EXHIBIT 1
EARTHWEB, INC.
_______ SHARES OF COMMON STOCK, $0.01 PAR VALUE
Underwriting Agreement
September __, 1998
X.X. Xxxxxx Securities Inc.
Bear Xxxxxxx & Co. Inc.
Xxxxx Xxxxx Xxxxxx & Co.
As Representatives of several
underwriters listed in Schedule I
hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
EarthWeb, Inc., a Delaware corporation (the "COMPANY"), proposes to issue
and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES") an aggregate of __________ shares of common stock, par value
$0.01 per share (the "SHARES"), of the Company (the "UNDERWRITTEN SHARES") and
the Company and the Selling Stockholders of the Company named in Schedule II
hereto (the "SELLING STOCKHOLDERS") propose to sell to the Underwriters, for the
sole purpose of covering over-allotments in connection with the sale of the
Underwritten Shares, at the option of the Underwriters, up to an additional
_____ shares of common stock of the Company (the "OPTION SHARES"). The
Underwritten Shares and the Option Shares are herein referred to as the
"SHARES". The shares of common stock of the Company to be outstanding after
giving effect to the sale of the Shares are herein referred to as the "COMMON
STOCK".
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective including
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Securities Act, is referred to
in this Agreement as the "REGISTRATION STATEMENT", and the prospectus in the
form first used to confirm sales of Shares is referred to in this Agreement as
the "PROSPECTUS". If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.
The Company and each of the Selling Stockholders hereby agree with the
Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share (the
"PURCHASE PRICE") of $______.
In addition, the Company and each of the Selling Stockholders, as and to
the extent indicated in Schedule II hereto agree, severally and not jointly, to
sell the Option Shares to the several Underwriters and the Underwriters shall
have the option to purchase at their election up to ________ Option Shares for
the sole purpose of covering over-allotments in connection with the sale of the
Underwritten Shares. The Underwriters on the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
shall have the option to purchase, severally and not jointly, from the Company
and each of the Selling Stockholders at the Purchase Price that portion of the
number of Option Shares as to which such election shall have been exercised (to
be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Option Shares by a fraction the numerator of which is
the maximum number of Option Shares which such Underwriter is entitled to
purchase and the denominator of which is the maximum number of Option Shares
that all of the Underwriters are entitled to purchase hereunder, for the sole
purpose of covering over-allotments (if any) in connection with the sale of the
Underwritten Shares by the several Underwriters. [Any such election to purchase
Option Shares shall be made in proportion to the maximum number of Option Shares
to be sold by the Company and each Selling Stockholder as set forth in Schedule
II hereto initially with respect to the Option Shares to be sold by the Company
and then among the
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Selling Stockholders in proportion to the maximum number of Optional Shares to
be sold by each Selling Stockholder as set forth in Schedule II hereto]./1/
The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Representatives to the
Company and the Attorneys-in-Fact (as defined below). Such notice shall set
forth the aggregate number of Option Shares as to which the option is being
exercised and the date and time when the Option Shares are to be delivered and
paid for which may be the same date and time as the Closing Date (as hereinafter
defined) but shall not be earlier than the Closing Date nor later than the tenth
full Business Day (as hereinafter defined) after the date of such notice (unless
such time and date are postponed in accordance with the provisions of Section 9
hereof). Any such notice shall be given at least two Business Days prior to the
date and time of delivery specified therein.
2. The Company and the Selling Stockholders understand that the
Underwriters intend (i) to make a public offering of the Shares as soon after
(A) the Registration Statement has become effective and (B) the parties hereto
have executed and delivered this Agreement, as in the judgment of the
Representatives is advisable and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified to the Representatives by the Company
with regard to payment to the Company and by the Attorneys-in-Fact, or any of
them, with regard to payment to the Selling Stockholders, in the case of the
Underwritten Shares, on ___________, 1998, or at such other time on the same or
such other date, not later than the fifth Business Day thereafter, as the
Representatives and the Company may agree upon in writing or, in the case of the
Option Shares, on the date and time specified by the Representatives in the
written notice of the Underwriters' election to purchase such Option Shares.
The time and date of such payment for the Underwritten Shares is referred to
herein as the "CLOSING DATE" and the time and date for such payment for the
Option Shares, if other than the Closing Date, are herein referred to as the
"ADDITIONAL CLOSING DATE". As used herein, the term "BUSINESS DAY" means any
day other than a day on which banks are permitted or required to be closed in
New York City.
------------
/1/ If less than full green shoe is exercised, will the allocation be pro rated?
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Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company or the Selling
Stockholders, as the case may be. The certificates for the Shares will be made
available for inspection and packaging by the Representatives at the office of
X.X. Xxxxxx Securities Inc. set forth above not later than 1:00 P.M., New York
City time, on the Business Day prior to the Closing Date or the Additional
Closing Date, as the case may be.
