8,000,000 Shares of Common Stock
theglobe.com, inc.
FORM OF
UNDERWRITING AGREEMENT
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May [___], 1999
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
VOLPE BROWN WHELAN & COMPANY, LLC
WIT CAPITAL CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, N.Y. 10167
Dear Sirs:
theglobe.com, inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), Todd V. Krizelman and Stephan J. Paternot
(collectively, the "Principal Selling Stockholders") and those certain selling
stockholders set forth on Schedule II attached hereto (the "Other Selling
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Stockholders," and collectively, with the Principal Selling Stockholders, the
"Selling Stockholders"), propose, subject to the terms and conditions stated
herein, to issue and sell to the several underwriters named in Schedule I hereto
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(the "Underwriters") an aggregate of 8,000,000 shares (the "Firm Shares") of the
Company's common stock, par value $0.001 per share (the "Common Stock") and, for
the sole purpose of covering over-allotments in connection with the sale of the
Firm Shares, at the option of the Underwriters, up to an additional 1,200,000
shares (the "Additional Shares") of Common Stock. Of the Firm Shares, 4,000,000
are being offered by the Company and 4,000,000 are being offered by the Selling
Stockholders. The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein
collectively as the "Shares." The Shares are more fully described in the
Registration Statement referred to below. The issuance by the Company and the
sale to the Underwriters of the Firm Shares and the Additional Shares is
hereinafter referred to as the "Underwritten Offering."
1. Representations and Warranties of the Company and the Principal Selling
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Stockholders. The Company and the Principal Selling Stockholders represent and
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warrant to, and agree 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. 333-76153), for the registration of the
Shares under the Securities Act of 1933, as amended (the "Act"). Such
registration statement, including the prospectus, financial statements and
schedules, exhibits and all other documents filed as a part thereof, as amended
at the time of effectiveness of the registration statement, including any
information deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations of the
Commission under the Act (the "Regulations"), is herein called the "Registration
Statement" and the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) or Rule 434 filing is
required, is herein called the "Prospectus". The term "preliminary prospectus"
as used herein means a preliminary prospectus as described in Rule 430 of the
Regulations.
(b) At the time of the effectiveness of the Registration Statement or any
462(b) Registration Statement or the effectiveness of any post-effective
amendment to the Registration Statement, when the Prospectus is first filed with
the Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission and at
the Closing Date and an Additional Closing Date, if any (as hereinafter
respectively defined), the Registration Statement, any 462(b) 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 preliminary prospectus dated May 3, 1999
was 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
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the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading. The Prospectus and any preliminary
prospectus delivered to the Underwriters for use in connection with the
Offerings was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related preliminary prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through Bear, Stearns & Co. Inc. ("Bear Stearns") as herein
stated expressly for use in connection with the preparation thereof. If Rule 434
is used, the Company will comply with the requirements of Rule 434.
(c) KPMG Peat Marwick, LLP, who have certified the financial statements
and supporting schedules included in the Registration Statement, are independent
public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has been no change in the
capital stock of the Company or the long-term indebtedness of the Company, and
there has been no material adverse change in the business, prospects,
properties, operations, condition (financial or other), stockholders' equity or
results of operations of the Company or its subsidiaries taken as a whole (the
effect of each such change or development being referred to herein as a
"Material Adverse Effect"), whether or not arising from transactions in the
ordinary course of business, and since the date of the latest balance sheet
presented in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations incurred in
the ordinary course of business or which are discussed in 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,
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would constitute a default) under, require approval or consent under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, the
terms of (A) any agreement, instrument, contract, indenture, mortgage, lease,
license, arrangement or understanding to which the Company or any of its
subsidiaries is a party, or to which any of their properties or assets are
subject (collectively, "Company Contracts"), which would have a Material Adverse
Effect or (B) any governmental franchise, license, permit heretofore issued to
the Company or any of its subsidiaries, which would have a Material Adverse
Effect, or (ii) violate or conflict with any provision of the Fourth Amended and
Restated Certificate of Incorporation or Bylaws of the Company or any of its
subsidiaries 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 subsidiaries or any of their
properties or assets. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its subsidiaries is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Shares to
be issued, sold and delivered by the Company hereunder, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits as have
been obtained or may be required under state securities, Blue Sky laws, with the
National Association of Securities Dealers, Inc. (the "NASD") or under the laws
of any non-United States jurisdiction, in connection with the purchase and
distribution of the Shares by the Underwriters.
(g) All of the outstanding shares of the capital stock of the Company and
its subsidiaries (including the Shares to be sold by the Selling Stockholders
hereunder) are duly and validly authorized and issued, fully paid and non-
assessable and were not issued and are not now in violation of or subject to any
preemptive rights. The Shares, when issued, delivered and sold in accordance
with this Agreement, will be duly and validly issued and outstanding, fully paid
and non-assessable, and will not have been issued in violation of or be subject
to any preemptive or similar rights; and, except as described in or expressly
contemplated by the Prospectus, there are no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital stock or
other equity interests in the Company, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital
stock of the Company and its subsidiaries. The Company had, at [________],
1999, an authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus. The Common Stock, the Firm Shares
and the Additional Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus.
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(h) Each of the Company and its subsidiaries has been duly organized and
is validly existing as a corporation in good standing under the laws of its
state of incorporation. Each of the Company and its subsidiaries is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which, individually or
in the aggregate, would not have or reasonably be expected to have a Material
Adverse Effect. Each of the Company and its subsidiaries has all requisite
power and authority, and all material consents, approvals, authorizations,
orders, registrations, qualifications, licenses and permits of and from all
public, regulatory or governmental agencies and bodies, to own, lease and
operate its properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and no such consent,
approval, authorization, order, registration, qualification, license or permit
contains a materially burdensome restriction not adequately disclosed in the
Registration Statement and the Prospectus. There are no contracts or other
documents applicable to the Company or any of its subsidiaries that are required
to be described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(i) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its subsidiaries is a
party or to which any property of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the Company, contemplated,
threatened against or otherwise affecting the Company or any of its subsidiaries
which, individually or in the aggregate, may reasonably be expected to have a
Material Adverse Effect or which is required to be disclosed in the Registration
Statement and the Prospectus.
