Statement and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
Prospectus (except as and to the extent stated in subparagraph (vii) above), on
the basis of the foregoing nothing has come to the attention of such counsel
that causes such counsel to believe that the Registration Statement or any
amendment thereto at the time such Registration Statement or amendment 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 that the Prospectus or any supplement thereto at the
date of such Prospectus or such supplement, and at all times up to and including
the time of purchase or additional time of purchase, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief with respect to the
financial statements and schedules and other financial, statistical and
accounting data included in the Registration Statement or Prospectus).
(c) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Xxxxxx Xxxx,
special international counsel to the Company, dated the time of purchase or the
additional time of purchase, as the case may be, stating that:
(i) eSpeed Securities International Limited has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
England and Wales, with the requisite corporate power and authority to own,
lease and operate its respective properties and to conduct its respective
business; and all of the outstanding shares of capital stock of eSpeed
Securities International Limited have been duly authorized and validly
issued and are fully paid and non-assessable and, to the knowledge of such
counsel, are owned by the Company;
(ii) eSpeed Securities International Limited is duly qualified to do
business as a foreign corporation in good standing in ;
(iii) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby do not constitute, and will not result in, a Default
Event
28
under any provisions of the articles and memorandum of association of
eSpeed Securities International Limited;
(iv) each of the Assignment and Assumption Agreement (international
version), the Joint Services Agreement and the Administrative Services
Agreement has been duly authorized, executed and delivered by eSpeed
Securities International Limited and constitutes a legal, valid and binding
agreement of eSpeed Securities International Limited enforceable in
accordance with its terms, subject to the qualification that the
enforceability of the obligations of eSpeed Securities International
Limited thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles; and none
of the execution, delivery and performance of the Assignment and Assumption
Agreements, the Joint Services Agreement and the Administrative Services
Agreement, the consummation of the transactions contemplated thereby or the
contribution to and the acquisition by the Company and its Subsidiaries of
assets as described in the Prospectus under the caption "Relationship with
Cantor -- The Formation Transactions," constitutes or will result in a
Default Event under any provisions of the charter or by-laws of eSpeed
Securities International Limited; and
(v) nothing has come to such counsel's attention that causes them to
believe that the statements with respect to regulatory matters (solely
insofar as such statements pertain to England and Wales) included in the
Prospectus, as of its date and as of the date of such opinion, contained or
contains an untrue statement of material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(d) You shall have received from Deloitte & Touche LLP letters dated,
respectively, the date of this Agreement and the time of purchase and additional
time of purchase, as the case may be, and addressed to the Underwriters (with
reproduced copies for each of the Underwriters) in the forms heretofore approved
by WDR.
(e) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Xxxxx Xxxxxxxxxx
LLP, counsel for the Underwriters, dated the time of purchase or the additional
time of purchase, as the case may be, with respect to the issuance and sale of
the Shares by the Company, the Registration Statement, the Prospectus (together
with any supplement thereto) and other related matters as the Underwriters may
require.
29
(f) No amendment or supplement to the Registration Statement or
Prospectus shall at any time have been filed to which you have objected or shall
object in writing.
(g) The Registration Statement shall have become effective, at or
before 5:30 P.M., New York City time, on the date of this Agreement, unless a
later time shall be agreed to by the Company and you in writing or by telephone,
confirmed in writing, and, if Rule 430A under the Act is used, the Prospectus
shall have been filed with the Commission no later than 5:30 P.M., New York City
time, on the second full business day after the date of this Agreement;
provided, however, that the Company and you and any group of Underwriters,
including you, who have agreed hereunder to purchase in the aggregate at least
50% of the Firm Shares may from time to time agree on a later date.