4. (a) The Company represents and warrants to each Underwriter and the
Selling Stockholders that:
(i) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
other than any such noncompliance, untrue statement or omission in a preliminary
prospectus which has been corrected in the Prospectus; provided that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been instituted
or, to the knowledge of the Company, threatened by the Commission; and the
Registration Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply, or will
comply, as the case may be, in all material respects with the
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Securities Act and do not and will not, as of the applicable effective date as
to the Registration Statement and any amendment thereto and as of the date of
the Prospectus and any amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Prospectus, as amended or supplemented, if applicable, at the Closing Date
or Additional Closing Date, as the case may be, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; except that the foregoing representations and warranties
shall not apply to statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein;
(iii) the financial statements, and the related notes thereto, included in
the Registration Statement and the Prospectus present fairly the financial
position of the Company as of the dates indicated and the results of its
operations and changes in its cash flows for the periods specified; and said
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein;
(iv) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in the
capital stock or long-term debt of the Company, or any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus; and except as set
forth or contemplated in the Prospectus the Company has not entered into any
transaction or agreement (whether or not in the ordinary course of business)
material to the Company;
(v) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of
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its jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, other than where the failure to be so
qualified or in good standing would not have a material adverse effect on the
Company;
(vi) this Agreement has been duly authorized, executed and delivered by the
Company;
(vii) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock conforms as to legal matters to the
description thereof set forth in the Prospectus, and all of the outstanding
shares of capital stock of the Company (including the shares to be sold by the
Selling Stockholders) have been duly authorized and validly issued, are fully-
paid and non-assessable and are not subject to any pre-emptive or similar
rights; and, except as described in or expressly contemplated by the Prospectus,
there are no outstanding rights (including, without limitation, pre-emptive
rights), warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in the
Company, or any contract, commitment, agreement, understanding or arrangement of
any kind, to which the Company or any of its controlling stockholders is a
party, relating to the issuance of any capital stock of the Company, any such
convertible or exchangeable securities or any such rights, warrants or options;
(viii) the Shares to be issued and sold by the Company hereunder have been
duly authorized, and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be duly issued
and will be fully paid and non-assessable and will conform to the descriptions
thereof in the Prospectus; and the issuance of the Shares is not subject to any
preemptive or similar rights;
(ix) the Company is not, nor with the giving of notice or lapse of time or
both would be, in violation of or in default under, its Amended and Restated
Certificate of Incorporation or Amended and Restated By-Laws or any indenture,
mortgage, deed of trust,
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loan agreement or other agreement or instrument to which the Company is a party
or by which it or any of its properties is bound, except for violations and
defaults which individually and in the aggregate are not material to the
Company; the issue and sale of the Shares and the performance by the Company of
its obligations under this Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will any such action result in
any violation of the provisions of the Amended and Restated Certificate of
Incorporation or the Amended and Restated By-Laws of the Company or any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, or any of its
properties; and no consent, approval, authorization, order, license,
registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act, as may be
required for the Underwriters to obtain from the National Association of
Securities Dealers, Inc. (the "NASD") and as may be required under state
securities or Blue Sky Laws in connection with the purchase and distribution of
the Shares by the Underwriters;
(x) other than as set forth or contemplated in the Prospectus, there are
no legal or governmental investigations, actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its properties or to which the Company is or may be a party or to
which any property of the Company is or may be the subject which, if determined
adversely to the Company, could individually or in the aggregate have, or
reasonably be expected to have, a material adverse effect on the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operations of the Company, and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; and there are no statutes,
regulations, contracts or other documents that are required
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to be described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; (xi) the Company owns no real property and has good and marketable
title to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as do not materially affect the
value of such property and do not interfere with the use made or proposed to be
made of such property by the Company; and any real property and buildings held
under lease by the Company are held by it under valid, existing and enforceable
leases with such exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company;
(xii) no relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required by the Securities
Act to be described in the Registration Statement and the Prospectus which is
not so described;
(xiii) except for __________ and __________, no person has the right to
require the Company to register any securities for offering and sale under the
Securities Act by reason of the filing of the Registration Statement with the
Commission or the issue and sale of the Shares by the Company hereunder or, to
the best knowledge of the Company, the sale of the Shares to be sold by the
Selling Stockholders hereunder, and each of __________ and __________ has duly
waived its registration rights;
(xiv) the Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(xv) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company, are independent public accountants as required by the
Securities Act;
(xvi) the Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and has paid all taxes shown
thereon and all assessments received by it to
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the extent that such taxes have become due and are not being contested in good
faith; and there is no tax deficiency which has been or might reasonably be
expected to be asserted or threatened against the Company;
(xvii) the Company has not taken nor will it take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or result
in stabilization or manipulation of the price of the Common Stock;
(xviii) the Company owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all self-
regulatory organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof, and
the Company has not received any actual notice of any proceeding relating to
revocation or modification of any such license, permit, certificate, consent,
order, approval or other authorization; and the Company is in compliance with
all laws and regulations relating to the conduct of its business as conducted as
of the date hereof, except to the extent that failure to so comply would not,
singly or in the aggregate, have a material adverse effect on the Company's
business, results of operations and financial condition;
(xix) there are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company which are likely to
have a material adverse effect on the Company;
(xx) each employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, ("ERISA") that is
maintained, administered or contributed to by the Company for employees or
former employees of the Company and its affiliates has been maintained in
compliance with its terms and the requirements of any applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the
Internal Revenue Code of 1986, as amended, ("CODE"), except to the extent that
failure to so comply would not, singly or in the aggregate, have a material
adverse effect on the Company's business, results of operations and financial
condition.
