Exhibit 1.1
5,500,000 SHARES
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
COMMON STOCK (PAR VALUE $.008 PER SHARE)
UNDERWRITING AGREEMENT
August __, 1999
August __, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇ & Company Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇▇▇▇▇▇ Sachs International
▇▇▇▇▇ & Company Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ International Limited
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
England
Dear Sirs and Mesdames:
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule II and
Schedule III hereto (the "UNDERWRITERS"), and certain stockholders of the
Company (the "SELLING STOCKHOLDERS") named in Part A of Schedule I hereto
severally propose to sell to the several Underwriters, an aggregate of 5,500,000
shares of the common stock (par value $.008 per share) of the Company (the "FIRM
SHARES"), of which 2,000,000 shares are to be issued and sold by the Company
(the "PRIMARY SHARES") and 3,500,000 shares are to be sold by the Selling
Stockholders, each Selling Stockholder selling the amount set forth opposite
such Selling Stockholder's name in Part A of Schedule I hereto.
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It is understood that, subject to the conditions hereinafter stated,
4,400,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the several U.S.
Underwriters named in Schedule II hereto (the "U.S. UNDERWRITERS") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 1,100,000 Firm Shares (the "INTERNATIONAL SHARES") will be sold to the
several International Underwriters named in Schedule III hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇▇,
Sachs & Co., BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
shall act as representatives (the "U.S. REPRESENTATIVES") of the several U.S.
Underwriters, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited, ▇▇▇▇▇▇▇ Sachs
International, BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ International Limited, ▇▇▇▇▇▇▇▇▇,
Lufkin & ▇▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ ▇▇▇▇▇ International shall act as
representatives (the "INTERNATIONAL REPRESENTATIVES") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the Underwriters.
The Selling Stockholders named in Part B of Schedule I hereto also
propose to issue and sell to the several U.S. Underwriters not more than an
additional 825,000 shares of the common stock (par value $.008 per share) of the
Company (the "ADDITIONAL SHARES") if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of common stock
(par value $.008 per share) of the Company to be outstanding after giving effect
to the sales contemplated hereby are hereinafter referred to as the "COMMON
STOCK." The 3,500,000 Firm Shares to be sold by the Selling Stockholders and the
Additional Shares are hereinafter collectively referred to as the "SECONDARY
SHARES." The Company and the Selling Stockholders are hereinafter sometimes
collectively referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement relating to the Shares. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares in the United States and Canada to United States and
Canadian persons, and the international prospectus, to be used in connection
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with the offering and sale of Shares outside of the United States and Canada to
persons other than United States and Canadian Persons. The international
prospectus is identical to the U.S. prospectus except for the outside front
cover page. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "PROSPECTUS." If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term
"REGISTRATION STATEMENT" shall be deemed to include such Rule 462 Registration
Statement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to
the knowledge of the Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iii)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) The Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware, has the corporate
power
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and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company.
(d) The Company has no subsidiaries and does not otherwise own
or control, directly or indirectly, any corporation, association or
other entity.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of common stock of the Company outstanding
prior to the issuance of the Primary Shares (including the Secondary
Shares to be sold by the Selling Stockholders) have been duly
authorized and are validly issued, fully paid and non-assessable.
(h) The Primary Shares to be sold by the Company have been
duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable and the issuance of such Primary Shares will not be
subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene (i) any provision of applicable law; (ii) the
certificate of incorporation or by-laws of the Company; (iii) except as
disclosed in the Prospectus, any agreement or other instrument binding
upon the Company that is material to the Company or (iv) any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company, except where, in the case of (i), (iii)
and (iv), such contravention would not, singly or in the aggregate,
have a material adverse effect on the Company, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as have
been obtained or made or such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and
sale of the Shares or such consents,
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approvals, authorizations, orders or qualifications the failure of the
Company to obtain would not have a material adverse effect on the
Company or the offering of Shares contemplated hereunder.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement).
(k) There are no (i) legal or governmental proceedings pending
or to the Company's knowledge threatened to which the Company is a
party or to which any of the properties of the Company is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or (ii) 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.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the
offering and sale of the Primary Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) the
Company has not incurred any material liability or obligation, direct
or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any
material change in the capital stock, short-term debt (other than in
the ordinary course of business) or long-term debt of the Company,
except in each case as described in the Prospectus.
