Exhibit 1.1
_______Shares of Common Stock
▇▇▇▇▇▇▇▇.▇▇▇, INC.
UNDERWRITING AGREEMENT
_________ __, 1999
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
Wit Capital Corporation, as e-Manager
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇▇▇.▇▇▇, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), proposes, subject to the terms
and conditions stated herein, to issue and sell to the several underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of 3,000,000 shares
(the "Firm Shares") of its common stock, par value $.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 450,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Offered Shares." The Company also proposes to issue and sell
[206,783] shares of Common Stock (the "Comcast Shares") to Comcast Interactive
Investments, Inc. ("Comcast") pursuant to a Common Stock Purchase Agreement
dated as of February 23, 1999 (the "Comcast Purchase Agreement"), between the
Company and Comcast. The Offered Shares and the Comcast Shares are collectively
referred to herein as the "Shares." The Shares are more fully described in the
Registration Statement referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-69881), and may have filed an amendment or amendments thereto, for the
registration of the Offered Shares under the Securities Act of 1933, as
amended (the "Act"). Such registration statement, including the
prospectus, financial statements and schedules, exhibits and all other
documents filed as a part thereof, as amended at the time of effectiveness
of the registration statement, including any information deemed to be a
part thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A or Rule 434 of the Rules
and Regulations of the Commission under the Act (the "Regulations"), is
herein called the "Registration Statement" and the prospectus, in the form
first filed with the Commission pursuant to Rule 424(b) of the Regulations
or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) or Rule 434 filing is required, is herein
called the "Prospectus." The term "preliminary prospectus" as used herein
means a preliminary prospectus as described in Rule 430 of the
Regulations.
(b) At the time of the effectiveness of the Registration Statement
or the effectiveness of any post-effective amendment to the Registration
Statement, when the Prospectus is first filed with the Commission pursuant
to Rule 424(b) or Rule 434 of the Regulations, when any supplement to or
amendment of the Prospectus is filed with the Commission and at the
Closing Date and the Additional Closing Date, if any (as hereinafter
respectively defined), the Registration Statement and the Prospectus and
any amendments thereof and supplements thereto complied or will comply in
all material respects with the applicable provisions of the Act and the
Regulations and does not or will not contain an untrue statement of a
material fact and does not or will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein (i) in the case of the Registration Statement, not misleading and
(ii) in the case of the Prospectus, in light of the circumstances under
which they were made, not misleading. When the preliminary prospectus
dated March 3, 1999 relating to the Offered Shares was first filed with
the Commission (whether filed as part of the registration statement for
the registration of the Offered Shares or any amendment thereto or
pursuant to Rule 424(a) of the Regulations) and when any amendment thereof
or supplement thereto was first filed with the Commission, such
preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the
Act and the Regulations and did not contain an untrue statement of a
material fact and did not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in
light of the circumstances under which they were made not misleading. No
representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any related preliminary prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of
any Underwriter through the Representatives 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 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
material adverse change or any development involving a prospective
material adverse change in the business, prospects, properties,
operations, condition (financial or other) or results of operations of the
Company, whether or not arising from transactions in the ordinary course
of business,
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and since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, the Company has not incurred or
undertaken any liabilities or obligations, direct or contingent, whether
or not arising from transactions in the ordinary course of business, which
are material to the Company, except for liabilities or obligations that
are reflected in the Registration Statement and the Prospectus.
(e) This Agreement, the Comcast Purchase Agreement and the
transactions contemplated herein and therein have been duly and validly
authorized by the Company and this Agreement and the Comcast Purchase
Agreement have been duly and validly executed and delivered by the
Company.
(f) The Company is not in violation of its certificate of
incorporation or by-laws (or other organizational documents) or in default
in the performance of any obligation, agreement or condition contained in
any agreement, instrument, franchise, license, permit, judgment, order or
decree to which the Company is a party or by which it or any of its
properties or assets is bound, which default would have a material adverse
effect on the Company's business, prospects, properties, operations,
condition (financial or other) or results of operations (a "Material
Adverse Effect").
(g) The execution, delivery and performance of this Agreement and
the Comcast Purchase Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any material agreement, instrument, franchise, license or
permit to which the Company is a party or by which any of its properties
or assets may be bound or (ii) violate or conflict with any provision of
applicable law or the certificate of incorporation or by-laws (or other
organizational documents) of the Company or (iii) violate or conflict with
any judgment, decree, order, statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having jurisdiction
over the Company or any of its properties or assets, which violation or
conflict would have a Material Adverse Effect. No consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its
properties or assets is required for the execution, delivery and
performance of this Agreement or the Comcast Purchase Agreement or the
consummation of the transactions contemplated hereby and thereby,
including the issuance, sale and delivery of the Shares to be issued, sold
and delivered by the Company hereunder and thereunder, except the
registration under the Act of the Offered Shares and such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Offered
Shares by the Underwriters. The issuance and sale of the Comcast Shares
pursuant to the Comcast Purchase Agreement is exempt from the registration
requirements of the Act by virtue of Section 4(2) of the Act.