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No prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code has occurred with respect to any such plan excluding
transactions effected pursuant to a statutory or administrative exemption;
(xxi) other than as set forth or contemplated in the Prospectus, the
Company owns or possesses adequate licenses or other rights to use all patents,
copyrights, trademarks, trade dress, service marks, trade names, technology,
trade secrets and know-how (the "INTELLECTUAL PROPERTY") necessary to conduct
its business in the manner described in the Prospectus and the Company has not
received any notice of infringement or conflict with (and the Company is not
aware of any infringement or conflict with) asserted rights of others with
respect to any patents, copyrights, trademarks, trade dress, service marks,
trade names, technology or know-how which could result in any material adverse
effect upon the Company; and the discoveries, inventions, products or processes
of the Company necessary to conduct its business in the manner described in the
Prospectus do not, to the best knowledge of the Company, infringe or conflict
with any right or patent of any third party, or any discovery, invention,
product or process which is the subject of a patent application filed by any
third party, known to the Company which could have a material adverse effect on
the Company;
(xxii) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed
in accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(xxiii) all outstanding shares of Common Stock, and all securities
convertible into or exercisable or exchangeable for Common Stock, are subject to
valid, binding and enforceable agreements (collectively, the "LOCK-UP
AGREEMENTS") that restrict the holders thereof from selling, making any short
sale of, granting any option for the purchase of, or otherwise transferring or
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disposing of, any of such shares of Common Stock, or any such securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of 180 days after the date of the Prospectus without the prior written consent
of the Company or X.X. Xxxxxx Securities Inc.;
(xxiv) the Company (A) has notified each holder of a currently outstanding
option issued under the EarthWeb, Inc. Stock Option Plan (the "OPTION PLAN") and
each person who has acquired shares of Common Stock pursuant to the exercise of
any option granted under the Option Plan that pursuant to the terms of the
Option Plan, none of such options or shares may be sold or otherwise transferred
or disposed of for a period of 180 days after the date of the initial public
offering of the Shares and (B) has imposed a stop-transfer instruction with the
Company's transfer agent in order to enforce the foregoing lock-up provision
imposed pursuant to the Option Plan;
(xxv) as of the date the Registration Statement becomes effective, the
Common Stock will be authorized for listing on the Nasdaq National Market (as
herein defined) upon official notice of issuance;
(xxvi) the Company has no subsidiaries;
(xxvii) the initial public offering of the Underwritten Shares as
currently contemplated in the Registration Statement constitutes a Qualified
Public Offering as was defined in the Company's Certificate of Incorporation
immediately prior to the amendment and restatement thereof on [ ], 1998; and
(xxviii) upon completion of the offering of the Shares, the Amended and
Restated Shareholders Agreement dated as of June 26, 1997 (the "SHAREHOLDERS
AGREEMENT") shall cease to have any legal effect, except for the registration
rights set forth in Sections _____ thereof.
(b) Each of the Selling Stockholders severally represents and warrants to,
and agrees with, each of the Underwriters that:
(i) all consents, approvals, authorizations and orders necessary for the
execution and delivery by such Selling Stockholder of this Agreement and the
Power of Attorney (the "POWER OF ATTORNEY") and the
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Custody Agreement (the "CUSTODY AGREEMENT") hereinafter referred to, and for the
sale and delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder has full right,
power and authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder hereunder; this Agreement, the Power of
Attorney and the Custody Agreement have each been duly authorized, executed and
delivered by such Selling Stockholder;
(ii) the sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody Agreement
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling Stockholder
is bound or to which any of the property or assets of such Selling Stockholder
is subject, nor will such action result in any violation of the provisions of
[the Certificate of Incorporation or By-laws of such Selling Stockholder if such
Selling Stockholder is a corporation], the Partnership Agreement of such Selling
Stockholder if such Selling Stockholder is a partnership, or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such Selling
Stockholder;
(iii) such Selling Stockholder has good and valid title to the Shares to
be sold at the Additional Closing Date, by such Selling Stockholder hereunder,
free and clear of all liens, encumbrances, equities or adverse claims; such
Selling Stockholder will have, immediately prior to the Additional Closing Date,
good and valid title to the Shares to be sold at the Additional Closing Date by
such Selling Stockholder, free and clear of all liens, encumbrances, equities or
adverse claims; and, upon delivery of the certificates representing such Shares
and payment therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances, equities or adverse claims, will pass to
the several Underwriters;
(iv) such Selling Stockholder has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares; and
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(v) the Registration Statement and the Prospectus (as amended or
supplemented) comply or will comply, as the case may be, in all material
respects the Securities Act and do not and will not, as of the applicable
effective date of the Registration Statement and any amendment thereto and as of
the date of the Prospectus and any amendment or supplement thereto, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented, if applicable, at the Closing
Date or Additional Closing Date, as the case may be, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; except that the foregoing representations and warranties
shall not apply to statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein.
