Exhibit 1.1
9,375,000 Shares of Common Stock
XXXXXX.XXX, INC.
UNDERWRITING AGREEMENT
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June __, 1999
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX & XXXXX, L.L.C.
WIT CAPITAL CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
xxxxxx.xxx, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 9,375,000 shares (the
"Firm Shares") of its common stock, par value $0.001 per share (the "Common
Stock") and, for the sole purpose of covering over-allotments in connection with
the sale of the Firm Shares, at the option of the Underwriters, up to an
additional 1,406,250 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares". The Shares are more fully described in the Registration
Statement referred to below.
1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have
filed an amendment or amendments thereto, on Form S-1 (No. 333-73459),
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for the registration of the Shares under the Securities Act of 1933, as
amended (the "Act"). Such registration statement, including the
prospectus, financial statements and schedules, exhibits and all other
documents filed as a part thereof, as amended at the time of
effectiveness of the registration statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A or Rule 434 of the published Rules and
Regulations of the Commission under the Act (the "Regulations"), is
herein called the "Registration Statement" and the prospectus, in the
form first filed with the Commission pursuant to Rule 424(b) of the
Regulations or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) or
Rule 434 filing is required, is herein called the "Prospectus". The term
"preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration Statement
or the effectiveness of any post-effective amendment to the Registration
Statement, when the Prospectus is first filed with the Commission
pursuant to Rule 424(b) or Rule 434 of the Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission
and at the Closing Date and the Additional Closing Date, if any (as
hereinafter respectively defined), the Registration Statement and the
Prospectus and any amendments thereof and supplements thereto complied or
will comply in all material respects with the applicable provisions of
the Act and the Regulations and does not or will not contain an untrue
statement of a material fact and does not or will not omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading. When the
related preliminary prospectus as described in Rule 430 of the
Regulations contained in Amendment No. 2 to the Registration Statement
dated May 14, 1999 or thereafter filed with the Commission (whether filed
as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations)
and when any amendment thereof or supplement thereto was first filed with
the Commission, such preliminary prospectus and any amendments thereof
and supplements thereto complied in all material respects with the
applicable provisions of the Act and the Regulations and did not contain
an untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein in light of the circumstances under which they
were made not misleading. No representation and warranty is made in this
subsection (b), however, with respect to any information contained in or
omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter through you as herein
stated expressly for use in connection with the preparation thereof. If
Rule 434 is used, the Company will comply with the requirements of Rule
434.
(c) PricewaterhouseCoopers LLP, who have certified the financial
statements and supporting schedules included in the Registration
Statement, are independent public accountants as required by the Act and
the Regulations.
(d) Except for changes in the economy or the securities markets
generally, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
disclosed in or contemplated by the Registration Statement and the
Prospectus, there has been no material adverse change or any development
involving a prospective material adverse change in the business,
prospects, properties, operations, condition (financial or other) or
results of operations of
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the Company, whether or not arising from transactions in the ordinary
course of business (a "Material Adverse Effect"), and since the date of
the latest balance sheet presented in the Registration Statement and the
Prospectus, the Company has not incurred nor undertaken any liabilities
or obligations, direct or contingent, which are material to the Company,
except for liabilities or obligations which are disclosed in or
contemplated by the Registration Statement and the Prospectus.
(e) This Agreement and the transactions contemplated herein have
been duly and validly authorized by the Company and this Agreement has
been duly and validly executed and delivered by the Company.
(f) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will
not (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, any agreement, instrument,
franchise, license or permit to which the Company is a party or by which
any of the Company's properties or assets may be bound or (ii) violate or
conflict with any provision of the certificate of incorporation or by-
laws of the Company or any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency
or body having jurisdiction over the Company or any of its properties or
assets, except for any such conflict, breach, default, lien, change or
encumbrance which would not reasonably be expected to result in a
Material Adverse Effect. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its properties or assets is
required to be obtained by the Company for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the
Shares to be issued, sold and delivered by the Company hereunder, except
the registration under the Act of the Shares and such consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters or which have duly been
obtained at or prior to closing.