(j) Neither the Company nor any of its subsidiaries has taken, nor will
take, directly or indirectly, any action designed to cause or result in, or
which constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale 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 and its
consolidated subsidiaries as of the dates indicated and the results of
operations of the Company and its consolidated subsidiaries for the periods
specified; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis; and the supporting
schedules included in the Registration Statement present fairly in all
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material respects the information required to be stated therein. The selected
financial data and the summary financial data included in the Prospectus present
fairly in all material respects the information shown therein and have been
compiled on a basis consistent with that of the financial statements included in
the Registration Statement. No other financial statements are required by
Form S-1 or otherwise to be included in the Registration Statement or the
Prospectus other than those included therein.
(l) Except as described in the Prospectus, no holder of securities of the
Company or any of its subsidiaries has any rights to the registration of such
securities of the Company because of the filing of the Registration Statement or
otherwise in connection with the sale of the Shares contemplated hereby.
(m) Neither the Company nor any of its subsidiaries is, or upon
consummation of the transactions contemplated hereby will be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended.
(n) Except as described in the Prospectus, the Company and its
subsidiaries own or possesses or reasonably believes it can acquire on
reasonable terms, patents, licenses (but excluding any required regulatory
licenses or approvals), inventions (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), copyrights, trademarks, service marks, trade names or other
intellectual property, registrations and applications to register any of the
foregoing, or that they can contract on reasonable terms with third parties who
can acquire such intellectual property which is material to the business now
operated, or proposed to be operated, by the Company and its subsidiaries, taken
as a whole (collectively, "Intellectual Property") and neither the Company nor
any of its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company and its subsidiaries and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or inadequacy,
individually or in the aggregate, would have or may reasonably be expected to
have a Material Adverse Effect.
(o) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries, on the one hand, and the directors,
officers, stockholders, customers or suppliers (to the extent that such
customers or suppliers are affiliates of the Company) of the Company or any of
its subsidiaries, on the other hand, which is required by the Act to be
described in the Registration Statement and the Prospectus which is not so
described.
(p) The Company and its subsidiaries are in compliance with all
environmental, safety or similar laws or regulations applicable to them or their
business or property relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants and the disposal of hazardous or toxic substances, wastes,
pollutants and contaminants, except those which,
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individually or in the aggregate, would not have or reasonably be expected to
have a Material Adverse Effect.
(q) Neither the Company nor any of its subsidiaries is in violation
or breach of, or in default under (nor has an event occurred that with notice,
lapse of time or both, would constitute a default under), any Company Contract,
where such violation, breach or default would have a Material Adverse Effect,
and each Company Contract is in full force and effect, and is the legal, valid
and binding obligation of the Company or such subsidiary, as the case may be,
and (subject to (i) applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or similar laws affecting the enforceability of
creditors' rights generally and (ii) general principles of equity, including
without limitation, standards of materiality, good faith, fair dealing and
reasonableness and limits on the availability of equitable remedies) is
enforceable as to the Company or such subsidiary, as the case may be, in
accordance with its terms.
(r) The Company and its subsidiaries maintain systems of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets; (iii) the access to the respective assets of the Company and each
such subsidiary 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.
(s) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
subsidiaries which are likely, individually or in the aggregate, to have or may
reasonably be expected to have a Material Adverse Effect.
(t) 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 or any of its
affiliates 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"). No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code has occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption. For each such plan which
is subject to the funding rules of Section 412 of the Code or Section 302 of
ERISA no "accumulated funding deficiency" as defined in Section 412 of the Code
has incurred, whether or not waived, and the fair market value of the assets of
each such plan (excluding for these purposes accrued but unpaid contributions)
exceeded the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions.
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(u) The Company has and its consolidated subsidiaries have filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions therefor (except in any case in which the failure to so
file would not have or reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect) and the Company and its consolidated
subsidiaries have paid all material taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith.
(v) Each of the Company and its subsidiaries maintain general
liability insurance with respect to physical damage to its assets, against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company and each such subsidiary is engaged. Neither
the Company nor any of its subsidiaries have any reason to believe that it will
not be able to renew its existing insurance coverage from similar insurers as
may be necessary to continue in its business.
(w) Except as described in the Registration Statement and as shall be
described in the Prospectus, the Company and each of its subsidiaries has (i)
good and marketable title to all real and personal properties owned by it, free
and clear of all liens, security interests, pledges, charges, encumbrances and
mortgages, and (ii) valid, subsisting and enforceable leases for all real and
personal properties leased by it, in either case (i) or (ii) above, subject to
such exceptions as, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect. No real property
owned, leased, licensed or used by the Company or any of its subsidiaries lies
in an area that is, or to the best knowledge of the Company will be, subject to
zoning, use or building code restrictions that would prohibit, and no state of
facts relating to the actions or inaction of another person or entity or his,
her or its ownership, leasing, licensing or use of such real property in the
business of the Company or any of its subsidiaries as presently conducted or as
the Prospectus indicates are contemplated to be conducted, subject to such
exceptions as, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect.
(x) Except as disclosed in the Registration Statement or the
Prospectus, there are no issues related to the Company's or any of its
subsidiaries' preparedness for the Year 2000 that might reasonably be expected
to result in any Material Adverse Effect. All internal computer systems and
each Constituent Component (as defined below) of those systems and all computer-
related products and each Constituent Component of those products of the Company
and each of its subsidiaries comply in all material respects with Year 2000
Qualification Requirements. "Year 2000 Qualification Requirements" means that
the internal computer systems and each Constituent Component of those systems
and all computer-related products and each Constituent Component of those
products of the Company and each of its subsidiaries (i) have been reviewed to
confirm that they store, process (including sorting and performing mathematical
operations, calculations and computations), input and output data containing
date and information correctly regardless of whether the date contains dates
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and times before, on or after January 1, 2000, (ii) have been designated to
ensure date and time entry recognition and calculations, and date data interface
values that reflect the century, (iii) accurately manage and manipulate data
involving dates and times, including single century formulas and multi-century
formulas, and will not cause an abnormal ending scenario within the application
or generate incorrect values or invalid results involving such dates, (iv)
accurately process any date rollover, and (v) accept and respond to two-digit
year date input in a manner that resolves any ambiguities as to the century.