Each of the Selling Stockholders represents and warrants that certificates
in negotiable form representing all of the Shares to be sold by such Selling
Stockholders hereunder placed in custody under a Custody Agreement relating to
such Shares, in the form heretofore furnished to you, duly executed and
delivered by such Selling Stockholder to [______________], as custodian (the
"CUSTODIAN"), and that such Selling Stockholder has duly executed and delivered
Powers of Attorney, in the form heretofore furnished to you, appointing the
person or persons indicated in Schedule II hereto, and each of them, as such
Selling Stockholder's Attorneys-in-fact (the "ATTORNEYS-IN-FACT" or any one of
them the "ATTORNEY-IN FACT") with authority to execute and deliver this
Agreement on behalf of such Selling Stockholder, to determine the purchase price
to be paid by the Underwriters to the Selling Stockholders as provided herein,
to authorize the delivery of the Shares to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement and the Custody
Agreement.
Each of the Selling Stockholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Stockholder
under the Custody Agreement, are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Stockholder for such
custody, and the appointment by such Selling Stockholder of the Attorneys-in-
Fact by the Power of Attorney, are to that extent irrevocable. Each of the
Selling Stockholders
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specifically agrees that the obligations of such Selling Stockholder hereunder
shall not be terminated by operation of law, whether by the death or incapacity
of any individual Selling Stockholder, or, in the case of an estate or trust, by
the death or incapacity of any executor or trustee or the termination of such
estate or trust, or in the case of a partnership or corporation, by the
dissolution of such partnership or corporation, or by the occurrence of any
other event. If any individual Selling Stockholder or any such executor or
trustee should die or become incapacitated, or if any such estate or trust
should be terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the delivery of the
Shares hereunder, certificates representing such Shares shall be delivered by or
on behalf of such Selling Stockholder in accordance with the terms and
conditions of this Agreement and the Custody Agreement, and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if
such death, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or
any of them, shall have received notice of such death, incapacity, termination,
dissolution or other event.
5. (a) The Company covenants and agrees with each of the several
Underwriters as follows:
(i) to use its best efforts to cause the Registration Statement to become
effective at the earliest possible time and, if required, to file the final
Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rule 430A under the Securities Act and to furnish copies of the Prospectus
to the Underwriters in New York City prior to 10:00 a.m., New York City time, on
the Business Day next succeeding the date of this Agreement in such quantities
as the Representatives may reasonably request;
(ii) to deliver, at the expense of the Company, to the Representatives
four signed copies of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement (as originally filed)
and each amendment thereto, in each case without exhibits and, during the period
mentioned in Section 5(a)(v) below, to each of the Underwriters as many copies
of the Prospectus (including all amendments and supplements thereto) as the
Representatives may reasonably request;
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(iii) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the Registration
Statement becomes effective, to furnish to the Representatives a copy of the
proposed amendment or supplement for review and not to file any such proposed
amendment or supplement to which the Representatives reasonably object;
(iv) to advise the Representatives promptly, and to confirm such advice in
writing when the Registration Statement has become effective, (A) when any
amendment to the Registration Statement has been filed or becomes effective, (B)
when any supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof, (C) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for any additional information, (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the Prospectus or the initiation or threatening of any
proceeding for that purpose, (E) of the occurrence of any event, within the
period referenced in Section 5(a)(v) below, as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, and (F) of the receipt by the Company
of any notification with respect to any suspension of the qualification of the
Shares for offer and sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and to use its best efforts to prevent the
issuance of any such stop order, or of any order preventing or suspending the
use of any preliminary prospectus or the Prospectus, or of any order suspending
any such qualification of the Shares, or notification of any such order thereof
and, if issued, to obtain as soon as possible the withdrawal thereof;
(v) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall occur
as a result of which it is necessary to amend or supplement the Prospectus in
order to make the
15
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and furnish,
at the expense of the Company, to the Underwriters and to the dealers (whose
names and addresses the Representatives will furnish to the Company) to which
Shares may have been sold by the Representatives on behalf of the Underwriters
and to any other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with law;
(vi) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; provided that the Company
shall not be required to file a general consent to service of process in any
jurisdiction;
(vii) to make generally available to its security holders and to the
Representatives as soon as reasonably practicable an earnings statement covering
a period of at least twelve months beginning with the first fiscal quarter of
the Company occurring after the effective date of the Registration Statement,
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Commission promulgated thereunder;
(viii) during the period of five years after the date of this Agreement,
to furnish to the Representatives copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of any
reports and financial statements furnished to or filed with the Commission or
any national securities exchange;
(ix) for a period of 180 days after the date of the initial public