(g) All of the outstanding shares of Common Stock are duly and
validly authorized and issued, fully paid and nonassessable and were not
issued and are not now in violation of or subject to any preemptive
rights. The Shares, when issued, delivered and sold in accordance with
this Agreement, will be duly and validly issued and outstanding, fully
paid and nonassessable, and will not have been issued in violation of or
be subject to any preemptive rights. The Company had, at March 31, 1999,
an authorized and outstanding capitalization as set forth under the
heading "Capitalization" in the Registration Statement and the
Prospectus. The Common Stock, the Firm Shares and the Additional Shares
conform in all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus. Except as disclosed in or
specifically
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contemplated by the Prospectus, the Company has no outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations, except
for grants of options to purchase shares of the Company's Common Stock to
employees made in the ordinary course of business since March 31, 1999
and not in excess of options to purchase 2,000,000 shares. The
description of the Company's stock option and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents in
all material respects the information required to be shown with respect
to such plans, arrangements, options and rights. No further approval or
authority of the stockholders or the Board of Directors of the Company
will be required for the issuance and sale of the Shares to be sold by
the Company to the Underwriters as contemplated herein.
(h) The Company does not own or control, either directly or
indirectly, any corporation, partnership, association or other entity.
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary except as
would not reasonably be expected to result in a Material Adverse Effect.
The Company has all requisite corporate power and authority, and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory
or governmental agencies and bodies, to own, lease and operate its
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus except as
would not reasonably be expected to have a Material Adverse Effect; no
such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and
the Prospectus; and, to the knowledge of the Company, no proceeding has
been instituted in any jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or
qualification.
(i) Except as described in the Prospectus, there is no litigation
or governmental proceeding to which the Company is a party or to which
any property of the Company is subject or which is pending or, to the
knowledge of the Company, contemplated against the Company which could
reasonably be expected to result in any material adverse change or any
development involving a material adverse change in the business,
prospects, properties, operations, condition (financial or other) or,
results of operations of the Company or which is required to be disclosed
in the Registration Statement and the Prospectus.
(j) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which
constitutes or which might
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reasonably be expected to constitute, the stabilization or manipulation
of the price of the shares of Common Stock to facilitate the sale or
resale of the Shares.
(k) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the
Prospectus present fairly in all material respects the financial position
of the Company as of the dates indicated and the results of its
operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; the supporting schedules included in the Registration
Statement, if any, present fairly the information required to be stated
therein. Except as included in the Registration Statement, no other
financial statements or schedules are required by Form S-1 to be included
in the Registration Statement.
(l) Except as described in the Prospectus, no holder of securities
of the Company has any rights to the registration of securities of the
Company because of the filing of the Registration Statement or otherwise
in connection with the sale of the Shares contemplated hereby.
(m) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940.
(n) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurances 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 accountability for assets, (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 existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(o) The Company is not in violation or default of any provision
of its certificate of incorporation or by-laws, or other organizational
documents, and is not in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its properties are bound
except as would not reasonably be expected to be material to the
Company's business, results of operations or financial condition; and
there does not exist any state of facts which constitutes an event of
default on the part of the Company as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of
default except as would not reasonably be expected to be material to the
Company's business, results of operations or financial condition.
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(p) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement which have not been described or filed as
required. The contracts so described in the Prospectus are in full force
and effect on the date hereof and neither the Company nor, to the
Company's knowledge, any other party is in breach of or default under any
of such contracts except as would not be material to the Company's
business, results of operations or financial condition.
(q) The Company has good and marketable title to all the
properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements, or (ii) those
which are not material in amount and do not adversely affect in any
material respect the use made and proposed to be made of such property by
the Company. The Company holds its leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company. Except as disclosed in the
Prospectus, the Company owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted.
(r) Since the respective dates as of which information is given
in the Registration Statement and Prospectus, except as disclosed or
specifically contemplated therein: (i) the Company has not incurred any
material liabilities or obligations, indirect, direct or contingent, or
entered into any material agreement or other transaction which is not in
the ordinary course of business; (ii) the Company has not sustained any
material loss or interference with its business or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock and the Company is
not in default in the payment of principal or interest on any outstanding
debt obligations; and (iv) there has not been any change in the capital
stock (other than upon the sale of the Common Stock hereunder and upon
the exercise of options or warrants described in the Registration
Statement) or indebtedness material to the Company.