"Constituent Component" means all software (including operating systems,
programs, packages and utilities), firmware, hardware, networking components,
and peripherals provided as part of the configuration. The Company and each of
its subsidiaries has inquired of material vendors as to their preparedness for
the Year 2000 and to its knowledge, except as disclosed in the Registration
Statement or the Prospectus, there are no issues relating to such vendors' Year
2000 preparedness that might reasonably be expected to result in any Material
Adverse Effect.
2. Representations and Warranties of the Selling Stockholders. Each of
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the Selling Stockholders, with respect to itself, represents, warrants and
covenants to, and agrees with, each Underwriter and the Company as follows:
(a) This Agreement has been duly authorized (to the extent due
authorization is a relevant concept to such Selling Stockholder), executed and
delivered by or on behalf of such Selling Stockholder and is a valid and binding
agreement of such Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification and contribution hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(b) Each of the (1) Custody Agreement signed by such Selling Stockholder
and American Stock Transfer & Trust Company as custodian (the "Custodian"),
relating to the deposit of the Shares to be sold by such Selling Stockholder
(the "Custody Agreement") and (2) Power of Attorney appointing certain
individuals named therein as such Selling Stockholder's attorneys-in-fact (each,
an "Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Selling Stockholder has been duly authorized (to the extent
due authorization is a relevant concept to such Selling Stockholder), executed
and delivered by such Selling Stockholder and is a valid and binding agreement
of such Selling Stockholder, enforceable in accordance with its terms, except as
rights to indemnification and contribution thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles. Each Selling Stockholder agrees that the Shares to be
sold by such Selling Stockholder on deposit with the Custodian is subject to the
interests of the Custodian, that the arrangements made for such custody are
irrevocable to the extent set forth in the Custody Agreement, and that
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the obligations of such Selling Stockholder hereunder shall not be terminated,
except as provided in this Agreement or in the Custody Agreement, by any act of
the Selling Stockholder, by operation of law, by death or incapacity of such
Selling Stockholder or by the occurrence of any other event. If such Selling
Stockholder should die or become incapacitated, or if any other event should
occur, before the delivery of the Shares to be sold by such Selling Stockholder
hereunder, the documents evidencing the Shares to be sold by such Selling
Stockholder then on deposit with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death, incapacity or other event had not occurred, regardless of whether or
not the Custodian shall have received notice thereof and to the extent permitted
by law.
(c) Such Selling Stockholder is the lawful owner of the Shares to be sold
by such Selling Stockholder hereunder and has, and on the Closing Date and an
Additional Closing Date, if any, will have, good and valid title to all of the
Shares which may be sold by such Selling Stockholder pursuant to this Agreement
on such date and the legal right and power, and all authorizations and approvals
required by law and, where applicable, under its charter or by-laws, partnership
agreement, trust agreement or other organizational documents to enter into this
Agreement and its Custody Agreement and Power of Attorney, to sell, transfer and
deliver all of the Shares which may be sold by such Selling Stockholder pursuant
to this Agreement and to comply with its other obligations hereunder and
thereunder, and upon sale and delivery of, and payment for, such Shares, as
provided herein, such Selling Stockholder will convey good and marketable title
to such Shares, free and clear of all liens, encumbrances, equities and claims
whatsoever, assuming that you are bona fide purchasers.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such Selling
Stockholder of the transactions contemplated herein, except such as may be
required under the Act, state securities laws, Blue Sky laws, the rules of the
NASD, the laws of any non-United States jurisdiction or except as have been
obtained or may be required, and where applicable, will not conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or Bylaws of such Selling Stockholder, if applicable, or any
agreement, indenture or other instrument to which such Selling Stockholder is a
party of by which such Selling Stockholder or property of such Selling
Stockholder is bound, or violate or conflict with any laws, administrative
regulation or ruling or court decree applicable to such Selling Stockholder or
property of such Selling Stockholder.
(e) Such Selling Stockholder does not have any registration or other
similar rights to have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as are described in the
Prospectus.
(f) Such Selling Stockholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right or right of first refusal or
other similar
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right to purchase any of the Shares that are to be sold by the Company or any of
the other Selling Stockholders to the Underwriters pursuant to this Agreement;
and such Selling Stockholder does not own any warrants, options or similar
rights to acquire, and does not have any right or arrangement to acquire, any
capital stock, right, warrants, options or other securities from the Company,
other than those described in the aggregate in the Registration Statement and
the Prospectus.
(g) All information furnished by or on behalf of such Selling Stockholder
in its capacity as a Selling Stockholder in writing expressly for use in the
Registration Statement and Prospectus is, and on the Closing Date and an
Additional Closing Date, if any, will be, true, correct, and complete in all
material respects, and does not, and on the Closing Date and an Additional
Closing Date, if any, will not, contain any untrue statement of a material fact
or omit to state any material fact, in either case relating to such Selling
Stockholder, necessary to make such information not misleading.
(h) Such Selling Stockholder has not taken and will not 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 any security of the
Company to facilitate the sale or resale of the Shares, and other than as
permitted by the Act, such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale or resale of the Shares.
(i) Neither the Selling Stockholder nor any of the Selling Stockholder's
affiliates directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, or had any other association
with (within the meaning of Article I of the Bylaws of the NASD), any member
firm of the NASD.
(j) At any time during the period described in Section 5(a) hereof, if
there is any change in the information referred to in Section 2(f) above, such
Selling Stockholder will immediately notify you of such change.
(k) Such Selling Stockholder, where applicable, has been duly organized
and is a validly existing as a corporation or organization under its
jurisdiction of incorporation or organization, as the case may be.
(l) Any certificate, including, without limitation, any custody agreement,
power of attorney, irrevocable election to sell, questionnaire and certificate
of Selling Stockholder (collectively, the "Selling Stockholder Documents")
signed by or on behalf of such Selling Stockholder and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by such Selling Stockholder to each Underwriter as
to the matters covered thereby.
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3. 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, (i) the Company agrees to issue and sell to the Underwriters and the
Underwriters, severally and not jointly, agree to purchase from the Company, an
aggregate of 4,000,000 Firm Shares and (ii) the Selling Stockholders, severally
and not jointly, agree to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Selling Stockholders, an
aggregate of 4,000,000 Firm Shares, each Selling Stockholder selling the number
of Firm Shares set forth opposite such Selling Stockholder's name on Schedule II
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hereto. On the basis of the representations, warranties, covenants and
agreements herein contained, the Underwriters, severally and not jointly, agree
to purchase from the Company and the Selling Stockholders, 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 10 hereof.