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(h) All of the outstanding shares of Common Stock are duly and
validly authorized and issued, fully paid and nonassessable and were not
issued and are not now in violation of or subject to any preemptive
rights. The Shares, when issued, delivered and sold in accordance with
this Agreement or the Comcast Purchase Agreement, as the case may be, will
be duly and validly issued and outstanding, fully paid and nonassessable,
and will not have been issued in violation of or be subject to any
preemptive rights. The Company had, at December 31, 1998, an authorized
and outstanding capitalization as set forth in the Registration Statement
and the Prospectus. The Common Stock, the Firm Shares, the Additional
Shares and the Comcast Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(i) The Company does not own, directly or indirectly, any stock,
partnership interest or joint venture interest in, or any security issued
by, any other entity.
(j) Each promissory note issued by the Company that was convertible
into preferred stock of the Company has, prior to the date hereof, been
converted into such preferred stock. All of the outstanding Series A,
Series B and Series C Convertible Preferred Stock (collectively, the
"Preferred Stock") of the Company has been duly and validly authorized and
is validly issued and outstanding, fully paid and nonassessable and was
not issued in violation of any preemptive rights and the shares of Common
Stock issuable upon conversion thereof have been duly and validly
authorized and reserved for issuance upon such conversion and, upon
conversion of the Preferred Stock on the Closing Date, the shares of
Common Stock issuable upon such conversion will be validly issued and
outstanding, fully paid and nonassessable and will not have been issued in
violation of or be subject to any preemptive rights. All outstanding
warrants (the "Warrants") to purchase Common Stock of the Company, have
been duly and validly authorized, executed and delivered by the Company
and constitute valid and binding obligations of the Company and the shares
of Common Stock issuable upon exercise of such Warrants have been duly and
validly authorized and reserved for issuance upon such exercise and, upon
payment of the exercise price thereof upon exercise of such Warrants, such
shares of Common Stock will be validly issued and outstanding, fully paid
and nonassessable and will not have been issued in violation of or be
subject to any preemptive rights. Except as described in or expressly
contemplated by the Registration Statement and the Prospectus, there are
no outstanding 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 of its subsidiaries, or any
contract, commitment, agreement, understanding or arrangement (including
without limitation preemptive rights) of any kind relating to the issuance
of any capital stock of the Company or any such subsidiary, or any such
convertible or exchangeable securities or any such rights, warrants or
options.
(k) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Delaware.
The Company is duly qualified and is 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
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be so qualified or in good standing which will not, individually or in the
aggregate, have a Material Adverse Effect. The Company has all requisite
corporate power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and
permits of and from all public, regulatory or governmental agencies and
bodies, to own, lease and operate its properties and conduct its business
as now being conducted and as described in the Registration Statement and
the Prospectus, except as would not result in a Material Adverse Effect,
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.
(l) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company is a party or to which any
property of the Company is subject or which is pending or, to the
knowledge of the Company, contemplated against the Company which, if
determined adversely to the Company, might individually or in the
aggregate have a Material Adverse Effect, or which is required to be
disclosed in the Registration Statement and the Prospectus, and there are
no statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described or
filed as required.
(m) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which
constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock
to facilitate the sale or resale of the Offered Shares.
(n) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the
Prospectus present fairly the financial position of the Company as of the
dates indicated and the results of its operations and changes in cash
flows for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein; and except as disclosed therein, the pro forma financial
information included in the Registration Statement and the Prospectus has
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and the assumptions used in
the preparation thereof are, in the Company's opinion, reasonable; and the
other financial and statistical information and data included in the
Registration Statement and the Prospectus is, in all material respects,
accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(o) Except as described in the Prospectus, no holder of securities
of the Company has any rights to the registration of securities for sale
under the Securities Act of 1933, as amended, of the Company because of
the filing of the Registration Statement or otherwise in connection with
the sale of the Offered Shares.
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(p) The Company is not, and upon consummation of the transactions
contemplated hereby and by the Comcast Purchase Agreement will not be,
subject to registration as an "investment company" under the Investment
Company Act of 1940, as amended.
(q) The Shares have been approved for quotation subject to official
notice of issuance on the Nasdaq National Market System.
(r) No labor dispute with the employees of the Company exists or, to
the knowledge of the Company, is imminent.
(s) Except as described in the Prospectus, the Company owns,
possesses or can acquire on reasonable terms, adequate trademarks, trade
names, inventions, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), patents, copyrights, and other intellectual property
reasonably necessary to conduct the business now operated by it, or
presently employed by it, and has not received any notice of infringement
of or conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse Effect.