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(o) 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 or proposed
to be made of such property by the Company; and any real property and
buildings held under lease by the Company are held by it under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made or proposed
to be made of such property and buildings by the Company, in each case
except as described in the Prospectus.
(p) Except to the extent described in the Prospectus, the
Company owns, possesses, or has an irrevocable right to use all
patents, patent applications, trademarks, trademark applications,
service marks, service ▇▇▇▇ applications, trade names, copyrights,
licenses, inventions, trade secrets, technology and know-how
(collectively, "INTELLECTUAL PROPERTY RIGHTS") currently employed by it
in connection with and material to its business as described in the
Prospectus; other than the claims described in the Prospectus, the
Company is not aware of any rights of third parties to any such
Intellectual Property Rights; in connection with the filing of its
patent applications, the Company conducted reasonable investigations of
the published literature and patent references relating to the
inventions claimed in such applications. There are no enforceable
United States or foreign patents known to the Company which the Company
believes to be infringed by its present activities or which the Company
believes would preclude the pursuit of its business as described in the
Prospectus to any material extent; the Company is not aware of any
infringement by third parties of any such Intellectual Property Rights
which would have a material adverse effect on the Company; except as
described in the Prospectus, there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim challenging the
validity or scope of the Company's rights in or to any such
Intellectual Property Rights; and, except as described in the
Prospectus, there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
is infringing or otherwise violating intellectual property rights of
others.
(q) The Company possesses all certificates, licenses,
authorizations and permits (collectively, "GOVERNMENTAL LICENSES")
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct its business, except such Governmental
Licenses the
6
failure of the Company to possess would not, singly or in the
aggregate, have a material adverse effect on the Company; the Company
has not received any notice of proceedings relating to the revocation
or modification of any Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company, except as
described in the Prospectus.
(r) No material labor dispute with the employees of the
Company exists, except as described in the Prospectus, or, to the
knowledge of the Company, is imminent.
(s) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as it
believes are reasonable for the business in which it is engaged and the
Company believes it will be able to renew or replace its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from financially responsible insurers as may be
necessary to continue its business at a cost that would not materially
and adversely affect the Company, except as described in the
Prospectus.
(t) 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.
(u) The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, 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, in each
case, where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms
7
and conditions of such permits, licenses or approvals would not have a
material adverse effect on the Company.
(v) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(w) Except as described or referred to in the Registration
Statement (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) and except for the 10,000,000
shares of Common Stock sold on April 1, 1999 in the Company's initial
public offering, 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 pursuant to Rule 144A under, or Regulations
D or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(x) Options issued or to be issued pursuant to any of the
Company's stock option plans to employees who participated in the
option exercise program described in the Prospectus are not exercisable
until 180 days after the date of this Agreement.
(y) The Company has reviewed its operations to the extent and
in the manner described in the Prospectus to evaluate the extent to
which the business or operations of the Company will be affected by the
Year 2000 Problem (that is, any significant risk that computer hardware
or software applications used by the Company will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000); as a result of such review, the Company does
not believe, that there are any issues related to the Company's
preparedness to address the Year 2000 Problem that are of a character
required to be described or referred to in the Registration Statement
or Prospectus which have not been accurately described in the
Registration Statement or Prospectus.
(z) There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any shares of Common Stock.
8
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
of the Selling Stockholders, severally and not jointly, represents and warrants
to and agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of,
and the performance by such Selling Stockholder of its obligations
under, this Agreement, the Custody Agreement signed by such Selling
Stockholder and ChaseMellon Shareholder Services, L.L.C., as Custodian,
relating to the deposit of the Shares to be sold by such Selling
Stockholder (the "CUSTODY AGREEMENT") and the Power of Attorney
appointing certain individuals as such Selling Stockholder's
attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
"POWER OF ATTORNEY"), will not contravene any provision of applicable
law, or the certificate of incorporation or by-laws of such Selling
Stockholder (if such Selling Stockholder is a corporation), or any
agreement or other instrument binding upon such Selling Stockholder or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by such
Selling Stockholder of its obligations under this Agreement or the
Custody Agreement or Power of Attorney of such Selling Stockholder,
except such as have been already obtained or as may be required by the
securities or Blue Sky laws of the various states or foreign countries
in connection with the offer and sale of the Shares.