(s) Except as disclosed in or specifically contemplated by the
Prospectus, the Company has or can acquire on commercially reasonable
terms sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals and governmental authorizations to conduct its
business as now conducted and as proposed to be conducted; and the
Company has no knowledge of any material infringement by it of trademark,
trade name rights, patent rights, copyrights, licenses, trade secret or
other similar rights of others and, to the Company's knowledge, there is
no claim being made against the Company regarding trademark, trade name,
patent, copyright, license, trade secret or other infringement which
would reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company, nor is the Company aware of any reasonable
grounds for the same.
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(t) The Company has filed all necessary federal, state and
foreign income and franchise tax returns, and all such tax returns are
complete and correct in all material respects, and the Company has paid
all taxes shown as due thereon. The Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the
Company which would reasonably be expected to materially and adversely
affect the business, operations or properties of the Company.
(u) The Company has not distributed and will not distribute prior
to the Closing Date any offering material in connection with the offering
and sale of the Shares other than the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(v) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business and all other risks
customarily insured against, all of which insurance is in full force and
effect. The Company has not been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially
and adversely affect the condition (financial or otherwise), properties,
business or results of operations of the Company.
(w) Neither the Company nor, to the Company's knowledge, any of
its employees or agents has at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law or (ii)
made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the
United States of any jurisdiction thereof.
(x) To the Company's knowledge, no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is
imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers,
subcontractors, original equipment manufacturers, authorized dealers or
international distributors that would reasonably be expected to result in
a material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company. No
collective bargaining agreement exists with any of the Company's
employees and, to the Company's knowledge, no such agreement is imminent.
(y) The Common Stock has been approved for quotation on The
Nasdaq National Market, subject to official notice of issuance.
(z) Except as set forth in the Registration Statement and
Prospectus, (i) the Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or
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the environment ("Environmental Laws") which are applicable to its
business, (ii) the Company has received no notice from any governmental
authority or third party of an asserted claim under Environmental Laws,
which claim is required to be disclosed in the Registration Statement and
the Prospectus, (iii) the Company will not be required to make future
material capital expenditures to comply with Environmental Laws and (iv)
no property which is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. (S) 9601, et seq.), or otherwise designated as a
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contaminated site under applicable state or local law except in each case
as would not reasonably be expected have a Material Adverse Effect.
(aa) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of
the executive officers or directors of the Company or any of the members
of the families of any of them of the sort required to be disclosed in
the Registration Statement and Prospectus, except as disclosed therein.
2. Purchase, Sale and Delivery of the Shares.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to sell to the Underwriters and the
Underwriters, severally and not jointly, agree to purchase from the
Company, at a purchase price per share of $_______, the number of Firm
Shares set forth opposite the respective names of the Underwriters in
Schedule I hereto plus any additional number of Shares which such
Underwriter may become obligated to purchase pursuant to the provisions
of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Shares shall be made at the offices of Xxxxxx & Xxxxxxx, located
at 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, XX 00000 (the "L&W Offices"), or
at such other place as shall be agreed upon by Bear, Xxxxxxx & Co., Inc.
("Bear Xxxxxxx") and the Company, at 10:00 A.M. on the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement
(or, if the Company has elected to rely upon Rule 430A of the
Regulations, the third or fourth business day (as permitted under Rule
15c6-1 under the Exchange Act) after the determination of the initial
public offering price of the Shares), or such other time not later than
ten business days after such date as shall be agreed upon by Bear Xxxxxxx
and the Company (such time and date of payment and delivery being herein
called the "Closing Date"). Payment shall be made to the Company by
certified or official bank check or checks drawn in federal funds or
similar same day funds payable to the order of the Company, or by wire
transfer in same day funds, against delivery to you for the respective
accounts of the Underwriters of certificates for the Shares to be
purchased by them. Certificates for the Shares shall be registered in
such name or names
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and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date. The Company will
permit you to examine and package such certificates for delivery at least
one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 1,406,250 Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the
Firm Shares as set forth in this Section 2, for the sole purpose of
covering over-allotments in the sale of Firm Shares by the Underwriters,
if any. This option may be exercised from time to time and at any time,
in whole or in part, on or before the thirtieth day following the date of
the Prospectus, by written notice by you to the Company. Such notice
shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time, as reasonably determined
by you, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing
Date"); provided, however, that unless otherwise agreed to by Bear Xxxxxxx
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and the Company, the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the
date on which the option shall have been exercised nor later than the
eighth full business day after the date on which the option shall have
been exercised (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Certificates for the Additional
Shares shall be registered in such name or names and in such authorized
denominations as you may request in writing at least two full business
days prior to the Additional Closing Date. The Company will permit you to
examine and package such certificates for delivery at least one full
business day prior to the Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number increased as set
forth in Section 9 hereof) bears to 9,375,000, subject, however, to such
adjustments to eliminate any fractional shares as you in your sole discretion
shall make.