(t) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to (A) the
protection of human health and safety and (B) the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its business
and (iii) is in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, individually or in the
aggregate, have a Material Adverse Effect.
(u) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, individually or in the aggregate, have a Material
Adverse Effect.
(v) The Company owns no real property and has good and marketable
title to all personal property owned by it which is material to the
business of the Company, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company; and any real property and buildings held under
lease by the Company are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of
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such property and buildings by the Company, in each case except as
described in or contemplated by the Prospectus.
(w) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the business in which it is engaged; the Company
has not been refused any insurance coverage sought or applied for; and the
Company does not have any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect.
(x) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. (y) Except as described
in the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), the Company has not sold,
issued or distributed any shares of Common Stock during the six-month
period preceding the date hereof, including any sales of Common Stock
pursuant to Rule 144A under, or Regulation D or S of, the Act, other than
shares of Common Stock issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
(z) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers, suppliers or providers of outsourced services of the Company on
the other hand, which is required by the Act to be described in the
Registration Statement and the Prospectus which is not so described.
(aa) The merger of General Internet, Inc, a New York corporation
("General Internet"), with and into the Company (the "Merger") has become
effective and the identity, existence, corporate organization, purposes,
powers, objects, franchises, privileges, rights, immunities, restrictions,
debts, liabilities and duties (the "Corporate Rights") of General Internet
will continue in effect and be unimpaired by the Merger, and the Corporate
Rights of General Internet have been merged with and into the Company,
which is, as the surviving corporation, fully vested therewith. All
consents, approvals, orders and authorizations of, and all registrations,
declarations and filings with, all persons (governmental and private)
required to be obtained or made in connection with the consummation of the
Merger have been so obtained or made. The Merger qualifies as a
reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended.
2. PURCHASE, SALE AND DELIVERY OF THE OFFERED SHARES.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to sell to the Underwriters and the
Underwriters, severally and not jointly, agree to purchase from the
Company, at a purchase price per share of $__________, the number of Firm
Shares set forth opposite the respective names of the Underwriters in
Schedule I hereto plus any additional number of Offered Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Representatives and the
Company, at 9:00 A.M. on the third or fourth business day (as permitted
under Rule 15c6-1 under the Exchange Act) (unless postponed in accordance
with the provisions of Section 9 hereof), following the date of the
effectiveness of the Registration Statement (or, if the Company has
elected to rely upon Rule 430A of the Regulations, the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act) after
the determination of the initial public offering price of the Offered
Shares), such time and date of payment and delivery being herein called
the "Closing Date." Payment shall be made to the Company by wire transfer
in same day funds, against delivery to the Representatives for the
respective accounts of the Underwriters of the Offered Shares to be
purchased by them. Certificates for the Offered Shares shall be registered
in such name or names and in such authorized denominations as the
Representatives may request in writing at least two full business days
prior to the Closing Date. The Company will permit you to examine and
package such certificates for delivery at least one full business day
prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters
options to purchase up to an aggregate of 450,000 Additional Shares at the
same purchase price per share to be paid by the Underwriters to the
Company for the Firm Shares as set forth in this Section 2, for the sole
purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters. These options may be exercised at any time and from time to
time, in whole or in part, on or before the thirtieth day following the
date of the Prospectus, by written notice by the Representatives to the
Company. Each such notice shall set forth the aggregate number of
Additional Shares as to which an option is being exercised and the date
and time, as reasonably determined by the Representatives, when the
Additional Shares are to be delivered (each such date and time being
herein sometimes referred to as the "Additional Closing Date"); PROVIDED,
HOWEVER, that no Additional Closing Date shall be earlier than the Closing
Date or earlier than the second full business day after the date on which
the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions
of Section 9 hereof). Certificates for Additional Shares shall be
registered in such name or names and in such authorized denominations as
the Representatives may request in writing at least two full business days
prior to the applicable Additional Closing Date. The Company will permit
you to examine and package such certificates for delivery at least one
full business day prior to the applicable Additional Closing Date.
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The number of Additional Shares to be sold to each Underwriter on an
Additional Closing Date shall be the number which bears the same ratio to the
aggregate number of Additional Shares being purchased on such Additional Closing
Date as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to 3,000,000 subject, however, to such adjustments to
eliminate any fractional shares as the Representatives in their sole discretion
shall make.
Payment for the Additional Shares shall be made by wire transfer in same
day funds at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other location as may be mutually
acceptable, upon delivery of the certificates for the Additional Shares to the
Representatives for the respective accounts of the Underwriters.
3. OFFERING.
(a) Upon the Representatives' authorization of the release of the
Firm Shares, the Underwriters propose to offer the Offered Shares for sale
to the public upon the terms set forth in the Prospectus.