(b) Payment of the purchase price for, and delivery of the Firm
Shares shall be made at the office of Morrison & Foerster LLP, 1290 Avenue of
the Americas, New York, New York 10104-0050, or at such other place as shall be
agreed upon by Bear Stearns and the Company, at 10:00 A.M., New York City time,
on the third Business Day (as permitted under Rule 15c6-1 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (unless postponed in
accordance with the provisions of Section 10 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 public offering price of the Shares), or such other time not later than ten
Business Days after such date as shall be agreed upon by you and the Company
(such time and date of payment and delivery being herein called the "Closing
Date"). 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. Payment
shall be made to the Company and the Selling Stockholders, (or the Custodian
named in the Custody Agreement on behalf of the Selling Stockholders), by wire
transfer of immediately available funds, against delivery to you for the
respective accounts of the Underwriters of the Firm Shares to be purchased by
them. Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Shares to be sold by such Selling Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholders' obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement. Certificates for the
Firm Shares shall be registered in such name or
12
names and in such authorized denominations as you may request in writing at
least two full Business Days prior to the Closing Date. The Company will permit
you to examine and package such certificates for delivery at least one full
Business Day prior to the Closing Date. If you so elect, delivery of the Firm
Shares purchased from the Company may be made by credit through full fast
transfer to the account(s) at The Depository Trust Company designated by you.
(c) In addition, the Company and Dancing Bear Investments, Inc. ("Dancing
Bear") hereby grant to the Underwriters the option to purchase up to 1,200,000
Additional Shares at the same purchase price per share to be paid by the
Underwriters to the Company and the Selling Stockholders for the Firm Shares as
set forth in this Section 3, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters; provided, however, that if the
-------- -------
underwriters elect to exercise such option, Dancing Bear shall determine how
many additional shares it desires to sell (which may be zero) and it shall only
be obligated to sell the number of shares it so desires to sell and the Company
shall be responsible for selling the remaining shares necessary to satisfy such
option exercise. This option may be exercised at any time, in whole or in part
and from time to time, on or before the thirtieth day following the date of the
Prospectus, by written notice by you to Dancing Bear and the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time, as reasonably determined by
you, when the Additional Shares are to be delivered (any such date and time
being herein sometimes referred to as an "Additional Closing Date"); provided,
--------
further, however, that an Additional Closing Date shall not be earlier than the
------- -------
Closing Date or earlier than the second full Business Day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 10 hereof). Certificates for the Additional Shares shall be registered
in such name or names and in such authorized denominations as you may request in
writing at least two full Business Days prior to an Additional Closing Date. If
you so elect, delivery of the Shares purchased from the Company may be made by
credit through full fast transfer to the account(s) at The Depository Trust
Company designated by you.
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 10 hereof) bears to 8,000,000, 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 wire transfer in
immediately available funds upon delivery of the Additional Shares to you for
the respective accounts of the Underwriters.
13
4. Offering. Upon the Company's authorization of the release of the
--------
Shares, the Underwriters propose to offer the Shares for sale to the public upon
the terms set forth in the Prospectus.
5. Covenants of the Company; Covenants of the Selling Stockholders.
---------------------------------------------------------------
(a) The Company covenants and agrees with the Underwriters that:
(i) If the Registration Statement has not yet been declared effective, the
Company will use its reasonable 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 notify you as promptly as possible (and, if requested by
you, will confirm such notice in writing) (A) when the Registration Statement
and any amendments thereto become effective, (B) of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for any additional information, (C) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, (D) 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, (E) of the receipt of any comments from the
Commission, and (F) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing in a timely fashion based on the
circumstances after being timely furnished in advance a copy thereof.
(ii) 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
14
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 reasonable best efforts to have any amendment to the Registration Statement
declared effective as soon as possible.
(iii) The Company will promptly deliver to you two conformed 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 the preliminary prospectus dated on May 3, 1999, any amendment thereof, the
Prospectus, the Registration Statement, and all amendments of and supplements to
such documents, if any, as you may reasonably request.
(iv) The Company will endeavor in good faith, in cooperation with you, at
or prior to the time of effectiveness of the Registration Statement, to qualify
the Shares for offering and sale under the securities laws relating to the
offering or sale of the Shares of such jurisdictions (domestic or foreign) as
you may designate and to maintain such qualification in effect for so long as
required for the distribution thereof; except that in no event shall the Company
be obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process.
(v) 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 (12)
consecutive months beginning after the effective date of the Registration
Statement.
(vi) The Company shall cause to be prepared and delivered, at its expense,
within one (1) Business Day from the effective date of this Agreement, to the
Underwriters an "electronic Prospectus" to be used by the Underwriters in
connection with the offering and sale of the Shares. As used herein, the term
"electronic Prospectus" means a form of Prospectus, and any amendment or
supplement thereto, that meets each of the following conditions: (A) it shall be
encoded in an electronic format, satisfactory to Bear Stearns, that may be
transmitted electronically by Bear Stearns and the other Underwriters to
offerees and purchasers
15
of the Shares for at least during the period when the Prospectus is required to
be delivered under the Act or the Exchange Act; (B) it shall disclose the same
information as the paper Prospectus and Prospectus filed pursuant to EDGAR,
except to the extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall be replaced
in the electronic Prospectus with a fair and accurate narrative description or
tabular representation of such material, as appropriate; and (C) it shall be in
or convertible into a paper format or an electronic format, satisfactory to Bear
Stearns, that will allow investors to store and have continuously ready access
to the Prospectus at any future time, without charge to investors (other than
any fee charged for subscription to the system as a whole and for on-line time).