Payment for the Additional Shares shall be made by certified or official
bank check or checks drawn in federal funds or similar same day funds, payable
to the order of the Company, or by wire transfer in same day funds at the L&W
Offices, or such other location as may be mutually acceptable, upon delivery
of the certificates for the Additional Shares to you for the respective
accounts of the Underwriters.
3. Offering.
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(a) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to offer the Shares for sale to the public upon the
terms set forth in the Prospectus.
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(b) At the request of the Company, the Underwriters will reserve up
to an aggregate of _______________ Shares for sale to Dell Computer
Corporation, Quintiles Transnational Corporation and FHC Internet
Services, L.C. (collectively, the "Concurrent Purchasers") at the initial
public offering price for such Shares. As a condition to the purchase of
such Shares by the Concurrent Purchasers from the Underwriters, the
Concurrent Purchasers shall enter into a lock-up agreement the same in
duration and substantially identical in scope to that of the Company set
out in Section 4(f) of this Agreement. The number of Shares available to
the general public shall be reduced to the extent the Concurrent
Purchasers elect to purchase such Shares. Any reserved Shares not
purchased by the Concurrent Purchasers at the Closing shall be offered by
the Underwriters to the general public in accordance with the terms of
purchase, sale and delivery set out in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with the
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Underwriters that:
(a) If the Registration Statement has not yet been declared
effective the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is
otherwise required under Rule 424(b) or Rule 434, the Company will file
the Prospectus (properly completed if Rule 430A has been used) pursuant
to Rule 424(b) or Rule 434 within the prescribed time period and will
provide evidence satisfactory to you of such timely filing. If the
Company elects to rely on Rule 434, the Company will prepare and file a
term sheet that complies with the requirements of Rule 434.
The Company will promptly notify you (and, if requested by you, will
confirm such notice in writing) (i) when the Registration Statement and
any amendments thereto become effective, (ii) of any request by the
Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of
the mailing or the delivery to the Commission for filing of any amendment
of or supplement to the Registration Statement or the Prospectus, (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto or of the initiation, or the threatening, of any
proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for
sale in any jurisdiction or the initiation or threatening of any
proceeding for that purpose. If the Commission shall propose or enter a
stop order at any time, the Company will make every reasonable effort to
prevent the issuance of any such stop order and, if issued, to obtain the
lifting of such order as soon as practicable. The Company will not file
any amendment to the Registration Statement or any amendment of or
supplement to the Prospectus (including the prospectus required to be
filed pursuant to Rule 424(b)or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before
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or after the effective date of the Registration Statement to which you
shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would, in
the judgment of the Company include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall
be necessary at any time to amend or supplement the Prospectus or
Registration Statement to comply with the Act or the Regulations, the
Company will notify you promptly and prepare and file with the Commission
an appropriate amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or omission and
will use its best efforts to have any amendment to the Registration
Statement declared effective as soon as practicable.
(c) The Company will promptly deliver to you two signed copies of
the Registration Statement, including exhibits and all amendments
thereto, and the Company will promptly deliver to each of the
Underwriters such number of copies of any preliminary prospectus, the
Prospectus, the Registration Statement, and all amendments of and
supplements to such documents, if any, as you may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
you, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions within the United States or Canada as you may designate and
to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be
obligated in connection therewith to qualify as a foreign corporation or
to execute a general consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal
quarter in which the first anniversary date of the effective date of the
Registration Statement occurs, an earnings statement (in form complying
with the provisions of Rule 158 of the Regulations) covering a period of
at least twelve consecutive months beginning after the effective date of
the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus,
the Company will not, without your prior written consent, issue, sell,
offer or agree to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock). The
foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the issuance by the Company of shares of Common
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Stock upon the exercise of options or warrants or the conversion of a
security outstanding on the date hereof of which the Underwriters have
been advised in writing and which is described in the Prospectus, (C) the
grant of options or share purchase rights by the Company pursuant to the
option and employee stock purchase plans described in the Registration
Statement and Prospectus, provided, such options are not exercisable for
180 days after the date of the Prospectus, or if such options are
exercisable within such period, such options are subject to lockup
provisions substantially the same as those set forth in this Section 4(f)
or (D) the issuance of shares of Common Stock in acquisition or
investment transactions approved by the Company's Board of Directors,
provided, such shares are subject to lockup provisions substantially
similar to those set forth in this Section 4(f) and so long as such
shares are not transferrable until the expiration of such lockup, which
expiration shall not occur until 180-days after the date of the
Prospectus.