(b) The Company and the Underwriters hereby agree that up to 300,000
of the Firm Shares to be purchased by the Underwriters (the "Directed
Shares") shall be reserved for sale by the Underwriters to eligible
employees of and certain persons designated by the Company (the "Directed
Shares Purchasers"), as part of the distribution of the Offered Shares by
the Underwriters subject to the terms of this Agreement, the applicable
rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. and all other applicable laws, rules and
regulations, PROVIDED, HOWEVER, that under no circumstances will Bear,
▇▇▇▇▇▇▇ & Co. Inc. or any other Underwriter be liable to the Company or to
any of the -------- ------- Directed Shares Purchasers for any action
taken or omitted in good faith in connection with transactions effected
with regard to the Directed Shares Purchasers. To the extent that such
Directed Shares are not orally confirmed for purchase by such persons by
the end of the first day after the date of this Agreement, such Directed
Shares will be offered to the public as part of the underwritten offering
contemplated hereby.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriters that:
(a) If the Registration Statement has not yet been declared
effective, the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is
otherwise required under Rule 424(b) or Rule 434, the Company will file
the Prospectus (properly completed if Rule 430A has been used) pursuant to
Rule 424(b) or Rule 434 within the prescribed time period and will provide
evidence satisfactory to the Representatives 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.
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The Company will notify the Representatives as promptly as possible (and,
if requested by you will confirm such notice in writing) (i) when the
Registration Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
mailing or the delivery to the Commission for filing of any amendment of or
supplement to the Registration Statement or the Prospectus, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, (v) of the receipt
of any comments from the Commission, and (vi) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for that purpose. If the Commission shall propose or enter a stop
order at any time, the Company will make every reasonable effort to prevent the
issuance of any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed 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 the Representatives shall reasonably object in writing after
being timely furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Offered Shares
is required to be delivered under the Act any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would, in
the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required
to be stated in order to make any statement therein, in light of the
circumstances under which it was made, not misleading, or if it shall be
necessary, in the judgment of the Underwriters or the Company, at any time
to amend or supplement the Prospectus or the Registration Statement to
comply with the Act or the Regulations, the Company will notify the
Representatives promptly and prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to
the Representatives) which will correct such statement or omission and
will use its best efforts to have any amendment to the Registration
Statement declared effective as soon as possible.
(c) The Company will promptly deliver to the Representatives two
signed copies of the Registration Statement, including exhibits and all
amendments thereto, and the Company will promptly deliver to each of the
Underwriters such number of copies of any preliminary prospectus, the
Prospectus, the Registration Statement and all amendments of and
supplements to such documents, if any, as the Representatives may
reasonably request.
(d) The Company will endeavor in good faith, in cooperation with the
Representatives, at or prior to the time of effectiveness of the
Registration Statement, to qualify the Offered Shares for offering and
sale under the securities laws relating to the offering or sale of the
Shares of such jurisdictions as the Representatives may designate
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and to maintain such qualification in effect for so long as required for
the distribution thereof, except that in no event shall the Company be
obligated in connection therewith to qualify as a foreign corporation or
to execute a general consent to service of process.
(e) The Company will make generally available (within the meaning of
11(a) of the Act) to its security holders and to the Representatives as
soon as practicable, but not later than 45 days after the end of its
fiscal quarter in which the first anniversary date of the effective date
of the Registration Statement occurs, an earnings statement (in form
complying with the provisions of Rule 158 of the Regulations) covering a
period of at least twelve consecutive months beginning after the effective
date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus,
the Company will not, without the prior written consent of Bear, ▇▇▇▇▇▇▇ &
Co. Inc., issue, sell, offer or agree to sell, grant any option for the
sale of, pledge, make any short sale, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended, or otherwise dispose of, any Common
Stock (or any securities convertible into, exercisable for or exchangeable
for Common Stock) of the Company or (ii) enter into any swap, derivative
transaction or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash
or otherwise, PROVIDED that the foregoing shall not apply to (A) the
Shares, (B) the issuance of Common Stock upon conversion of the Preferred
Stock on the -------- Closing Date, (C) the issuance by the Company of
shares of Common Stock upon the exercise of any warrant outstanding on the
date hereof and disclosed in the Prospectus, (D) the issuance by the
Company of shares of Common Stock or options to purchase Common Stock
pursuant to any stock option or incentive plan described in the Prospectus
and (E) the issuance by the Company of shares of Common Stock in
connection with any acquisition of another company if the terms of such
issuance provide that such shares shall not be resold prior to the
expiration of the 180-day period from the date of the Prospectus; and the
Company will obtain the undertaking of each of its officers and directors
and such of its stockholders as have been heretofore designated by the
Representatives and listed on Schedule II attached hereto not to engage in
any of the aforementioned transactions on their own behalf.
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to the Representatives,
copies of (i) all reports to its stockholders; and (ii) all reports,
financial statements and proxy or information statements filed by the
Company with the Commission or any national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to
continue to qualify for inclusion in the Nasdaq National Market System.