Such electronic Prospectus may consist of a Rule 434 preliminary prospectus,
together with the applicable term sheet, provided that it otherwise satisfies
the format and conditions described in the immediately preceding sentence. The
Company hereby confirms that it has included or will include in the Prospectus
filed pursuant to EDGAR or otherwise with the Commission and in the Registration
Statement at the time it was declared effective an undertaking that, upon
receipt of a request by an investor or his or her representative within the
period when the Prospectus is required to be delivered under the Act or the
Exchange Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
(vii) During the period of 90 days from the date of the Prospectus, the
Company will not, without your prior written consent, directly or indirectly,
issue, sell, offer or agree to sell, except pursuant to any stock option or
incentive plan described in the Prospectus or the sale of Shares hereunder,
grant any option for the sale of, pledge, make any short sale, establish an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the Exchange
Act or otherwise dispose of any Common Stock (or any securities convertible
into, exercisable for or exchangeable for Common Stock). The foregoing sentence
shall not apply to shares of Common Stock issued in connection with any merger,
recapitalization consolidation or acquisition of stock or assets by the Company
or its subsidiaries, provided that the Company obtains the undertaking in the
foregoing sentence from the holders of such shares in connection with a
consummated transaction. The Company will obtain the undertaking of each of its
officers and directors as have been heretofore designated by you and listed on
Schedule III attached hereto, which undertaking shall be substantially in the
------------
form set forth in Exhibit A attached hereto. The Company agrees not to waive
---------
any undertaking obtained pursuant to this paragraph without the prior written
consent of Bear Stearns on behalf of the Underwriters.
(viii) The Company will apply the proceeds from the sale of the Shares as
set forth under "Use of Proceeds" in the Prospectus.
16
(ix) The Company will use its best efforts to cause the Shares to be
approved for quotation on the National Association of Securities Dealers
Automated Quotation National Market System ("Nasdaq").
(b) Each Selling Stockholder covenants and agrees with the Underwriters
that:
(i) Other than the Shares sold pursuant to this Agreement, such Selling
Stockholder will not, during the period of 90 days from the date of the
Prospectus, without your prior written consent, directly or indirectly, issue,
sell, offer or agree to sell, except pursuant to any stock option or incentive
plan described in the Prospectus or the sale of Shares hereunder, grant any
option for the sale of, pledge, make any short sale, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act
or otherwise dispose of any Common Stock (or any securities convertible into,
exercisable for or exchangeable for Common Stock) of the Company or of any of
its subsidiaries. The foregoing sentence shall not apply to (A) the issuance of
any shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in the
Registration Statement; (B) the pledge by the undersigned of shares of Common
Stock to a financial institution in connection with a bona fide financing
transaction; (C) transfers of shares of Common Stock to immediate family members
or trusts for the benefit of such family members, provided such transferee
enters into a similar lock-up agreement, (D) the transfer of all or part of any
warrants held by Dancing Bear on the date hereof to any employee of Dancing
Bear, provided that any such employee shall have executed a similar lock-up
agreement or (E) the transfer by Dancing Bear of shares of Common Stock to
entities under common control with Dancing Bear, provided that each such
transferee shall have executed a similar lock-up agreement. Furthermore, such
Selling Stockholder has agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
securities held by such Selling Stockholder except in compliance with the
foregoing restrictions.
(ii) Such Selling Stockholder will not take, prior to the termination of
the underwriting arrangement contemplated by this Agreement, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(iii) Such Selling Stockholder will deliver to the Representatives prior
to the Closing Date a properly completed and executed United States Treasury
Department Form W-8 (if the Selling Stockholder is a non-United States person)
or Form W-9 (if the Selling Stockholder is a United States person).
17
(iv) Such Selling Stockholder will pay or to cause to be paid all transfer
taxes with respect to the Shares to be sold by such Selling Stockholder.
6. 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), 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 costs of printing and mailing
a preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters and such counsel's disbursements in relation thereto, (iv)
quotation of the Shares on Nasdaq, (v) filing fees of the Commission and the
NASD; (vi) the cost of printing certificates representing the Shares, and (vii)
the cost and charges of any transfer agent or registrar, (viii) the fees and
expenses of counsel to the Selling Stockholders (to the extent the Company has
agreed to pay) and (ix) all other costs and expenses incident to the
performance of the Company's and the Selling Stockholders' (to the extent the
Company has agreed to pay) obligations hereunder (including costs incurred in
closing the purchase of the Additional Shares, if any) that are not otherwise
specifically provided for in this Section 6.
7. 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 all Additional Closing Dates, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Morrison & Foerster LLP
("Underwriters' Counsel") pursuant to this Section 7 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later than,
if pricing pursuant to Rule 430A, 5:30 P.M., New York City 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 5(a) hereof; and, at
or
18
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) All the representations and warranties of the Selling Stockholders
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date, and you
shall have received a certificate to such effect, dated the Closing Date, from
the Selling Stockholders.
(c) At the Closing Date you shall have received the opinion of Fried,
Frank, Harris, Shriver & Jacobson, 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) Each of the Company and its subsidiaries is duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, based upon certificates of public officials
of such state, with all requisite corporate power and authority to own its
properties and conduct its business as described in the Prospectus.
(ii) Each of the Company and its subsidiaries is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary,
except for those failures to be so qualified which will not in the
aggregate have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(iii) The Company has an authorized capital stock as set forth in the
Prospectus under the caption "Capitalization," and all of the issued shares
of capital stock of the Company (including the Shares being delivered to
the Underwriters on the date hereof) have been duly authorized, validly
issued and are fully paid and non-assessable (assuming that they are paid
for in accordance with the terms of this Agreement) and will not be issued
in violation of or subject to any preemptive rights under the Fourth
Amended and Restated Certificate of Incorporation of the Company; and the
Common Stock, including the Firm Shares and the Additional Shares, conform
as to legal matters to the descriptions thereof contained in the
Prospectus.
(iv) The Common Stock and the Shares are duly authorized for listing on
Nasdaq.
19
(v) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
(vi) The Company has taken all necessary corporate action to authorize
the execution, delivery and performance of its obligations under this
Agreement and has duly executed and delivered this Agreement.
(vii) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator against the Company or any of
its subsidiaries, of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the Prospectus.
(viii) The execution and delivery by the Company of and the performance
by the Company of its obligations under this Agreement (A) do not require
under the federal laws of the United States of America, the laws of the
State of New York or the General Corporation law of the State of Delaware
any filing or registration by the Company or any of its subsidiaries with,
or approval or consent to the Company or any of its subsidiaries of, any
governmental agency or authority of the United States of America or the
States of New York or Delaware, except those that have been made or
obtained, or the failure of which to make or obtain would not have a
material adverse effect on the Company or any of its subsidiaries, taken as
a whole, (B) do not contravene any provision of the Fourth Amended and
Restated Certificate of Incorporation or the By-Laws of the Company, and
(C) do not violate (1) any present law, or present regulation of any
governmental agency or authority, of the States of New York or Delaware or
the United States of America known by such counsel to be applicable to the
Company or any of its subsidiaries or its property or (2) any agreement or
any court decree or order binding upon the Company or any of its
subsidiaries or its property (such opinion being limited (x) to those
agreements, decrees or orders, if any, that have been listed in an
officer's certificate and (y) in that such counsel need express no opinion
with respect to any violation not readily ascertainable from the face of
any such agreement or court decree or order, or arising under or based upon
any cross-default provision insofar as it relates to a default under an
agreement or court order or decree not so listed, or arising under or based
upon any covenant of a financial or numerical nature or requiring
computation); which violation would have a material adverse effect on the
Company or any of its subsidiaries, taken as a whole.