(g) During a period of three years from the effective date of the
Registration Statement, the Company will upon request make generally
available to its securityholders copies of (i) all reports to its
shareholders; and (ii) all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use all reasonable commercial efforts to cause
the Shares to be listed for quotation on the Nasdaq National Market
System.
(j) The Company will comply with Rule 463 of the Regulations.
5. Payment of Expenses. Whether or not the transactions contemplated in
-------------------
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any
amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel) but excluding the fees and
expenses of counsel to the Underwriters, the underwriting documents including
this Agreement and the Agreement Among Underwriters and all other documents
related to the public offering of the Shares (including those supplied to the
Underwriters in quantities as hereinabove stated), (ii) the issuance, transfer
and delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the qualification of the Shares under state
or foreign securities or Blue Sky laws, including the reasonable costs of
printing and mailing a preliminary and final "Blue Sky Survey" and the
reasonable fees of counsel for the Underwriters and such counsel's
disbursements in relation thereto, (iv) listing the Shares for quotation on
the Nasdaq
-12-
National Market, (v) filing fees of the Commission and the National
Association of Securities Dealers, Inc.; (vi) the cost of printing
certificates representing the Shares and (vii) the cost and charges of any
transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, P.C. ("Underwriters' Counsel") pursuant to this Section 6 of any
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York time, on the date of this Agreement or at such
later time and date as shall have been consented to in writing by you; if
the Company shall have elected to rely upon Rule 430A or Rule 434 of the
Regulations, the Prospectus shall have been filed with the Commission in
a timely fashion in accordance with Section 4(a) hereof; and, at or prior
to the Closing Date no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or
threatened by the Commission.
(b) At the Closing Date you shall have received the opinion of
Xxxxxx & Xxxxxxx, counsel for the Company, dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Company has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware, with
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus. Based solely
on certificates from public officials, we confirm that the Company is
qualified to do business in the State of Texas.
(ii) The authorized capital stock of the Company consists solely
of 100,000,000 shares of Common Stock, $.001 par value per share, and
15,000,000 shares of Preferred Stock, $.001 par value per share.
(iii) The shares of Common Stock to be issued and sold by the
Company pursuant to the Underwriting Agreement have been duly authorized
and, when issued to and paid for by the Underwriters in accordance with
the terms of the Underwriting Agreement, will be validly issued, fully
paid and non-assessable.
-13-
(iv) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(v) The issuance and sale of the shares of Common Stock to be
sold to you by the Company pursuant to the Underwriting Agreement on the
date hereof will not result in the violation by the Company of its
Certificate of Incorporation or Bylaws or the violation by the Company of
any federal, California or Delaware statute, rule or regulation known by
us to be applicable to the Company (other than federal or state
securities laws as to which no opinion is expressed in this paragraph) or
in the breach of or a default under any agreement or instrument listed on
Annex A hereto or under any license or permit known to us, which breach
or default which in any such case would reasonably be expected to result
in a Material Adverse Effect. No consent, approval, authorization or
order of, or filing with, any federal, California or Delaware court or
governmental agency or body known by us to be applicable to the Company
is required for the consummation of the issuance and sale of the shares
of Common Stock to be sold to you by the Company pursuant to the
Underwriting Agreement on the date hereof, except such as have been
obtained under the Act, such as may be required under applicable state
securities laws in connection with the purchase and distribution of such
shares of Common Stock by the Underwriters and the filing of the
Company's Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware.
(vi) The Registration Statement has become effective under the
Act, and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Act
and no proceedings therefor have been initiated by the Commission.
(vii) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements for registration
statements on Form S-1 under the Act and the rules and regulations of the
Commission thereunder; it being understood, however, that we express no
opinion with respect to the financial statements, schedules and other
financial data included in the Registration Statement or the Prospectus.