11
(j) The Company will use its best efforts to ensure that the
Directed Shares are restricted as required by the National Association of
Securities Dealers Inc. or the National Association of Securities Dealers
Inc. rules from sale, transfer, assignment, pledge or hypothecation for a
period of three (3) months following the date of this Agreement. The
Underwriters will notify the Company as to which persons will need to be
so restricted. At the request of the Underwriters, the Company will direct
the transfer agent to place a stop transfer restriction upon such
securities for such a period of time. Should the Company release, or seek
to release, from such restrictions any of the Directed Shares, the Company
agrees to reimburse the Underwriters for any reasonable expenses
(including, without limitation, legal expenses) they incur in connection
with such release.
5. PAYMENT OF EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Comcast Purchase Agreement,
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
Offered Shares (including those supplied to the Underwriters in quantities as
hereinabove stated) and the Comcast Purchase Agreement, (ii) the issuance,
transfer and delivery of the Offered Shares to the Underwriters and the Comcast
Shares to Comcast, 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," (iv) the fees of counsel for the Underwriters in connection with
the qualification of the Offered Shares under state or foreign securities or
Blue Sky laws and in connection with the review and qualification of the
offering of the Offered Shares by the National Association of Securities Dealers
Inc., and such counsel's disbursements in relation thereto, (v) quotation of the
Shares on the Nasdaq National Market System, (vi) filing fees of the Commission
and the National Association of Securities Dealers, Inc., (vii) the cost of
printing certificates representing the Offered Shares and (viii) the cost and
charges of any transfer agent or registrar.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to ▇'▇▇▇▇▇▇▇▇ Graev &
Karabell, LLP ("Underwriters' Counsel") pursuant to this Section 6 of any
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
12
(a) The Registration Statement shall have become effective not later
than, if pricing pursuant to Rule 430A, 5:30 P.M., New York time, on the
date of this Agreement or, if pricing pursuant to a pricing amendment,
12:00 P.M., New York time on the date an amendment to the Registration
Statement containing the public offering price has been filed with the
Commission, or at such later time and date as shall have been consented to
in writing by the Representatives; if the Company shall have elected to
rely upon Rule 430A or Rule 434 of the Regulations, the Prospectus shall
have been filed with the Commission in a timely fashion in accordance with
Section 4(a) hereof; and, at or prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date, you shall have received the opinion of
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, dated the
Closing Date addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware.
The Company is duly qualified to transact business and is in good
standing as a foreign corporation in New York. The Company has the
requisite corporate power and authority, to own, lease and operate
its properties and conduct its business as described in the
Registration Statement and the Prospectus.
(ii) The authorized capital stock of the Company is as set
forth in the Registration Statement and the Prospectus. All of the
outstanding shares of Common Stock (including the shares of Common
Stock issued on the Closing Date upon conversion of the Preferred
Stock) are duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive
rights arising under the Delaware General Corporation Law or, to
such counsel's knowledge, similar rights that entitle or will
entitle any person to acquire any shares of capital stock of the
Company upon the issuance and sale of the Shares by the Company. The
Shares to be sold by the Company on the Closing Date have been duly
authorized and, when issued and delivered to the Underwriters or
Comcast, as applicable, against payment therefor in accordance with
this Agreement or the Comcast Purchase Agreement, as applicable,
will be validly issued, fully paid and nonassessable and will not
have been issued in violation of any preemeptive rights arising
under the Delaware General Corporation Law or, to such counsel's
knowledge, similar rights that entitle or will entitle any person to
acquire any shares of capital stock of the Company upon the issuance
and sale of the Shares by the Company. The Common Stock, the Firm
Shares, the Additional Shares and the Comcast Shares conform as to
legal matters to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(iii) All outstanding Warrants to purchase Common Stock of the
Company have been duly authorized, executed and delivered by the
Company and constitute
13
valid and binding obligations of the Company, enforceable against it
in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general equitable principles
(whether relief is sought in a proceeding at law or in equity) and
except as rights to indemnification and contribution thereunder may
be limited by applicable law or public policy relating thereto. The
shares of Common Stock issuable upon exercise of such Warrants have
been duly reserved for issuance upon such exercise and, upon payment
of the exercise price thereof upon exercise of such Warrants, such
shares of Common Stock will be validly issued and outstanding, fully
paid and nonassessable and will be free of any preemptive rights
arising under the Delaware General Corporation Law or, to such
counsel's knowledge, similar rights that entitle or will entitle any
person to acquire any shares of capital stock of the Company upon
the issuance and sale of such shares of Common Stock by the Company.
(iv) This Agreement and the Comcast Purchase Agreement have
been duly and validly authorized, executed and delivered by the
Company.