(h) Prior to the time of purchase or the additional time of purchase,
as the case may be, (i) no stop order with respect to the effectiveness of the
Registration Statement shall have been issued under the Act or proceedings
initiated under Section 8(d) or 8(e) of the Act; (ii) the Registration Statement
and all amendments thereto, or modifications thereof, if any, shall not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and (iii) the Prospectus and all amendments or supplements thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
(i) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no material
and adverse change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the operations, business, condition
or prospects of the Company and the Subsidiaries taken as a whole shall occur or
become known and (ii) no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or any of the Subsidiaries.
(j) Each of the Company, the Parent and the Selling Stockholder will,
at the time of purchase or additional time of purchase, as the case may be,
deliver to you a certificate of the Company, the Parent or the Selling
Stockholder, as the case may be, signed by two of its executive officers or
partners to the effect that the representations and warranties of the Company,
the Parent or the Selling Stockholder, as the case may be, as set forth in this
Agreement are true and correct as of each such date, that the Company, the
Parent or the Selling Stockholder, as the case may be, has performed
30
such of its obligations under this Agreement as are to be performed at or before
the time of purchase and at or before the additional time of purchase, as the
case may be, and the conditions set forth in paragraphs (h) and (i) of this
Section 6 have been met.
(k) You shall have received signed letters, dated the date of this
Agreement, from each of the holders of Common Stock and securities convertible
into or exchangeable or exercisable for Common Stock (including the Parent and
the Selling Stockholder) in the form and to the effect contemplated by Section
3(i)(r).
(l) The Company, the Parent and the Selling Stockholder shall have
furnished to you such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement and the Prospectus
as of the time of purchase and the additional time of purchase, as the case may
be, as you may reasonably request.
(m) The Shares shall have been approved for listing for quotation on
NASDAQ, subject only to notice of issuance at or prior to the time of purchase
or the additional time of purchase, as the case may be.
(n) The Formation Transactions shall have been completed substantially
in the manner contemplated by the Prospectus.
7. Effective Date of Agreement; Termination. This Agreement shall
become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has agreed to purchase in the aggregate at least
50% of the Firm Shares, (a) if, since the time of execution of this Agreement or
the respective dates as of which information is given in the Registration
Statement and Prospectus, there has been any material adverse and unfavorable
change, financial or otherwise (other than as referred to in the Registration
Statement and Prospectus), in the operations, business, condition or prospects
of the Company and the Subsidiaries taken as a whole, which would, in your
judgment or in the judgment of such group of Underwriters, make it impracticable
to market the Shares, or (b) if, at any time prior to the time of purchase or,
with respect to the purchase of any Additional Shares, the additional time of
purchase, as the case may be, trading in securities on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or limitations or minimum prices shall have been established on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market, or
31
if a banking moratorium shall have been declared either by the United States or
New York State authorities, or if the United States shall have declared war in
accordance with its constitutional processes or there shall have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in your judgment or in the judgment
of such group of Underwriters, to make it impracticable to market the Shares.
If any Underwriter elects to terminate this Agreement as provided in
this Section 7, the Company, the Parent, the Selling Stockholder and each other
Underwriter shall be notified promptly by letter or telegram from such
terminating Underwriter.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company, the
Parent or the Selling Stockholder shall be unable to comply with any of the
terms of this Agreement, the Company and the Parent shall not be under any
obligation or liability under this Agreement (except to the extent provided in
Sections 4(i)(1), 5 and 9 hereof), and the Underwriters shall be under no
obligation or liability to the Company, the Parent and the Selling Stockholder
under this Agreement (except to the extent provided in Section 9 hereof) or to
one another hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7,
if any Underwriter shall default in its obligation to purchase and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to purchase and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
purchase and pay for (in addition to the aggregate number of Firm Shares they
are obligated to purchase pursuant to Section 1 hereof) the number of Firm
Shares agreed to be purchased by all such defaulting Underwriters, as
hereinafter provided. Such Shares shall be purchased and paid for by such
non-defaulting Underwriter or Underwriters in such amount or amounts as you may
designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be purchased and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company and the Selling Stockholder agree with the non-defaulting
Underwriters that they will not sell any Firm Shares hereunder unless all of the
Firm Shares are purchased by the Underwriters (or by substituted Underwriters
selected by you with the approval of the Company and the Selling Stockholder or
selected by the Company and the Selling Stockholder with your approval).