In passing upon the compliance as to the form of Registration Statement
and the Prospectus, we assume that the statements made therein are
correct and complete.
(viii) The statements set forth in the Prospectus under the
headings "Description of Securities," "Management--Stock Option Plans,"
"Shares Eligible for Future Sale" and "Item 14 of Part II of the
Registration Statement" insofar as such statements constitute a summary
of the legal matters or documents referred to therein, are accurate in
all material respects.
(ix) To the best of our knowledge, there are no legal or
governmental proceedings required to be described in the Prospectus that
are not described as required, or contracts or documents of a character
required to be described in
-14-
the Registration Statement or Prospectus or to be filed as exhibits to
the Registration Statement that are not described and filed as required.
(x) The Shares to be issued and sold by the Company pursuant
to the Underwriting Agreement are duly authorized for quotation on the
Nasdaq National Market.
(xi) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Underwriters at which the contents and the Prospectus and related
matters were discussed and, no facts have come to the attention of such counsel
which would lead such counsel to believe that either the Registration Statement
at the time it became effective (including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to Rule 430A(b)
or Rule 434, if applicable), or any amendment thereof made prior to the Closing
Date as of the date of such amendment, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus as of its date (or any amendment thereof or supplement thereto made
prior to the Closing Date as of the date of such amendment or supplement) and as
of the Closing Date contained or contains an untrue statement of a material fact
or omitted or omits to state any 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 or opinion with respect to the financial statements and
schedules and other financial data included or incorporated by reference
therein).
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and certificates or other written statements of officers of departments
of various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall upon request be delivered to
Underwriters' Counsel.
(c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, and the Underwriters shall have received from said Underwriters'
Counsel a favorable opinion, dated as of the Closing Date with respect to
the issuance and sale of the Shares, the Registration Statement and the
Prospectus and such other related matters as you may reasonably require,
and the Company shall have furnished to Underwriters' Counsel such
-15-
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(d) At the Closing Date you shall have received a certificate of the
Company executed on its behalf by its Chief Executive Officer and Chief
Financial Officer, dated the Closing Date to the effect that (i) the
condition set forth in subsection (a) of this Section 6 has been
satisfied, (ii) as of the date hereof and as of the Closing Date the
representations and warranties of the Company set forth in Section 1
hereof are accurate, (iii) as of the Closing Date the obligations of the
Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
the Company has not sustained any material loss or interference with its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any
material adverse change, or any development involving a material adverse
change, in the prospects, properties, operations, condition (financial or
otherwise), results of operations or business of the Company as presently
conducted or as proposed to be conducted, except in each case as
described in or contemplated by the Prospectus.
(e) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from PricewaterhouseCoopers LLP,
independent public accountants for the Company, dated, respectively, as
of the date of this Agreement and as of the Closing Date addressed to the
Underwriters and in form and substance satisfactory to you, to the effect
that: (i) they are independent certified public accountants with respect
to the Company within the meaning of the Act and the Regulations and
stating that the answer to Item 10 of the Registration Statement is
correct insofar as it relates to them; (ii) stating that, in their
opinion, the financial statements and schedules of the Company included
in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable
published rules and regulations of the Commission thereunder; (iii) on
the basis of procedures consisting of a reading of the latest available
unaudited interim financial statements of the Company, a reading of the
minutes of meetings and consents of the shareholders and board of
directors of the Company and the committees of such boards subsequent to
December 31, 1998, inquiries of officers and other employees of the
Company who have responsibility for financial and accounting matters of
the Company with respect to transactions and events subsequent to
December 31, 1998 and other specified procedures and inquiries to a date
not more than five days prior to the date of such letter, nothing has
come to their attention that would cause them to believe that: (A) the
unaudited financial statements and schedules of the Company presented in
the Registration Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of the
Act and the applicable published rules and regulations of the Commission
thereunder or that such unaudited financial statements are not fairly
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
-16-
audited financial statements included in the Registration Statement and
the Prospectus; (B) with respect to the period subsequent to March 31,
1999 there were, as of the date of the most recent available monthly
financial statements of the Company and as of a specified date not more
than five days prior to the date of such letter, any changes in the
capital stock or long-term indebtedness of the Company or any decrease in
the net current assets or stockholders' equity of the Company, in each
case as compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for
changes or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such letter
or (C) that during the period from March 31, 1999 to the date of the most
recent available monthly financial statements of the Company and to a
specified date not more than five days prior to the date of such letter,
there was any decrease, as compared with the corresponding period in the
prior fiscal year, in total revenues, or total or per share net income,
except for decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such
letter; and (iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other
financial information pertaining to the Company set forth in the
Registration Statement and the Prospectus, which have been specified by
you prior to the date of this Agreement, to the extent that such amounts,
numbers, percentages, and information may be derived from the general
accounting and financial records of the Company or from schedules
furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate
procedures specified by you set forth in such letter, and found them to
be in agreement.