(v) To such counsel's knowledge, (i) there is no litigation or
governmental or other action, suit, proceeding or investigation
before any court or before or by any public, regulatory or
governmental agency or body pending or, threatened against, or
involving the properties or business of, the Company, which is of a
character required to be disclosed in the Registration Statement and
the Prospectus which has not been properly disclosed therein and
(ii) there are no statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(vi) The execution, delivery and performance of this Agreement
and the Comcast Purchase Agreement and the consummation of the
transactions contemplated hereby and thereby by the Company do not
and will not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which
with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company pursuant
to, any agreement, instrument, franchise, license or permit known to
such counsel to which the Company is a party or by which any of its
properties or assets may be bound or (B) violate or conflict with
any provision of applicable law or the certificate of incorporation
or by-laws (or other organizational documents) of the Company, or
any statute, rule or regulation, or to the best knowledge of such
counsel, any judgment, decree or order, of any court or any public,
governmental or regulatory agency or body having jurisdiction over
the Company or any of its properties or assets. No consent,
approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any public, governmental
or regulatory agency or body having jurisdiction over the Company or
any of its properties or assets is required for the execution,
delivery and
14
performance of this Agreement or the Comcast Purchase Agreement or
the consummation of the transactions contemplated hereby or thereby,
except for (1) such as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of
the Offered Shares by the Underwriters (as to which such counsel
need express no opinion) and (2) such as have been made or obtained
under the Act. The issuance and sale of the Comcast Shares pursuant
to the Comcast Purchase Agreement is exempt from the registration
requirements of the Act by virtue of Section 4(2) of the Act.
(vii) The statements (A) in the Prospectus under the captions
"Business-- Government Regulation and Legal Uncertainties,"
"Management -- Employment, Severance and Other Agreements," "--1998
Stock Option/Stock Issuance Plan," "Description of Securities" and
"Shares Eligible for Future Sale" and (B) in the Registration
Statement in Items 14 and 15, in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, provide a fair summary of such
legal matters, documents and proceedings in all material respects.
(viii) The Company is not, and upon consummation of the
transactions contemplated hereby and by the Comcast Purchase
Agreement, will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(ix) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (except for the financial
statements and the schedules and the other financial and statistical
data included in the Registration Statement and the Prospectus, as
to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the
Regulations.
(x) The Registration Statement has been declared effective
under the Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings
therefor have been initiated or threatened by the Commission and any
required filing of the Prospectus pursuant to Rule 424(b) of the
Regulations has been made in accordance with Rule 424(b).
(xi) To such counsel's knowledge, except as described in the
Prospectus, no holder of any security of the Company has the right,
not effectively satisfied or waived, to require inclusion of shares
of Common Stock or any other security of the Company in the
Registration Statement.
(xii) The Merger has become effective and the Corporate Rights
of General Internet will continue in effect and be unimpaired by the
Merger, and the Corporate Rights of General Internet have been
merged with and into the Company, which is, as the surviving
corporation, fully vested therewith. All consents, approvals, orders
and authorizations of, and all registrations,
15
declarations and filings with, all persons (governmental and, to
such counsel's knowledge, private) required to be obtained or made
in connection with the consummation of the Merger have been so
obtained or made. The Merger qualifies as a reorganization under the
provisions of Section 368 of Internal Revenue Code.
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with certain officers and representatives of the
Company, its independent public accountants, the Underwriters and the
Underwriters' counsel at which the contents of the Registration Statement and
the Prospectus and related matters were discussed. Such counsel need not,
however, pass upon, or assume any responsibility for, and such counsel may state
that it has not independently checked or verified, the accuracy, completeness or
fairness of the information contained in the Registration Statement and the
Prospectus. Such counsel shall state, however, that based upon its participation
as described in the preceding two sentences, (i) it confirms that it has no
reason to believe that the Registration Statement (other than the financial
statements, including the notes and schedules thereto, and the other financial
and statistical data included in the Registration Statement, as to which such
counsel need not express any belief), 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; and (ii) it confirms that it has no reason to
believe that the Prospectus (other than the financial statements, including the
notes and schedules thereto, and the other financial and statistical data
included in the Prospectus, as to which such counsel need not express any
belief), on the date of such opinion, contains any untrue statement of a
material fact or omits 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.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States, the
General Corporation Law of the State of Delaware, the laws of the State of New
York, to the extent such counsel deems proper and to the extent specified in
such opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Underwriters' Counsel) of other counsel reasonably
acceptable to Underwriters' Counsel, familiar with the applicable laws; (B) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, 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.
The opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP described in this Section
6(b) shall be rendered to the Underwriters at the request of the Company and
shall so state therein.
(c) All proceedings taken in connection with the sale of the Shares
as herein contemplated and as contemplated in the Comcast Purchase
Agreement shall be satisfactory in form and substance to you and to
Underwriters' Counsel, and the Underwriters shall have received from said
Underwriters' Counsel a favorable opinion,
16
dated as of the Closing Date with respect to the issuance and sale of the
Offered Shares, the Registration Statement and the Prospectus and such
other related matters as the Representatives may reasonably require, and
the Company shall have furnished to Underwriters' Counsel such documents
as they request for the purpose of enabling them to pass upon such
matters.