(c) Such Selling Stockholder has, and on the Closing Date or
the Option Closing Date (as defined in Section 3 below), will have,
valid title to the Shares to be sold by such Selling Stockholder, and
with respect to Delta Airlines, Inc. ("DELTA") and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
each has the right to purchase the Shares to be sold by each of them,
on such date and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement, the Custody
Agreement and the Power of Attorney and to sell, transfer and deliver
the Shares, to be sold by such Selling Stockholder. Delta has the legal
right and power, and all authorization and approval required by law, to
purchase the Shares to be sold by Delta under this Agreement by
exercising warrants granted under the Participation Warrant Agreement
dated as of August 31, 1998, as amended, between Delta and the Company.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ has the legal right and power, and all authorization
and approval required by law, to
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purchase the Shares to be sold by him under this Agreement by
exercising outstanding options to purchase the Shares. The
representations and warranties made in this clause (c) with respect
to Delta and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ are being made only by Delta and ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, respectively.
(d) The Custody Agreement and the Power of Attorney have been
duly authorized, executed and delivered by such Selling Stockholder and
are valid and binding agreements of such Selling Stockholder
enforceable against such Selling Stockholder, except to the extent that
enforcement thereof may be limited by (a) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(e) Delivery of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances.
(f) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this paragraph 2(f)
apply only to statements or omissions in the Registration Statement or
the Prospectus that are based upon information furnished by such
Selling Stockholder to the Company in writing expressly for use
in the Registration Statement or the Prospectus.
3. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, each Seller, severally and not jointly, hereby agrees to
sell to the several Underwriters, and each Underwriter, agrees, severally and
not jointly, to purchase from such Seller at $ a share (the "PURCHASE PRICE")
the number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the number of
Firm Shares to be sold by such Seller as the number of Firm Shares set forth in
Schedules II and III hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
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On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each Selling Stockholder set
forth in Part B of Schedule I hereto agrees, severally and not jointly, to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 825,000
Additional Shares at the Purchase Price. If the U.S. Representatives, on behalf
of the U.S. Underwriters, elect to exercise such option, the U.S.
Representatives shall so notify the Selling Stockholders set forth in Part B of
Schedule I hereto in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the U.S. Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Selling Stockholder named in Part B of Schedule I hereto agrees,
severally and not jointly, to sell the number of Additional Shares (subject to
such adjustments to eliminate fractional shares as you may determine) that bears
the same proportion to the maximum number of Additional Shares to be sold by
such Selling Stockholder as the total number of Additional Shares to be
purchased bears to 825,000, and each U.S. Underwriter agrees, severally and not
jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be sold by such
Selling Stockholder as the number of U.S. Firm Shares set forth in Schedule II
hereto opposite the name of such U.S. Underwriter bears to the total number of
U.S. Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock; (ii) enter into any swap 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, or
(iii) in the case of the Company, file a registration statement other than a
registration statement on Form S-8 covering shares of Common Stock subject to
outstanding options under the 1997 Omnibus Plan or shares of Common Stock
subject to options to be issued under the 1999 Omnibus Plan, for the
registration of any shares of Common Stock or any security convertible or
exercisable or exchangeable for Common Stock. The foregoing sentence shall
not apply to (A) the Shares to be sold hereunder; (B) the issuance by the
Company of
11
restricted stock awards under the Company's existing employee benefits plans
or of shares of common stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof; (C) the grant of
options to officers, directors, employees or consultants, PROVIDED such
options are not exercisable (except in the case of a change of control) prior
to the end of the lockup period; (D) the issuance by the Company of warrants
(or shares of capital stock upon the exercise of such warrants) to suppliers
or other entities providing products or services to the Company in connection
with entering into certain supply, adaptive marketing or other similar
arrangements, PROVIDED that the recipient of such warrants or shares agrees
to be bound by the foregoing provisions; (E) the concurrent offering by the
Company of its % convertible subordinated notes due 2006 ("NOTES OFFERING")
and the sale of the convertible notes in an underwritten offering; (F) the
filing of a Rule 462(b) Registration Statement; (G) in the case of each
Selling Stockholder, transfers of any shares of common stock to any
associate, as such term is defined in Rule 12b-2 under the Exchange Act, of
such Selling Stockholder which agrees to be bound by the foregoing
provisions; or (H) the filing by the Company of a registration statement in
response to the exercise of demand registration rights under the Amended and
Restated Registration Rights Agreement dated as of December 8, 1998 (the
"Registration Rights Agreement") among the Company, General Atlantic Partners
48, L.P., GAP Coinvestment Partners, L.P., General Atlantic Partners 50, L.P.