offering of the Shares not to (A) offer, pledge, announce the intention to sell,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any
16
securities of the Company which are substantially similar to the Common Stock,
including but not limited to any securities convertible into or exercisable or
exchangeable for Common Stock, or that represent the right to receive Common
Stock or any such substantially similar securities or (B) enter into any swap,
option, future, forward or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock or any
securities substantially similar to Common Stock, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise without the prior written
consent of X.X. Xxxxxx Securities Inc., provided, however, the foregoing shall
not prohibit (w) the issuance of Shares to be sold hereunder, (x) the issuance
of stock options granted under existing director or employee stock option or
stock purchase plans, (y) the issuance of any shares of Common Stock of the
Company issued upon the exercise of options granted under existing employee
stock option plans, or (z) the issuance of any shares of Common Stock upon the
conversion or exchange of convertible, exercisable or exchangeable securities
outstanding on the date hereof;
(x) to use the net proceeds received by the Company from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(xi) to use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
(the "NASDAQ NATIONAL MARKET");
(xii) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations hereunder,
including without limiting the generality of the foregoing, all costs and
expenses (A) incident to the preparation, issuance, reregistration, transfer,
execution and delivery of the Shares, (B) incident to the preparation,
printing and filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all exhibits,
amendments and supplements thereto), (C) incurred in connection with the
registration or qualification of the Shares under the laws of such jurisdictions
as the Representatives may designate (including fees of counsel for
17
the Underwriters and its disbursements), (D) in connection with the listing of
the Shares on the Nasdaq National Market, (E) related to the filing with, and
clearance of the offering by, the National Association of Securities Dealers,
Inc., (F) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and the furnishing to the Underwriters and
dealers of copies of the Registration Statement and the Prospectus, including
mailing and shipping, as herein provided, (G) any expenses incurred by the
Company in connection with a "road show" presentation to potential investors,
the cost of preparing stock certificates and (H) the cost and charges of any
transfer agent and any registrar; it is understood, however, that, except as
provided in this Section, and Sections 7 and 8 hereof, the Underwriters will pay
all of their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
(b) Each of the Selling Stockholders covenants and agrees with each of the
several Underwriters as follows:
(i) for a period of 180 days after the date of the initial public offering
of the Shares not to (A) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (B) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Stock, whether any
such transaction described in clause (A) or (B) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise or (C)
make any demand for or exercise any right with respect to the registration of
any shares of stock or any security convertible into or exercisable or
exchangeable for stock without the prior written consent of the
Representatives, in each case other than the Shares to be sold by such Selling
Stockholder hereunder; and
(ii) to deliver to the Representatives prior to or at the Closing Date a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by the Treasury Department
regulations in lieu thereof) in order to facilitate
18
the Underwriters' documentation of their compliance with the reporting and
withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company and each of the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(a) the Registration Statement shall have become effective (or if a post-
effective amendment is required to be filed under the Securities Act, such post-
effective amendment shall have become effective) not later than 5:00 P.M., New
York City time, on the date hereof; and no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
shall be in effect, and no proceedings for such purpose shall be pending before
or threatened by the Commission; the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act and in
accordance with Section 5(a)(i) hereof; and all requests for additional
information shall have been complied with to the satisfaction of the
Representatives;
(b) the respective representations and warranties of the Company and the
Selling Stockholders contained herein are true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be, as if made on
and as of the Closing Date or the Additional Closing Date, as the case may be,
and each of the Company and the Selling Stockholders shall have complied with
all agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date or the Additional Closing Date, as the
case may be;
(c) subsequent to the execution and delivery of this Agreement and prior
to the Closing Date or the Additional Closing Date, as the case may be, there
shall not have occurred any downgrading, nor shall any notice have been given of
(i) any downgrading, (ii any intended or potential downgrading or (ii any review
or possible change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company by any "nationally recognized
statistical rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
19
long-term debt of the Company or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, business, prospects, management, financial position, stockholders'
equity or results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus, the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated in
the Prospectus; and the Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus;
(e) the Representatives shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, (i) a certificate of an
executive officer of the Company, with specific knowledge about the Company's
financial matters, satisfactory to the Representatives to the effect set forth
in Sections 6(a), 6(b), 6(c) and 6(d) (with respect to the respective
representations, warranties, agreements and conditions of the Company) and to
the further effect that there has not occurred any material adverse change, or
any development involving a prospective material adverse change, in or affecting
the general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company from that set forth