(d) At the Closing Date, you shall have received a certificate of
the Chief Executive Officer and Chief Financial Officer of the Company,
dated the Closing Date to the effect that (i) the condition set forth in
subsection (a) of this Section 6 has been satisfied, (ii) as of the date
hereof and as of the Closing Date, the representations and warranties of
the Company set forth in Section 1 hereof are accurate, (iii)
simultaneously with the Closing, the sale of the Comcast Shares pursuant
to the Comcast Purchase Agreement shall have been consummated and the
Company shall have received $2,500,000 as a result of such sale, (iv) as
of the Closing Date, the obligations of the Company to be performed
hereunder and under the Comcast Purchase Agreement on or prior thereto
have been duly performed and (v) subsequent to the respective dates as of
which information is given with the Registration Statement and the
Prospectus, the Company has not sustained any material loss or
interference with its business 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.
(e) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter from KPMG LLP, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in
form and substance satisfactory to the Representatives, to the effect
that: (i) they are independent certified public accountants with respect
to the Company within the meaning of the Act and the Regulations and
stating that the answer to Item 10 of the Registration Statement is
correct insofar as it relates to them; (ii) stating that, in their
opinion, the financial statements and schedules of the Company included in
the Registration Statement and the Prospectus and covered by their opinion
therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the latest available unaudited interim
consolidated financial statements of the Company, a reading of the minutes
of meetings and consents of the stockholders and board of directors of the
Company and the committees of such board subsequent to December 31, 1998,
inquiries of officers and other employees of the Company who have
responsibility for financial and accounting matters of the Company and its
subsidiaries with respect to transactions and events subsequent to
December 31, 1998 and other specified procedures and inquiries to a date
not more than five days (three days in the case of the letter delivered on
the Closing Date) prior to the date of such letter, nothing has come to
their attention that would cause them to believe that: (A) the unaudited
consolidated financial statements and schedules of the Company presented
in the Registration Statement and the
17
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable published
rules and regulations of the Commission thereunder or that such unaudited
consolidated financial statements are not fairly presented in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements of the Company included in the Registration Statement and the
Prospectus; (B) with respect to the period subsequent to December 31, 1998
there were, as of the date of the most recent available monthly financial
statements of the Company and as of a specified date not more than five
days (three days in the case of the letter delivered on the Closing Date)
prior to the date of such letter, any changes in the capital stock or
long-term indebtedness of the Company or any decrease in the net current
assets or stockholders' equity of the Company, in each case, as compared
with the amounts shown in the most recent balance sheet presented in the
Registration Statement and the Prospectus, except for changes or decreases
which the Registration Statement and the Prospectus disclose have occurred
or may occur or which are set forth in such letter or (C) that during the
period from January 1, 1999 to the date of the most recent available
monthly financial statements of the Company and to a specified date not
more than five days (three days in the case of the letter delivered on the
Closing Date) prior to the date of such letter, there was (1) any
decrease, as compared with the corresponding period in the prior fiscal
year, in total revenues, or any increase, as compared with the
corresponding period in the prior fiscal year, in operating loss or the
total or per share net loss or (2) any decrease, as compared with the
corresponding period in the prior fiscal quarter, in revenues, except in
any such case for decreases or increases which the Registration Statement
and the Prospectus disclose have occurred or may occur or which are set
forth in such letter; (iv) nothing has come to their attention that would
cause them to believe that the pro forma financial information included in
the Registration Statement do not comply in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such financial information; and (v) stating
that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, and other financial information
pertaining to the Company set forth in the Registration Statement and the
Prospectus, which have been specified by the Representatives prior to the
date of this Agreement, to the extent that such amounts, numbers,
percentages and information may be derived from the general accounting and
financial records of the Company or from schedules furnished by the
Company, and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures specified by the
Representatives set forth in such letter, and found them to be in
agreement.
(f) Prior to the Closing Date, the Company shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
(g) The Representatives shall have received from each person who is
a director or officer of the Company or stockholder that has been
heretofore designated by the Representatives and listed on Schedule II
hereto an agreement to the effect that such person will not, directly or
indirectly, without the prior written consent of Bear, ▇▇▇▇▇▇▇
18
& Co. Inc., offer, sell, offer or agree to sell, grant any option to
purchase, pledge, make any short sale, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended, or otherwise dispose of, any Common
Stock (or any securities convertible into, exercisable for or exchangeable
for Common Stock) of the Company or (ii) enter into any swap, derivative
transaction or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash
or otherwise, for a period of 180 days after the date of the Prospectus.