32
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company and the Selling Stockholder for a defaulting
Underwriter or Underwriters in accordance with the foregoing provision, the
Company and the Selling Stockholder or you shall have the right to postpone the
time of purchase for a period not exceeding five business days in order that any
necessary changes in the Registration Statement and Prospectus and other
documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company, the Parent and the Selling Stockholder to any non-defaulting
Underwriter and without any liability on the part of any non-defaulting
Underwriter to the Company, the Parent and the Selling Stockholder. Nothing in
this paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
9. Indemnity and Contribution.
(a) The Company, the Parent and the Selling Stockholder jointly and
severally agree to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and the successors and assigns of all of the foregoing persons from and against
any loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or any such
person may incur under the Act, the Exchange Act, the common law or otherwise,
insofar as such loss, damage, expense, liability or claim arises out of or is
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or in a
Prospectus (the term Prospectus for the purpose of this Section 9 being deemed
to include any Preliminary Prospectus, the Prospectus and the Prospectus as
amended or supplemented by the Company), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be stated in
either such Registration Statement or Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of
33
or is based upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in writing by or
on behalf of any Underwriter (in its capacity as such) through you (in your
capacity as representatives of the several Underwriters) to the Company
expressly for use with reference to such Underwriter (in its capacity as such)
in such Registration Statement or such Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in connection
with such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading, provided,
however, that the indemnity agreement contained in this subsection (a) with
respect to any Preliminary Prospectus or amended Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such loss, damage, expense, liability or claim purchased the Shares which is the
subject thereof if the Prospectus corrected any such alleged untrue statement or
omission and if such Underwriter failed to send or give a copy of the Prospectus
to such person at or prior to the written confirmation of the sale of such
Shares to such person, unless the failure is the result of noncompliance by the
Company with Section 4(i)(g) hereof
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company, the Parent and the Selling Stockholder pursuant to
the foregoing paragraph, such Underwriter or such person shall promptly notify
the Company, the Parent and the Selling Stockholder in writing of the
institution of such Proceeding and the Company shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
the omission to so notify the Company, the Parent and the Selling Stockholder
shall not relieve the Company, the Parent and the Selling Stockholder from any
liability which the Company, the Parent and the Selling Stockholder may have to
any Underwriter or any such person or otherwise. Such Underwriter or such person
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
Underwriter or of such person unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
Proceeding or the Company shall not have, within a reasonable period of time in
light of the circumstances, employed counsel to have charge of the defense of
such Proceeding or such indemnified party or parties shall have reasonably
concluded, based on the written advice of counsel, that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company, the Parent and the Selling Stockholder (in
which case the Company shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the Company, the Parent and the
Selling Stockholder and paid as incurred (it being understood, however, that the
Company, the Parent and the Selling Stockholder shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
34
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). The
Company, the Parent and the Selling Stockholder shall not be liable for any
settlement of any Proceeding effected without the Company's written consent but
if settled with the written consent of the Company, the Company, the Parent and
the Selling Stockholder jointly and severally agree to indemnify and hold
harmless any Underwriter and any such person from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the indemnifying
party agrees that it shall be liable for any settlement of any Proceeding
effected without the Company's written consent if (i) such settlement is entered
into more than 60 business days after receipt by the indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. 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 and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, the Parent and the Selling Stockholder and the successors and
assigns of all of the foregoing persons from and against any loss, damage,
expense, liability or claim (including the reasonable cost of investigation)
which, jointly or severally, the Company, the Parent, the Selling Stockholder or
any such person may incur under the Act, the Exchange Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by or on behalf of such Underwriter (in its capacity as such) through
you (in your capacity as representatives of the several Underwriters) to the
Company expressly for use with reference to such Underwriter (in its capacity as
such) in the Registration Statement (or in the Registration Statement as amended
by any post-effective amendment thereof by the Company) or in a Prospectus, or
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such information
not misleading.