and the stockholders named therein, the grant of exchange rights and the
issuance by the Company of common stock on exercise of such exchange rights,
in connection with the development by ▇▇▇▇▇▇▇▇▇.▇▇▇ of new lines of business
through other entities, PROVIDED THAT no such issuance is permitted prior to
180 days after the date of the Prospectus. In addition, each Selling
Stockholder, agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated on behalf of the Underwriters, it will not, during the
period ending 180 days after the date of the Prospectus, make any demand for,
or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at $ a
share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at a
price that represents a concession not in excess of $ a share under the Public
Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $ a share, to any Underwriter or to
certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by
each Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
12
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on August __, 1999 or at such other time on the same or such other date,
not later than August __, 1999, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Selling
Stockholders set forth in Part B of Schedule I hereto in Federal or other funds
immediately available in New York City against delivery of such Additional
Shares for the respective accounts of the several U.S. Underwriters at 10:00
a.m., New York City time, on the date specified in the notice described in
Section 3 or at such other time on the same or on such other date, in any event
not later than September __, 1999, as shall be designated in writing by the U.S.
Underwriters. The time and date of such payment are hereinafter referred to as
the "OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Sellers to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:00 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized
13
statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the
Chief Financial Officer of the Company, to the effect set forth in
Section 6(a)(i) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has in all material
respects complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date
an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special outside
counsel for the Company, dated the Closing Date, to the effect set
forth in Annex I hereto.
(d) The Underwriters shall have received on the Closing Date
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇, general counsel for the Company, dated the
Closing Date, to the effect set forth in Annex II hereto.
(e) The Underwriters shall have received on the Closing Date
the opinion of outside patent counsel for the Company, dated the
Closing Date, to the effect set forth in Annex IV hereto.
(f) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Selling Stockholders, or other counsel reasonably acceptable to the
Underwriters, dated the Closing Date, to the effect set forth
in Annex V hereto.
14
With respect to Section 6(f) above, ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely upon an opinion or opinions of counsel for
any Selling Stockholders and, with respect to factual matters and to
the extent such counsel deems appropriate, upon the representations of
each Selling Stockholder contained herein and in the Custody Agreement
and Power of Attorney of such Selling Stockholder and in other
documents and instruments; PROVIDED that (A) each such counsel for the
Selling Stockholders is satisfactory to your counsel, (B) a copy of
each opinion so relied upon is delivered to you and is satisfactory to
your counsel and (C) copies of such Custody Agreements and Powers of
Attorney and of any such other documents and instruments shall be
delivered to you and shall be in form and substance satisfactory to
your counsel.
(g) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
dated the Closing Date, in form and substance satisfactory to you.
The opinions of counsel described in Sections 6(c), 6(d), 6(e)
and 6(f) above shall be rendered to the Underwriters at the request of
the applicable Seller.
(h) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Deloitte & Touche LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
PROVIDED that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and [▇▇▇ ▇. ▇▇▇▇▇▇, The ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ 1999 Annuity Trust, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, The ▇▇▇▇
▇. ▇▇▇▇▇▇▇ 1998 Trust, dated April 1, 1998, The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
1998 Trust, dated December 2, 1998, The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1999 Trust,
dated February 26, 1999, The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1999 Grantor Retained
Annuity Trust, The ▇. ▇▇▇▇▇ Case 1997 Grantor Retained Annuity Trust,
The ▇▇▇▇▇ ▇▇▇▇ 1998 Grantor Retained Annuity Trust and General
Atlantic Partners 50, L.P. relating to sales and certain other
15
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
(j) The several obligations of the U.S. Underwriters to
purchase Additional Shares hereunder are subject to the delivery to the
U.S. Representatives on the Option Closing Date of such documents as
they may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares
and other matters related to the issuance of the Additional Shares.
7. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, seven signed copies of
the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to furnish to you in New York
City, without charge, prior to 3:00 p.m. New York City time on the
business day next succeeding the date of this Agreement and during the
period mentioned in Section 7(c) below, as many copies of the
Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the
16
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request; PROVIDED that the Company shall not be obligated to
file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending [September 30], 2000 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Not to release any option holder from, or in any other
way, amend or modify the lock-up agreements entered into in connection
with the option exercise program described in the Prospectus, without
the consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the
Underwriters, which will not be unreasonably withheld.
(g) To notify ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated promptly upon
receipt by the Company of any demand registration request under the
Registration Rights Agreement so that the Underwriters may exercise
their holdback rights under Section 6(a) of Registration Rights
Agreement.
8. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees
to pay or cause to be paid the following expenses incident to the performance
of the Sellers' obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel, the Company's
accountants and counsel for the Selling Stockholders in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the
17
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities herein specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of
the Shares under state securities laws and all expenses in connection with
the qualification of the Shares for offer and sale under state securities
laws as provided in Section 7(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or
Legal Investment memorandum, not to exceed, together with fees for the
concurrent convertible note offering, $10,000, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the NASD Regulation, Inc., not to exceed, together with fees for the
concurrent convertible note offering, $10,000, (v) all costs and expenses
incident to the quotation of the Shares on the NASDAQ National Market, (vi)
the cost of printing certificates representing the Shares, (vii) the costs
and charges of any transfer agent, registrar or depositary, (viii) the costs
and expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants and the
cost of any aircraft chartered in connection with the road show, (ix) all
expenses in connection with any offer and sale of the Shares outside of the
United States, including filing fees and the reasonable fees and
disbursements of the counsel for the Underwriters in connection with offers
and sales outside of the United States, and (x) all other costs and expenses
incident to the performance of the obligations of the Sellers hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as specifically provided in this Section, Section 9
entitled "Indemnity and Contribution", and the last paragraph of Section 11
below, the Underwriters will pay all of their costs and expenses, including
fees and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
18
9. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter, each Selling Stockholder and each person,
if any, who controls any Underwriter or Selling Stockholder within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have made any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made) not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use
therein; PROVIDED that the foregoing indemnity agreement with respect to any
preliminary prospectus or the Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented, if
the Company shall have made any amendments or supplements) 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 or liability.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, the Company and each person, if
any, who controls any Underwriter or the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, but only
with
19
reference to information relating to such Selling Stockholder furnished to the
Company in writing by or on behalf of such Selling Stockholder expressly for use
in the Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto; PROVIDED that the foregoing indemnity
agreement with respect to any preliminary prospectus or the Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented, if the Company shall have made any amendments or supplements) 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 or liability and PROVIDED, FURTHER, that the aggregate
amount of all indemnification reimbursement payable by any Selling Stockholder
pursuant to this Agreement shall in no case exceed the net proceeds to such
Selling Stockholder from the sale of the Secondary Shares.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each Selling Stockholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have made any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in light of the circumstances under which they were
made), but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
20
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Stockholders and all persons, if any, who control
any Selling Stockholder within the meaning of either such Section, in each case
as applicable, and that all such fees and expenses shall be reimbursed as they
are incurred upon receipt of reasonably detailed invoices thereof. In the case
of any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholders and such control persons of any Selling Stockholders,
such firm shall be designated in writing by a majority of the persons named as
attorneys-in-fact for the Selling Stockholders under the Powers of Attorney. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
21
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such
22
action or claim. Notwithstanding the provisions of this Section 9, 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 and no Selling
Stockholder shall be required to contribute any amount in excess of the net
proceeds received by such Selling Stockholder from the offering of the Secondary
Shares. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 9 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(g) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company and
the Selling Stockholders contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Stockholder or any person controlling
any Selling Stockholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
10. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
10(a)(i) through 10(a)(iv), such event, singly or together with any other such
event, makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
23
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II or Schedule III bears to the
aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; PROVIDED that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Firm Shares to be purchased, and arrangements satisfactory to you, the
Company and the Selling Stockholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
any Selling Stockholder. In any such case either you or the relevant Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses
24
(including the fees and disbursements of their counsel) reasonably incurred by
such Underwriters in connection with this Agreement or the offering contemplated
hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. 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.