(h) The closing of the sale of the Comcast Shares shall be
consummated concurrently with or prior to the closing of the sale of the
Firm Shares and the Company shall have received $____ per share or
[$2,500,000] in the aggregate with respect thereto.
(i) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market System.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters Counsel, all obligations of the Underwriters hereunder may be
cancelled by the Representatives 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 the Representatives at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone, telex or telegraph, confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act,
the Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration
of the Offered Shares, as originally filed or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that the Company will not be liable in any
such case to the extent but only to
19
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 the Representatives expressly for use
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each
of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to 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 severally, 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 the Representatives 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 third, seventh and
twelfth paragraphs 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 Offered Shares as originally filed or in any amendment thereof, any
related preliminary prospectus or the Prospectus or in any amendment
thereof or supplement thereto, as the case may be.
(c) In connection with the offer and sale of the Directed Shares,
the Company agrees, promptly upon a request in writing, to indemnify and
hold harmless the Underwriters from and against any and all losses,
liabilities, claims, damages and expenses incurred by them as a result of
the failure of the Directed Shares Purchasers to pay for and accept
delivery of the Directed Shares which, by the end of the day following the
date of this Agreement, were subject to a properly confirmed agreement to
purchase such Directed Shares.
20
(d) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party
shall not relieve it from any liability which it may have under this
Section 7). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein, and to the
extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the
indemnifying parties in connection with the defense of such action, (ii)
the indemnifying parties shall not have employed counsel to have charge of
the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available to one
or all of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the indemnifying parties. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall
not be liable for any settlement of any claim or action effected without
its written consent; PROVIDED, HOWEVER, that -------- ------- such consent
was not unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company, and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company, and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the offering of the Offered
Shares or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received
21
by the Company and the Underwriters shall be deemed to be in the same proportion
as (x) the total proceeds from the offering of the Offered Shares (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
the Underwriters, respectively, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. 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.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default
relates do not (after giving effect to arrangements, if any, made by you
pursuant to subsection (b) below) exceed in the aggregate 10% of the
number of Firm Shares or Additional Shares, to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to the
respective proportions which the numbers of Firm Shares set forth opposite
their
22
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, the Representatives
may in their discretion arrange for the Representatives 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 calendar days after such a default the
Representatives do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as
provided in this Section 9, this Agreement or, in the case of a default
with respect to the Additional Shares, the obligations of the Underwriters
to purchase and of the Company to sell the Additional Shares shall
thereupon terminate, without liability on the part of the Company with
respect thereto (except in each case as provided in Section 5, 7(a) and 8
hereof) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any,
to the other Underwriters and the Company for damages occasioned by its or
their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, the Representatives or the Company shall have the right to
postpone the Closing Date or the applicable Additional Closing Date, as
the case may be, for a period, not exceeding five business days, in order
to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the
opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include
any party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares
and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
23
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon the later of when (i)
the Representatives and the Company shall have received notification of
the effectiveness of the Registration Statement and (ii) the execution of
this Agreement. If either the initial public offering price or the
purchase price per Offered Share has not been agreed upon prior to 5:00
P.M., New York time, on the fifth full business day after the Registration
Statement shall have become effective, this Agreement shall thereupon
terminate without liability to the Company or the Underwriters except as
herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by the
Representatives notifying the Company. Notwithstanding the foregoing, the
provisions of this Section 11 and of Section 1, 5, 7 and 8 hereof shall at
all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the obligations of the Underwriters to
purchase Additional Shares at any time prior to the applicable Additional
Closing Date, as the case may be, if (A) any domestic or international
event or act or occurrence has materially disrupted, or in the opinion of
the Representatives 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 the Nasdaq Stock Market shall
have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required, on the New York Stock Exchange or the Nasdaq Stock Market by the
New York Stock Exchange, the National Association of Securities Dealers,
Inc. 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 the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Firm Shares or the Additional Shares,
as the case may be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone, telex or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by the
Representatives as provided in Section 11(a) hereof or (ii) Section 9(b)
or 11(b) hereof), or if the sale of the Offered 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 the Representatives, reimburse
24
the Underwriters for all out-of-pocket expenses (including the fees and
expenses of their counsel) incurred by the Underwriters in connection
herewith.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a copy to ▇'▇▇▇▇▇▇▇▇
Graev & Karabell, LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; if sent to the Company, shall be mailed,
delivered, or telegraphed and confirmed in writing to the Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer, with a copy to ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention : ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
13. PARTIES. This Agreement shall insure solely to the benefit of, and
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Offered Shares from any of the Underwriters.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
25
If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board, President and
Chief Executive Officer
26
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
Wit Capital Corporation, as e-Manager
on behalf of themselves and the other
Underwriters named in Schedule I hereto
BY: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By
---------------------------
Name:
Title:
27
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
Wit Capital Corporation
[Others]
Total............................. __________
28
SCHEDULE II
Lock-up Officers, Directors and Stockholders
[To be completed]
29