35
If any Proceeding is brought against the Company, the Parent, the
Selling Stockholder or any such person in respect of which indemnity may be
sought against any Underwriter pursuant to the foregoing paragraph, the Company,
the Parent, the Selling Stockholder or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company, the Parent, the Selling
Stockholder or any such person or otherwise. The Company, the Parent, the
Selling Stockholder or such person shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company, the Parent, the Selling Stockholder or such person
unless the employment of such counsel shall have been authorized in writing by
such Underwriter in connection with the defense of such Proceeding or such
Underwriter shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such Proceeding
or such indemnified party or parties shall have reasonably concluded, based on
the written advice of counsel, that there may be defenses available to it or
them which are different from or additional to or in conflict with those
available to such Underwriter (in which case such Underwriter shall not have the
right to direct the defense of such Proceeding on behalf of the indemnified
party or parties, but such Underwriter may employ counsel and participate in the
defense thereof but the fees and expenses of such counsel shall be at the
expense of such Underwriter), in any of which events such fees and expenses
shall be borne by such Underwriter and paid as incurred (it being understood,
however, that such Underwriter shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). No Underwriter shall be
liable for any settlement of any such Proceeding effected without the written
consent of such Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold harmless the Company,
the Parent, the Selling Stockholder and any such person from and against any
loss or liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
36
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.
(c) The Company, the Parent and the Selling Stockholder hereby confirm
that at their request WDR has without compensation acted as "qualified
independent underwriter" (in such capacity, the "QIU") within the meaning of
Rule 2720 of the Conduct Rules of NASDR in connection with the offering of the
Shares. The Company, the Parent, and the Selling Stockholder agree to indemnify
and hold harmless the QIU, the directors, officers, employees and agents of the
QIU and each person who controls the QIU within the meaning of either the Act or
the Exchange Act against any and all losses, damages, expenses, liabilities, or
claims, joint or several, to which they or any of them may become subject under
the Act, the Exchange Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, damages, expenses,
liabilities or claims (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 in any amendment thereof, or in any 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, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, damage, expense,
liability or claim; provided, however, that none of the Company, the Parent or
the Selling Stockholder will be liable in any such case to the extent that any
such loss, damage, expense, liability or claim 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 the QIU (in its capacity
as such) through the representatives of the several Underwriters (in their
capacity as such) specifically for inclusion therein. This indemnity agreement
will be in addition to any liability that the Company, the Parent and the
Selling Stockholder may otherwise have.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a), (b) and (c) of this
Section 9 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Parent and the Selling
Stockholder on the one hand and the Underwriters on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the
37
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Parent and the Selling Stockholder on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, damages, expenses, liabilities or claims, as well as
any other relevant equitable considerations. The relative benefits received by
the Company, the Parent and the Selling Stockholder on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Stockholder and the total underwriting discounts and commissions
received by the Underwriters, bear to the aggregate public offering price of the
Shares. Benefits received by the QIU in its capacity as "qualified independent
underwriter" shall be deemed to be equal to the compensation received by the QIU
acting in such capacity. The relative fault of the Company, the Parent and the
Selling Stockholder on the one hand and of the Underwriters on the other shall
be determined by reference to, among other things, whether the untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company, the Parent or by the Selling
Stockholder or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims referred to in this subsection shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating, preparing to defend or defending
any Proceeding.