(f) Prior to the Closing Date the Company shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
(g) You shall have received from each person who is a director or
officer of the Company or such shareholder as have been heretofore
designated by you and listed on Schedule II hereto a Lock-Up Agreement to
the effect that such person will not, directly or indirectly, without
your prior written consent, offer, sell, offer or agree to sell, grant
any option to purchase or otherwise dispose (or announce any offer, sale,
grant of an option to purchase or other disposition) of any shares of
Common Stock (or any securities convertible into, exercisable for or
exchangeable or exercisable for shares of Common Stock) for a period of
180 days after the date of the Prospectus.
(h) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in
-17-
form and substance to you and to Underwriters' Counsel, all obligations of the
Underwriters hereunder may be cancelled by you at, or at any time prior to,
the Closing Date and the obligations of the Underwriters to purchase the
Additional Shares may be cancelled by you at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone, telex or telegraph, confirmed in writing.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any and
all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to reasonable attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company in writing
by or on behalf of any Underwriter through you expressly for use therein.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each
of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to reasonable
attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), jointly or several, to which they
or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue
-18-
statement of a material fact contained in the registration statement for
the registration of the Shares, as originally filed or any amendment
thereof, or any related preliminary prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein;
provided, however, that in no case shall any individual Underwriter be
-------- -------
liable or responsible for any amount in excess of the underwriting
discount applicable to the Shares purchased by such Underwriter
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The
Company acknowledges that the statements set forth in the last paragraph
of the cover page and under the caption "Underwriting" in the Prospectus
constitute the only information furnished in writing by or on behalf of
any Underwriter expressly for use in the registration statement relating
to the Shares as originally filed or in any amendment thereof, any
related preliminary prospectus or the Prospectus or in any amendment
thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party
shall not relieve it from any liability which it may have under this
Section 7 except to the extent the indemnifying party is substantially
prejudiced, and then only to the extent thereof). In case any such action
is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of
such action within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses shall be borne by the indemnifying parties. In no event shall
the indemnifying
-19-
parties be liable for the fees and expenses of more than one counsel (in
addition to any required local counsel) for all indemnified parties,
which counsel shall be selected by Bear Xxxxxxx. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall
not be liable for any settlement of any claim or action effected without
its written consent; provided, however, that such consent was not
-------- -------
unreasonably withheld.
8. Contribution. In order to provide for contribution in circumstances in
------------
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the offering of the Shares or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same proportion
as (x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder,
-20-
and (ii) no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 8 and the preceding sentence, no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 8. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 8 or
otherwise, except to the extent the indemnifying party is substantially
prejudiced, and then only to the extent thereof. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
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9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default
relates do not (after giving effect to arrangements, if any, made by you
pursuant to subsection (b) below) exceed in the aggregate 10% of the
number of Firm Shares or Additional Shares, to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth
opposite their respective names in Schedule I hereto bear to the
aggregate number of Firm Shares set forth opposite the names of the non-
defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree)
to purchase such Firm Shares or Additional Shares, as the case may be, to
which such default relates on the terms contained herein. In the event
that within 5 calendar days after such a default you do not arrange for
the purchase of the Firm Shares or Additional Shares, as the case may be,
to which such default relates as provided in this Section 9, this
Agreement or, in the case of a default
-21-
with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares
shall thereupon terminate, without liability on the part of the Company
with respect thereto (except in each case as provided in Section 5, 7(a)
and 8 hereof) or the Underwriters, but nothing in this Agreement shall
relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, you or the Company shall have the right to postpone the
Closing Date or Additional Closing Date, as the case may be for a period,
not exceeding five business days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus
or in any other documents and arrangements, and the Company agrees to
file promptly any amendment or supplement to the Registration Statement
or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in
this Agreement shall include any party substituted under this Section 9
with like effect as if it had originally been a party to this Agreement
with respect to such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective, upon the later of when
(i) you and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase
price per Share has not been agreed upon prior to 5:00 P.M., New York
time, on the fifth full business day after the Registration Statement
shall have become effective, this Agreement shall thereupon terminate
without liability to the Company or the Underwriters except as herein
expressly provided. Until this Agreement becomes effective as aforesaid,
it may be terminated by the Company by notifying you or by you notifying
the Company. Notwithstanding the foregoing, the provisions of this
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Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in
full force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional
Closing Date, as the case may be, if (A) any domestic or international
event or act or occurrence has materially disrupted, or in your opinion
will in the immediate future materially disrupt, the market for the
Company's securities or securities in general; or (B) if trading on
either of the Nasdaq National Market or the New York Stock Exchange (the
--------- -----------------------------------
"NYSE") shall have been suspended, or minimum or maximum prices for
------
trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the Nasdaq or the NYSE or by
order of the Commission or any other governmental authority having
jurisdiction; or (C) if a banking moratorium has been declared by a New
York or federal authority or if any new restriction materially adversely
affecting the distribution of the Firm Shares or the Additional Shares,
as the case may be, or (i) if the United States becomes engaged in
hostilities or there is an escalation of hostilities involving the United
States or there is a declaration of a national emergency or war by the
United States or (ii) if there shall have been such change in political,
financial or economic conditions if the effect of any such event set
forth in clauses (i) or (ii) as in your judgment makes it impracticable
or inadvisable to proceed with the offering, sale and delivery of the
Firm Shares or the Additional Shares, as the case may be, on the terms
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof),
or if the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth
herein is not satisfied or because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with
any provision hereof, the Company will, subject to demand by you,
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and expenses of their counsel), no incurred by the
Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, X.X. 00000, Attention: Syndicate Department, with a copy to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000, Attn:
Xxxx X. Xxxxxx, Esq.; if sent to the Company, shall be mailed, delivered, or
telegraphed and confirmed in writing to the Company, xxxxxx.xxx, Inc., 0000
Xxxxxxxx Xxxx Xxxxx, Xxxxxx, XX 00000, Attn: Chief
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Executive Officer, with a copy to Xxxxxx & Xxxxxxx, 000 Xxxxxxxxxxxx Xxxxx,
Xxxxx Xxxx, XX 00000, Attn: Xxxxxxx X. Xxxxxxxx, Esq.
13. Parties. This Agreement shall insure solely to the benefit of, and
-------
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7
and 8, and their respective successors and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provision herein
contained. The term "successors and assigns" shall not include a purchaser, in
its capacity as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
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If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
XXXXXX.XXX, INC.
_____________________________________________
By: Xxxxxx Xxxxxxx
Its: President and Chief Executive Officer
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX & XXXXX L.L.C.
WIT CAPITAL CORPORATION
By____________________________________
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
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its pro rata share of
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
-------------------------------------------------------------------
Bear, Xxxxxxx & Co. Inc
Xxxxxxxxx & Xxxxx L.L.C.
Wit Capital Corporation
Total...........__________
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SCHEDULE II
Names of stockholders subject to the lock-up provision:
Received
--------
X C. Xxxxxxx Xxxx
X Xxxx X. Xxxxxxx
X Xxxxxx X. Xxxxxxx
X Xxxxx X. Xxxxxxxx
X Xxxxxx X. Xxxx
X Xxxxx X. Xxxxxxx-Xxxx
X Xxxxxx X. Xxxxxxx, Xx.
X Xxxxxxx X. Xxxxxxx, Xx.
X Superior Consultant Holdings Corporation
X Xxxxx X. Xxxxxxxxx
X Adventist Health Systems Sunbelt Healthcare Corporation
X Xxxxxxx XxXxxxxx
X Xxxx X. Xxxxxxxx
X Xxxxxx Main
X Xxxx X. Xxxxxxxx
X Xxxxxx Xxxxxxx
X The Software Atelier
X Xxxxx X. Xxxxxx
X Xxxxx Xxxxxxx
X Xxxx Xxxxxxx
X Xxxx Xxxxx
X Xxxx Xxxx
X Xxx Xxxxxx
X Xxxxxxx X. Xxxxxxxx
X Xxxxx Xxxxxxx
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