or contemplated in the Registration Statement, and (ii) a Certificate of the
Selling Stockholders, satisfactory to the Representatives, to the effect set
forth in Section 6(b) (with respect to the representations, warranties,
agreements and conditions of the Selling Stockholders);
(f) Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, shall have furnished
to the Representatives their written opinion, dated the Closing Date or the
Additional Closing Date, as the case may be, in form and substance satisfactory
to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus;
20
(ii) the Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which the conduct of any business requires such qualification,
other than where the failure to be so qualified or in good standing would not
have a material adverse effect on the Company;
(iii) to such counsel's knowledge after due inquiry of officers of the
Company (it being understood that for purposes of this opinion, due inquiry does
not include any search of court or administrative records), there is no legal or
governmental investigation, action, suit or proceeding pending, threatened
against or affecting the Company or any properties of the Company or to which
the Company is or may be a party or to which the property of the Company is or
may be subject which is required to be described in the Registration Statement
or the Prospectus and is not so described; and there is no statute, regulation,
contract or other document known to such counsel of a character required to be
described in the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required, and all such contracts or
other documents described in the Prospectus have been accurately described in
all material respects;
(iv) this Agreement has been duly authorized, executed and delivered by
the Company;
(v) the Company has authorized capital stock as set forth in the
Prospectus;
(vi) all outstanding shares of the Company's Common Stock, $0.01 par value
have been duly authorized and are validly issued, fully paid and non-assessable;
(vii) the Shares have been duly authorized, and upon delivery to the
Underwriters against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and the
issuance of the Shares is not subject to any preemptive rights;
(viii) the statements in the Prospectus under "Management--Board of
Directors; --Employment Agreements; --Benefit Plans," "Principal Stockholders",
"Certain Transactions",
21
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting", and in the Registration Statement in Items 14 and 15, insofar as
such statements constitute a summary of the terms of the Common Stock, legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such terms, legal matters, documents or
proceedings;
(ix) such counsel is of the opinion that the Registration Statement, as of
the effective date thereof, and the Prospectus, as amended and supplemented,
complied as to form in all material respects with the requirements of the Act
(except as to the financial statements (including footnotes), supporting
schedules, and other financial and statistical information included therein, as
to which such counsel need express no opinion);
(x) the Company is not, nor with the giving of notice or lapse of time or
both would be, in violation of or in default under, its Amended and Restated
Certificate of Incorporation or Amended and Restated By-Laws or any indenture,
mortgage, deed of trust, lease, loan agreement or other agreement or instrument
known to such counsel to which the Company is a party or by which it or any of
its properties is bound, except for violations and defaults which individually
and in the aggregate are not material to the Company; the issue and sale of the
Shares, the execution and delivery of this Agreement and the performance by the
Company of its terms do not violate or result in a violation of the Company's
Amended and Restated Certificate of Incorporation or Amended and Restated By-
Laws, any applicable law, statute, rule or regulation or any judgment, order or
decree, known to such counsel, of any court, governmental agency or body or
arbiter having jurisdiction over the Company or its properties, and, to such
counsel's knowledge, will not constitute a material breach of the terms,
conditions or provisions of or constitute a default under any contracts,
undertakings, indentures or other agreements to which the Company is a party or
by which any of its properties are bound;
(xi) no authorization, approval, consent, order, license, registration or
qualification of any court or governmental authority or agency or body is
required for the issue and sale of the Shares or the consummation of the other
transactions contemplated by this Agreement, except such as have been obtained
under the Securities Act, those that the Underwriters need to obtain from the
NASD
22
and as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters;
(xii) the Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as such term is defined in the
Investment Company Act;
(xiii) to such counsel's knowledge, the Company owns, possesses or has
obtained all licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including foreign
regulatory agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case may be,
and to operate its properties and to carry on its business as conducted as of
the date hereof, and, to such counsel's knowledge, the Company has not received
any actual notice of any proceeding relating to revocation or modification of
any such license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and the
Prospectus; and, to such counsel's knowledge, the Company is in compliance with
all laws and regulations relating to the conduct of its business as conducted as
of the date of the Prospectus;
(xiv) to such counsel's knowledge, the Company owns, possesses or has the
right to use the Intellectual Property employed by it in connection with the
business conducted by it as of the date hereof;
(xv) except as disclosed in the Prospectus, to such counsel's knowledge,
the Company owns no real property and has good and marketable title to all
personal property owned by it, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company; and any real property and buildings held under
lease by the Company is held by it under valid, existing and enforceable leases
with such exceptions as are not material and do not interfere with the use made
or proposed to be made of such property and buildings by the Company; and
23
(xvi) upon completion of the offering of the Shares, the Shareholders
Agreement shall cease to have any legal effect, except for the registration
rights set forth in Sections ____ thereof.