20
(ix) The Registration Statement and the Prospectus, as of their
respective effective or issue dates (other than the financial statements,
notes or schedules included or omitted in the Registration Statement or the
Prospectus or other financial or accounting data included in or omitted
from the Registration Statement or Prospectus, as to which we express no
opinion) appeared on their face to be responsive as to form in all material
respects with the applicable requirements of the Act.
(x) The Registration Statement has been declared effective by the
Commission under the Act. To the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the Act and no proceedings for such purpose have been instituted or
are pending or are contemplated or threatened by the Commission. Any
required filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period
required by such Rule 424(b).
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus such counsel
participated in conferences with certain of the officers and
representatives of, and the independent public accountants for, the
Company. Such counsel shall state that between the date of the Registration
Statement and the time of delivery of their opinion, they participated in
additional conferences with certain officers and representatives of the
Company at which the contents of the Registration Statement and the
Prospectus were discussed to a limited extent. Such counsel may state that
given the limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration
process, they are not passing upon and do not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus. Such counsel shall state that
subject to the foregoing and on the basis of the information they gained in
the course of the performance of the services referred to above, including
information obtained from offices and representatives of the Company, no
facts have come to their attention that cause them to believe that the
Registration Statement, at the time the Registration Statement became
effective, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date, contained any untrue statement of a materials fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Also, such counsel shall state that, subject to the foregoing, no facts
have come to their attention in the course of the proceedings described in
the second sentence of this paragraph that cause them to believe that the
Prospectus,
21
as of the date and time of delivery of their opinion letter, contains any
untrue statement of a material fact or omits to state any material
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. In each case,
however, such counsel shall not be required to express any view or belief
with respect to (x) financial statements, notes or schedules included or
omitted in the Registration Statement or the Prospectus or (y) other
financial or accounting data included in the Registration Statement or the
Prospectus.
In rendering such opinion, such counsel may rely (x) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon
an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to
Underwriters' Counsel, familiar with the applicable laws; (y) as to matters
of fact, to the extent they deem proper, on certificates of officers of the
Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company and its
subsidiaries, provided that copies of any such statements or certificates
shall be delivered to Underwriters' Counsel. The opinion of such counsel
for the Company shall state that the opinion of any such other counsel is
in form satisfactory to such counsel and, in their opinion, you and they
are justified in relying thereon.
(d) At the Closing Date you shall have received the opinion of
Cooley Godward LLP, special intellectual property counsel for the Company, dated
the Closing Date addressed to the Underwriters and in form and substance
satisfactory to the Underwriters' counsel.
(e) At the Closing Date you shall have received the opinion of
each counsel for the Selling Stockholders, dated the Closing Date addressed to
the Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) Each Selling Stockholder has full legal right, power
and authority, and any approval required by law (other than any approval
imposed by the applicable state securities and Blue Sky laws), to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Stockholder in the manner provided in this Agreement.
(ii) Each Selling Stockholder has good and clear title to
the certificates for the Shares to be sold by such Selling Stockholder, and
upon delivery thereof pursuant hereto and payment
22
therefor, good and clear title will pass to the Underwriters, severally,
free of all restrictions on transfer, liens, encumbrances, security
interests and claims whatsoever.
(iii) This Agreement has been duly and validly
authorized, executed and delivered by each Selling Stockholder and is a
valid and binding agreement of each Selling Stockholder.
(iv) The power of attorney signed by each Selling
Stockholder appointing Michael S. Egan, Todd V. Krizelman and Stephan J.
Paternot as such Selling Stockholder's attorney-in-fact, to the extent set
forth therein with regard to the transactions contemplated hereby and by
the Registration Statement, has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder and is the valid and
binding instrument of such Selling Stockholder enforceable in accordance
with its terms, and pursuant to such power of attorney, each Selling
Stockholder has authorized such attorney-in-fact, to execute and deliver on
such Selling Stockholder's behalf this Agreement and any other document
necessary or desirable in connection with the transactions contemplated
hereby and to deliver the Shares to be sold by such Selling Stockholder
pursuant to this Agreement.
(v) Where applicable, each Selling Stockholder has been
duly organized and is validly existing as a corporation or organization
under its jurisdiction of incorporation or organization, as the case may
be.
(vi) The execution, delivery and performance of this
Agreement by the Selling Stockholders, compliance by the Selling
Stockholders with all the provisions hereof and the consummation of the
transactions contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except as such may be required under the
Act, state securities laws or Blue Sky laws or except as such may have been
obtained) and will not conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or by-laws of each
of the Selling Stockholders, if applicable, or any material agreement,
indenture or other instrument to which any of the Selling Stockholders is a
party or by which any of the Selling Stockholders or property of any of the
Selling Stockholders is bound, or violate or conflict with any laws,
administrative regulation or ruling or court decree applicable to any of
the Selling Stockholders or property of any of the Selling Stockholders.
In rendering such opinion, such counsel may rely (x) as to matters
involving the application of laws other than the laws of the United States
23
and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon
an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to
Underwriters' Counsel, familiar with the applicable laws; (y) as to matters
of fact, to the extent they deem proper and is applicable, on certificates
of officers of the Selling Stockholders 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 Selling Stockholders, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion of
such counsel for the Company shall state that the opinion of any such other
counsel is in form satisfactory to such counsel and, in their opinion, you
and they are justified in relying thereon.