(e) The Company, the Parent and the Selling Stockholder and the
Underwriters agree that it would not be just and 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 subsection (d) above. Notwithstanding the provisions of this
Section 9, in no case shall (i) any Underwriter be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter and distributed to the public were offered to
the public exceeds the amount of any damage which such Underwriter has otherwise
been required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission or (ii) the QIU in its capacity as
such be responsible for any amount in excess of the compensation received by the
QIU for acting in such capacity. 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. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
38
(f) The indemnity and contribution agreements contained in this Section
9 and the covenants, warranties and representations of the Company, the Parent
and the Selling Stockholder contained in this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter, its partners, directors or officers or any person (including each
partner, officer or director of such person) who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or
on behalf of either of the Company, the Parent or the Selling Stockholder, their
directors or officers or any person who controls any of the Company, the Parent
or the Selling Stockholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Company, the Parent,
the Selling Stockholder and each Underwriter agree promptly to notify each other
of the commencement of any Proceeding against it and, in the case of the
Company, the Parent or the Selling Stockholder, against any of the officers,
directors or partners of the Company, the Parent or the Selling Stockholder, as
the case may be, in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement or Prospectus.
10. Directed Share Program
(a) As part of the offering contemplated by this Agreement, the
Underwriters agree to reserve out of the Shares up to 425,000 Shares for sale to
the employees, officers, and directors of the Company and the Parent and other
parties associated with the Company and the Parent (collectively,
"Participants"), as set forth in the Prospectus under the heading "Underwriting"
(the "Directed Share Program"). The Shares to be sold by the Underwriters
pursuant to the Directed Share Program will be sold by the Underwriters pursuant
to this Agreement at the public offering price. Any Directed Shares not
purchased by Participants will be offered to the public by the Underwriters as
set forth in the Prospectus.
(b) With respect to Directed Shares sold outside the United States, the
Company and the Parent represent and warrant to the Underwriters that (i) the
Registration Statement, the Prospectus, each Preliminary Prospectus and all
other materials distributed in connection with the Directed Share Program comply
in all material respects, and any further amendments or supplements to any of
the foregoing will comply in all material respects, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus, any Preliminary
Prospectus, as amended or supplemented, and any additional materials are
distributed in connection with the Directed Share Program and that (ii) no
authorization, approval, consent, license, order, registration or qualification
of or with any government, governmental instrumentality or court, other than
such as have been obtained, is necessary under the securities laws and
regulations of foreign jurisdictions in which the Directed Shares are offered
outside the United States. The Company and the Parent covenant with the
Underwriters that the Company and the Parent will comply in all material
respects with all
39
applicable securities and other applicable laws, rules and regulations in each
foreign jurisdiction in which the Directed Shares are offered in connection with
the Directed Share Program.
(c) The Company and the Parent will ensure that the Directed Shares
will be restricted to the extent required by the NASD or the NASD rules from
sale, transfer, assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration Statement. WDR will
notify the Company as to which Participants will need to be so restricted. The
Company will direct the removal of such transfer restrictions upon the
expiration of such period of time.
(d) The Company and the Parent agree, jointly and severally, to
indemnify and hold harmless each Underwriter and the QIU, their respective
partners, directors and officers, and any person who controls any Underwriter or
the QIU within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) related to, arising out of, or in connection
with the Directed Share Program, provided that, the Company and the Parent shall
not be responsible for any loss, damage, expense, liability or claim that is
finally judicially determined to have resulted from the bad faith or gross
negligence of the Underwriters.
11. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
Warburg Dillon Read LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000, Attention:
Syndicate Department; if to the Company, shall be sufficient in all respects if
delivered or sent to the Company at the offices of the Company at Xxx Xxxxx
Xxxxx Xxxxxx, 000xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
Xxxxxx, Senior Vice President, General Counsel and Secretary; if to the Parent,
shall be sufficient in all respects if delivered or sent to the Parent at the
offices of the Parent at Xxx Xxxxx Xxxxx Xxxxxx, 000xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxxx, Senior Vice President, General Counsel and
Secretary; and, if to the Selling Stockholder, shall be sufficient in all
respects if delivered or sent to the Selling Stockholder at the offices of the
Selling Stockholder at Xxx Xxxxx Xxxxx Xxxxxx, 000xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxxx, Senior Vice President, General Counsel and
Secretary.
12. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement
40
have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and you, the Company,
the Parent and the Selling Stockholder consent to the jurisdiction of such
courts and personal service with respect thereto. The Company, the Parent and
the Selling Stockholder hereby consent to personal jurisdiction, service and
venue in any court in which any Claim arising out of or in any way relating to
this Agreement is brought by any third party against an Underwriter or any
indemnified party. Each Underwriter, the Company (on its behalf and, to the
extent permitted by applicable law, on behalf of its partners and
affiliates), the Parent (on its behalf and, to the extent permitted by
applicable law, on behalf of its partners and affiliates) and the Selling
Stockholder (on its behalf and, to the extent permitted by applicable law, on
behalf of its partners and affiliates) waives all right to trial by jury in
any action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company,
the Parent and the Selling Stockholder agree that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company, the Parent or the Selling Stockholder, as the case
may be, and may be enforced in any other courts in the jurisdiction of which the
Company, the Parent or the Selling Stockholder is or may be subject, by suit
upon such judgment.
14. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the QIU, the Company, the
Parent and the Selling Stockholder and, to the extent provided in Section 9 and
Section 10 hereof, the controlling persons, directors and officers referred to
in such section, and their respective successors, assigns, heirs, personal
representatives and executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
15. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Company, the Parent and the Selling Stockholder and their
successors and assigns and any successor or assign of any substantial portion of
the Company's, the Parent's, and the Selling Stockholder's and any of the
Underwriters' respective businesses and/or assets.
41
17. Miscellaneous. Warburg Dillon Read LLC, an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of Warburg Dillon Read LLC. Because Warburg
Dillon Read LLC is a separately incorporated entity, it is solely responsible
for its own contractual obligations and commitments, including obligations with
respect to sales and purchases of securities. Securities sold, offered or
recommended by Warburg Dillon Read LLC are not deposits, are not insured by the
Federal Deposit Insurance Corporation, are not guaranteed by a branch or agency,
and are not otherwise an obligation or responsibility of a branch or agency.
A lending affiliate of Warburg Dillon Read LLC may have lending
relationships with issuers of securities underwritten or privately placed by
Warburg Dillon Read LLC. To the extent required under the securities laws,
prospectuses and other disclosure documents for securities underwritten or
privately placed by Warburg Dillon Read LLC will disclose the existence of any
such lending relationships and whether the proceeds of the issue will be used to
repay debts owed to affiliates of Warburg Dillon Read LLC.
42
If the foregoing correctly sets forth the understanding among
the Company, the Parent, the Selling Stockholder and the Underwriters, please so
indicate in the space provided below for the purpose, whereupon this letter and
your acceptance shall constitute a binding agreement among the Company, the
Parent, the Selling Stockholder and the several Underwriters.
Very truly yours,
eSPEED, INC.
By: ---------------------
Name:
Title:
CANTOR XXXXXXXXXX, X.X.
By: ---------------------
Name:
Title:
Accepted and agreed to as of the
date first above written
WARBURG DILLON READ LLC CANTOR XXXXXXXXXX SECURITIES
XXXXXXXXX & XXXXX LLC
XXXXXX XXXXXX PARTNERS LLC
As Representatives of the
Several Underwriters named
in Schedule A hereto
By: ----------------------
Name:
Title:
By: WARBURG DILLON READ LLC
By: ________________________________
Name:
Title:
By: _________________________________
Name:
Title:
43
SCHEDULE A
Number of
Underwriter Firm Shares
WARBURG DILLON READ LLC
XXXXXXXXX & XXXXX LLC
XXXXXX XXXXXX PARTNERS LLC
CANTOR XXXXXXXXXX & CO.
---------
Total......... 8,500,000
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