In addition to the matters set forth above, such opinion shall also include
a statement to the effect that, nothing has come to such counsel's attention
that leads them to believe that the Registration Statement, at the time it
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, as amended or
supplemental, if applicable, at the time it was filed with the Commission
pursuant to Rule 424(b) under the Securities Act or as of the date hereof,
contained or contains an untrue statement of a 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 (it being understood that such counsel has not been requested to
and does not make any comment in this paragraph with respect to the financial
statements (including footnotes), supporting schedules, and other financial and
statistical information contained in the Registration Statement or Prospectus).
With respect to the foregoing opinion, such counsel may state their opinion and
belief is based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendment or supplement thereto but is
without independent check or verification except as specified.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of Delaware and New York, to the extent such counsel deems proper and
to the extent specified in such opinion, if at all, upon an opinion or opinions
(in form and substance reasonably satisfactory to Underwriters' counsel) of
other counsel reasonably acceptable to the Underwriters' counsel, familiar with
the applicable laws and (B) as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible officers of the Company and
certificates or other written statements of officials of jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel upon which they relied is in form satisfactory
to such counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon.
The opinion of Xxxxxxxx & Xxxxxxxx LLP described above shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
24
(g) Xxxxxxxx & Xxxxxxxx LLP, counsel for the Selling Stockholders, shall
have furnished to the Representatives their written opinion, dated the
Additional Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) this Agreement has been duly authorized, executed and delivered by or
on behalf of each of the Selling Stockholders;
(ii) a Power of Attorney and a Custody Agreement have been duly
authorized, executed and delivered by each Selling Stockholder and constitute
valid and binding agreements of each Selling Stockholder in accordance with
their terms;
(iii) each Selling Stockholder is the record, beneficial and lawful owner
of all of the Shares to be sold by such Selling Stockholder and has valid and
marketable title to such Shares, and upon delivery of and payment for the
Shares, the Underwriters will acquire valid and marketable title to the shares,
free and clear of any mortgage, pledge, security interest, lien, claim or other
encumbrance or restriction on transferability or any adverse claim; and
(iv) the sale of the Shares and the execution and delivery by the Selling
Shareholder of, and the performance by the Selling Shareholder of its
obligations under, this Agreement, and the consummation of the transactions
contemplated herein, (A) have been duly authorized on the part of each of the
Selling Stockholders, and (B) will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which any Selling Stockholder is a party or by which any Selling
Stockholder is bound or to which any of the property or assets of any Selling
Stockholder is subject, nor will any such action result in any violation of [the
provisions of the Certificate of Incorporation or the By-Laws of any Selling
Stockholder if such Selling Stockholder is a corporation,]/2/ the partnership
agreement if such Selling Stockholder is a partnership or any applicable law or
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over such Selling Stockholder or any of
------------
/2/ Please confirm
25
its properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the sale of the Shares or the consummation by the Selling
Stockholders of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or qualifications as have
been obtained under the Securities Act and as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters.
(h) on the effective date of the Registration Statement and the effective
date of the most recently filed post-effective amendment to the Registration
Statement and also on the Closing Date or Additional Closing Date, as the case
may be, PricewaterhouseCoopers LLP shall have furnished to you letters, dated
the respective dates of delivery thereof, in form and substance satisfactory to
you, containing statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus;
(i) the Representatives shall have received on and as of the Closing Date
or Additional Closing Date, as the case may be, an opinion of Xxxxx Xxxx &
Xxxxxxxx, counsel to the Underwriters, with respect to the due authorization and
valid issuance of the Shares, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(j) the Shares to be delivered on the Closing Date or Additional Closing
Date, as the case may be, shall have been approved for listing on the Nasdaq
National Market, subject to official notice of issuance;
(k) on or prior to the Closing Date or Additional Closing Date, as the
case may be, the Company and the Selling Stockholders shall have furnished to
the Representatives such further certificates and documents as the
Representatives shall reasonably request; and
(l) the "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and all the shareholders, officers and directors of the
Company relating to sales and certain other dispositions of shares of Common
Stock or certain other securities, delivered to you on or
26
before the date hereof, shall be in full force and effect on the Closing Date or
Additional Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
Selling Stockholders and each person, if any, who controls any Selling
Stockholders within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use
therein, provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus was not sent to or given by or on behalf of such Underwriter to such
person, if required by law so to have delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability.