(f) 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 Firm Shares, and as of the Additional Closing Date with respect to the
Additional Shares, the Registration Statement and the Prospectus and such other
related matters as you may reasonably require, and the Company shall have
furnished to Underwriters' Counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
(g) At the Closing Date you shall have received a certificate
of either Co-Chief Executive Officer and the Chief Financial Officer of the
Company, dated the Closing Date to the effect that (i) the condition set forth
in subsection (a) of this Section 7 has been satisfied, (ii) as of the date
hereof and as of the Closing Date the representations and warranties of the
Company set forth in Section 1 hereof are accurate in all material respects,
(iii) as of the Closing Date the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed in all material respects
and (iv) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company has not sustained any
material loss or interference with its respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding,
and there has not been any material adverse change, or any development involving
a material adverse change, in the business prospects, properties, operations,
condition (financial or otherwise), or results of operations of the Company,
except in each case as described in or contemplated by the Prospectus.
(h) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter, from KPMG Peat Marwick, LLP, independent
public accountants for the Company, dated, respectively, as of the date of this
Agreement
24
and as of the Closing Date addressed to the Underwriters and in form and
substance satisfactory to you.
(i) Prior to the Closing Date the Company and the Selling
Stockholders shall have furnished to you such further information, certificates
and documents as you may reasonably request.
(j) You shall have received from each person who is a director
or officer of the Company as have been heretofore designated by you and listed
on Schedule III hereto an agreement, in the form set forth in Exhibit A
-------- ---------
attached hereto. The Company agrees not to waive any undertaking obtained
pursuant to this paragraph without the prior written consent of Bear Stearns,
which consent shall be on behalf of the Underwriters.
(k) At the Closing Date, the Shares shall have been approved
for quotation on Nasdaq, subject to official notice of issuance.
(l) Prior to the Closing Date, and with respect to the
Additional Shares, prior to an Additional Closing Date, the Company shall have
furnished to you such further information, certificates and documents as you may
reasonably request.
If any of the conditions specified in this Section 7 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 7 shall not be in all material respects
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be cancelled by you
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Shares may be cancelled by you at, or at
any time prior to, an Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
8. Indemnification.
----------------
(a) The Company, on the one hand, and the Principal Selling
Stockholders, jointly and severally, on the other hand agree 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
Exchange Act, against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to reasonable
attorneys' fees and any and all reasonable expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained
25
in the registration statement for the registration of the Shares, as originally
filed or any amendment thereof, or the preliminary prospectus dated May 3, 1999
or any amendment thereof 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 and the Principal Selling Stockholders 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 by or on behalf of any Underwriter through you
expressly for use therein, provided, further, however, that with respect to
-------- ------- -------
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling such
Underwriter if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage liability or expense, provided, further, however, that each Principal
-------- ------- -------
Selling Stockholder shall be liable hereunder in any case only to the extent of
the total net proceeds from the Underwriters for the Shares sold by such
Principal Selling Stockholder.
(b) The Other Selling Stockholders severally agree 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 Exchange Act
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which it may become subject as a result of or based upon any breach of any
warranty or covenant of such Selling Stockholder contained in Sections 2(c),
2(d) and 2(g) herein; provided, however, that with regard to liability under
-------- -------
this Section, such Selling Stockholder shall not be liable 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
Bear Stearns expressly for use therein; and provided, further, however, that
-------- ------- -------
each Other Selling Stockholder shall be liable hereunder in any case only to the
extent of the total net proceeds from the Underwriters for the Shares sold by
such Other Selling Stockholder. This indemnity agreement will be in addition to
any liability which each Other Selling Stockholder may otherwise have, including
under this Agreement.
26
(c) 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, the Selling Stockholders and each other person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), jointly or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Shares, as originally filed
or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
you expressly for use therein; provided, however, that in no case shall any
-------- -------
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The Company
acknowledges that the statements set forth in the [last] paragraph of the cover
page of the Prospectus, and in the [fifth] paragraph, the [sixth] paragraph, the
[seventh] paragraph and the [eighth] paragraph under the caption "Underwriting"
in the Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for use in the registration statement
relating to the Shares as originally filed or in any amendment thereof, any
related preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) 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 8). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to
27
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, and which counsel, in the event that the
indemnifying party is Bear Stearns, shall be approved by Bear Stearns, whose
approval shall not be unreasonably withheld. 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.
9. Contribution.
------------
[(a) In order to provide for contribution in circumstances in
which the indemnification provided for in Section 8 hereof, if otherwise
applicable in accordance with its terms, is for any reason (i) held to be
unavailable from any indemnifying party or (ii) is insufficient to hold harmless
a party indemnified thereunder, the Company, the Selling Stockholders 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 or the Selling
Stockholders any contribution received by the Company or the Selling
Stockholders 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, the Selling Stockholders 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 Principal Selling
Stockholders, collectively, each Other Selling Stockholder and the Underwriters
from the offering of the Shares or, if such allocation is not permitted by
applicable law or
28
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 8 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 Principal Selling
Stockholders, collectively, each Other Selling Stockholder 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 the Principal Selling Stockholders, on the
one hand, and each Other Selling Stockholder, on the other hand, 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 the Principal Selling
Stockholders, collectively, each Other Selling Stockholder and 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 and the
Principal Selling Stockholders, collectively, each Other Selling Stockholder or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Principal Selling Stockholders, and each Other Selling
Stockholder and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 9, (i) in no case shall any Underwriter be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 9 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 9, 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 9. 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
29
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 9 or otherwise. No party shall be liable for contribution with respect
to any action or claim settled without its consent; provided, however, that
-------- -------
such consent was not unreasonably withheld. The liability of each Selling
Stockholder under this Section 9 shall be limited to an amount equal to the
total net proceeds from the Underwriters for the Shares sold by each such
Selling Stockholder to the Underwriters. Each Selling Stockholder who is not an
officer or director of the Company hereby designates CT Corporation, whose
address is 1633 Broadway, New York, New York, as its authorized agent, upon
which process may be served in any action, suit or proceeding which may be
instituted in any state or federal court in the State of New York by any
Underwriter or person controlling an Underwriter asserting a claim for
indemnification or contribution under or pursuant to Section 8 hereof or this
Section 9, and each such Selling Stockholder shall accept the jurisdiction of
such court in such action, and waives, to the fullest extent permitted by
applicable law, any defense based upon lack of personal jurisdiction or venue
together with any right to trial by jury. A copy of any such process shall be
sent or given to such Selling Stockholders at the address for notices specified
in the Selling Shareholder Documents.]
(b) The obligations of the Company under Sections 8 and 9
herein shall be in addition to any liability which the Company may otherwise
have.
10. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
----------
Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five (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 10, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company, the Selling Stockholders (except in each
case as provided in Sections 6, 8(a) and 9 hereof) or the Underwriters with
respect thereto, but nothing in this
30
Agreement shall relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other Underwriters and the Company and the Selling
Stockholders 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,
either you on the one hand or the Company and the Selling Stockholders on the
other hand shall have the right to postpone the Closing Date or an 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 the Company's counsel and the 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 10 with like effect as if it
had originally been a party to this Agreement with respect to such Firm Shares
and Additional Shares.
11. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters and the Company and the
Selling Stockholders contained in this Agreement, including the agreements
contained in Section 6, the indemnity agreements contained in Section 8 and the
contribution agreements contained in Section 9, 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 or
by or on behalf of any of the Selling Stockholders, and shall survive delivery
of and payment for the Shares to and by the Underwriters. The representations
contained in Section 1 and Section 2 hereof and the agreements contained in
Sections 6, 8, 9 and 12(d) hereof shall survive the termination of this
Agreement, including termination pursuant to Section 10 or 12 hereof.
12. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective, upon the later of
when (i) you and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the price of the Underwritten Offering or the purchase
price per Share has not been agreed upon prior to 5:00 P.M., New York City time,
on the fifteenth full Business Day after the Registration Statement shall have
become effective, this Agreement shall thereupon terminate without liability to
the Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying you or by you notifying the Company. Notwithstanding the foregoing,
the provisions of this Section 12 and of Sections 1, 2 6, 8 and 9 hereof shall
at all times be in full force and effect.
31
(b) You shall have the right to terminate this Agreement at any
time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to an Additional Closing Date,
as the case may be, if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on the New York Stock Exchange or Nasdaq shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required by
the New York Stock Exchange or Nasdaq or by order of the Commission or any other
governmental authority having jurisdiction; or (C) if a banking moratorium has
been declared by a state 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, shall have become effective; or (D) (i)
if the United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been such
change in political, financial or economic conditions if the effect of any such
event in (i) or (ii) as in your judgment makes it impracticable or inadvisable
to proceed with the offering, sale and delivery of the Firm Shares 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 12 shall
be by telephone, telex, or telegraph, confirmed in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 12(a) hereof or (ii) Section 10(b) or 12(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all out-
of-pocket expenses (including the fees and expenses of their counsel), incurred
by the Underwriters in connection herewith.
13. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or faxed and confirmed in
writing, to such Underwriter c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New
York, N.Y. 10167, Fax (212) 272-3092, Attention: Corporate Finance Department,
with a copy to Allen L. Weingarten, Esq. c/o Morrison & Foerster LLP, 1290
Avenue of the Americas, New York, New York 10104; if sent to the Company, shall
be mailed, delivered, or faxed and confirmed in writing to theglobe.com, inc.,
31 West 21st Street, 4th Floor, New York, New York 10010, Fax (212) 367-8588,
Attention: Todd Krizelman and Stephan Paternot, with a copy to Stuart H.
Gelfond, Esq. c/o Fried Frank, Harris, Shriver & Jacobson, 1 New York Plaza, New
York, New York 10004; and if sent to the Selling Stockholders, shall be mailed,
32
delivered, or faxed and confirmed in writing, with respect to each Selling
Stockholder, the address specified in the Selling Stockholder Documents.
14. Parties. This Agreement shall insure solely to the benefit of, and
-------
shall be binding upon, the Underwriters, each Selling Stockholder and the
Company and the controlling persons, directors, officers, employees and agents
referred to in Section 8 and Section 9, 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.
15. Failure of One or More of the Selling Stockholders to Sell and Deliver
----------------------------------------------------------------------
Common Shares. If one or more of the Selling Stockholders shall fail to sell
-------------
and deliver to the Underwriters the Shares to be sold and delivered by such
Selling Stockholders at the Closing Date pursuant to this Agreement, the Company
hereby agrees, at the option of the Underwriters, to sell and deliver to the
Underwriters any or all of the Shares (the "Company Reallocation") not sold and
delivered by such Selling Stockholders and each Selling Stockholder agrees, at
the option of the Underwriters, to sell and deliver to the Underwriters any or
all of the Shares (the "Selling Stockholder Reallocation") not sold and
delivered by such Selling Stockholders, to the extent that such Selling
Stockholder has elected to sell shares of Common Stock pursuant to the Selling
Stockholder Documents in excess of the amount such Selling Stockholder has
agreed to sell thereunder. The Underwriters shall determine the allocation of
Shares sold with in connection with the Company Reallocation and the Selling
Stockholder Reallocation. Furthermore, if one or more of the Selling
Stockholders shall fail to sell and deliver to the Underwriters in the aggregate
more than Four Hundred Thousand (400,000) of the Shares then the Underwriters
may at their option, by written notice from the Representatives to the Company
and the Selling Stockholders, terminate this Agreement without any liability on
the part of any Underwriter or, except as provided in Sections 6, 8 and 12(d)
hereof, the Company or the Selling Stockholders. If one or more of the Selling
Stockholders shall fail to sell and deliver to the Underwriters the Shares to be
sold and delivered by such Selling Stockholders pursuant to this Agreement at
the Closing Date, then the Underwriters shall have the right, by written notice
from the Representatives to the Company and the Selling Stockholders, to
postpone the Closing Date, but in no event for longer than seven (7) days in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
16. 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.
33
17. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be an original and all of which together shall constitute one and
the same instrument.
18. Headings. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
34
If the foregoing correctly sets forth the understanding between you, the
Company and the Selling Stockholders, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Accepted as of the date first above written.
Very truly yours,
THEGLOBE.COM, INC.
By: ______________________
Title: Co-Chief Executive Officer
SELLING STOCKHOLDERS LISTED ON SCHEDULE II
By:______________________
Attorney-in-Fact for the Selling
Stockholders listed on Schedule II hereto
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
VOLPE, BROWN, WHELAN & COMPANY, LLC
WIT CAPITAL CORPORATION
on behalf of themselves and the other
Underwriters named in Schedule I hereto.
Bear, Stearns & Co. Inc.
By: ______________________
Title:
35
Underwriting Agreement - TheGlobe.com Inc., Bear, Stearns & Co. Inc, NationsBanc Montgomery Securities LLC, Volpe Brown Whelan & Co. LLC, and Wit Capital Corp.
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