Each of the Selling Stockholders severally in proportion to the number of
Shares to be sold by such Selling Stockholder hereunder agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact furnished by such Selling Stockholder to the Company in writing
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the
27
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act and each of the
Selling Stockholders to the same extent as the foregoing indemnity from the
Company and the Selling Stockholders to each Underwriter, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use in
the Registration Statement, the Prospectus, any amendment or supplement thereto,
or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to the preceding paragraphs
of this Section 7, such person (the "INDEMNIFIED PERSON") shall promptly notify
the person or persons against whom such indemnity may be sought (the
"INDEMNIFYING PERSON") in writing, and such Indemnifying Persons, upon request
of the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Persons and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Persons have failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both an Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to
28
actual or potential differing interests between them. It is understood that no
Indemnifying Person shall, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Underwriters and such control persons
of Underwriters shall be designated in writing by X.X. Xxxxxx Securities Inc.
and any such separate firm for the Company, its directors, its officers who sign
the Registration Statement and such control persons of the Company shall be
designated in writing by the Company and any such separate firm for the Selling
Stockholders shall be designated in writing by the Attorney-in-Fact. No
Indemnifying Person shall be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, such
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding and does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any Indemnified Party.
If the indemnification provided for in the first four paragraphs of this
Section 7 is unavailable to an Indemnified Person or insufficient in respect of
-
any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand from the offering of the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appro-
29
priate to reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the Selling Stockholders
and the total underwriting discounts and the commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company and the Selling Stockholders on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
-
determined by pro rata allocation (even if the Selling Stockholders or the
Underwriters were treated as one entity for such purposes) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Underwriter be required to contribute any amount
-
in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to con tribute pursuant to
this Section 7 are several in proportion to the respective number of Shares set
-
forth opposite their names in Schedule I hereto, and not joint.
30
The remedies provided for in this Section 7 are not exclusive and shall not
-
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
-
the representations and warranties of the Company and the Selling Stockholders
set forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Company, its officers or directors or any other person
controlling the Company or the Selling Stockholders and (iii) acceptance of and
payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company and the Selling Stockholders, if after the execution and delivery
of this Agreement and prior to the Closing Date (or, in the case of the Option
Shares, prior to the Additional Closing Date) (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange or the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the Representatives, is material and
adverse and which, in the judgment of the Representatives, makes it
impracticable to market the Shares being delivered at the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the manner
contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any post-
effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number
31
of Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
underwritten Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Representatives may specify,
to purchase the Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the number of Shares that any Underwriter has agreed to purchase pursuant to
Section 1 be increased pursuant to this Section 9 by an amount in excess of one-
- -
tenth of such number of Shares without the written consent of such Underwriter.
If on the Closing Date or the Additional Closing Date, as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase Shares which it or
they have agreed to purchase hereunder on such date, and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to the Representatives, the Company and, with respect to the Option
Shares, the Selling Stockholders for the purchase of such Shares are not made
within 36 hours after such default, this Agreement (or the obligations of the
several Underwriters to purchase the Option Shares, as the case may be) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company or the Selling Stockholder. In any such case either the Representative
or the Company (and, in the case of the Option Shares, the Selling Stockholders)
shall have the right to postpone the Closing Date (or, in the case of the Option
Shares, the Additional Closing Date), but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and in the Prospectus or in any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement. If this Agreement shall be terminated pursuant to this Section
9, the Company shall not then be liable to any Underwriter except as provided in
Sections 5(a)(xii) and 7 hereof.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or the
Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason any of the Company or the
Selling Stockholders shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company and the Selling Stockholders agree to reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
expenses of its counsel) reasonably incurred by the Underwriter in connection
with this Agreement or the offering contemplated hereunder.
32
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Selling Stockholders and the Underwriters, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Shares from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by X.X. Xxxxxx Securities Inc. on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
X.X. Xxxxxx Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (telefax:______); Attention: Syndicate Department. Notices to the
Company shall be given to it at EarthWeb, Inc., 0 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, (telefax: 212-725-6559); Attention: Xxxxx Math. Notices to the
Selling Stockholders shall be given to the Attorneys-in-Fact at ____________,
_________, (telefax:____________); Attention: ____________.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
33
If the foregoing is in accordance with your understanding, please sign and
return four counterparts hereof.
Very truly yours,
EARTHWEB, INC.
By:
-----------------------------------
Name:
Title:
[Selling Stockholders]
By:
-----------------------------------
Name:
Title:
Accepted: September __, 1998
X.X. Xxxxxx Securities Inc.
Bear Xxxxxxx & Co. Inc.
Xxxxx Xxxxx Xxxxxx & Co.
Acting severally on behalf of themselves
and the several Underwriters listed
in Schedule I hereto.
By: X.X. Xxxxxx Securities Inc.
Acting on behalf of itself and the several
Underwriters listed in Schedule I
hereto.
By:
-----------------------------------
Title:
34
SCHEDULE I
NUMBER OF SHARES
UNDERWRITER TO BE PURCHASED
----------- ----------------
X.X. Xxxxxx Securities Inc. .........................
Bear Xxxxxxx & Co. Inc. .............................
Xxxxx Xxxxx Xxxxxx & Co. ............................
Total
SCHEDULE II
SELLING STOCKHOLDERS
--------------------
2