25
Very truly yours,
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
By:
---------------------------------------
Name:
Title:
The Selling Stockholders named in Schedule
I hereto, acting severally
By:
---------------------------------------
Attorney-in-Fact
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇ & Company Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Acting severally on behalf of themselves and the several U.S. Underwriters named
in Schedule II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:
---------------------------------------
Name:
Title:
26
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇▇▇▇▇▇ Sachs International
▇▇▇▇▇ & Company Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ International
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
Acting severally on behalf of themselves and the several international
Underwriters named in Schedule III hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International
Limited
By:
---------------------------------------
Name:
Title:
27
SCHEDULE I
PART A
NUMBER OF FIRM SHARES
SELLING STOCKHOLDER TO BE SOLD
---------------------------------------------- ---------------------
▇▇▇▇▇▇ Digital Corporation.................... 202,312
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇........................... 202,313
GAP Coinvestment Partners, L.P................ 142,644
General Atlantic Partners 48, L.P............. 469,417
General Atlantic Partners 50, L.P............. 36,189
Vulcan Ventures Incorporated.................. 231,406
▇▇▇ ▇▇▇▇▇..................................... 5,862
Yarmouth Limited Partnership.................. 1,851
▇▇▇▇▇▇▇ ▇▇▇▇.................................. 69,648
Delta Airlines, Inc........................... 1,523,329
The ▇▇▇▇▇▇▇▇ ▇▇▇▇ Foundation, Inc............. 121,387
▇▇▇▇ ▇. ▇▇▇▇▇▇▇............................... 30,001
Strypemonde Foundation........................ 42,832
▇▇▇▇▇▇▇ ▇▇▇▇▇................................. 64,740
The ▇▇▇ ▇▇▇▇▇ Grantor Retained Annuity Trust.. 8,092
▇. ▇▇▇▇▇ Case................................. 72,832
▇▇▇▇▇ ▇▇▇▇.................................... 202,313
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.............................. 72,832
---------
Total:............................... 3,500,000
=========
I-1
PART B
MAXIMUM NUMBER OF
ADDITIONAL SHARES TO BE
SELLING STOCKHOLDER TO BE SOLD
---------------------------------------------- -----------------------
▇▇▇▇▇▇ Digital Corporation.................... 47,687
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇........................... 47,687
GAP Coinvestment Partners, L.P................ 33,623
General Atlantic Partners 48, L.P............. 110,648
General Atlantic Partners 50, L.P............. 8,536
Vulcan Ventures Incorporated.................. 54,546
▇▇▇ ▇▇▇▇▇..................................... 1,362
Yarmouth Limited Partnership.................. 436
▇▇▇▇▇▇▇ ▇▇▇▇.................................. 16,418
Delta Airlines................................ 359,071
The ▇▇▇▇▇▇▇▇ ▇▇▇▇ Foundation Inc.............. 28,613
▇▇▇▇ ▇. ▇▇▇▇▇▇▇............................... 7,071
Strypemonde Foundation........................ 10,096
▇▇▇▇▇▇▇ ▇▇▇▇▇................................. 15,260
The ▇▇▇ ▇▇▇▇▇ Grantor Retained Annuity Trust.. 1,908
▇. ▇▇▇▇▇ Case................................. 17,168
▇▇▇▇▇ ▇▇▇▇.................................... 47,687
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.............................. 17,168
-------
Total:............................... 825,000
=======
I-2
SCHEDULE II
U.S. UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------------------------------------------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated..............
▇▇▇▇▇▇▇, Sachs & Co............................
▇▇▇▇▇ & Company Incorporated...................
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc..............
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation...........................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.................
---------
Total U.S. Firm Shares....... 4,400,000
=========
II-1
SCHEDULE III
INTERNATIONAL UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------------------------------------------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited.....
▇▇▇▇▇▇▇ Sachs International ...................
▇▇▇▇▇ & Company Incorporated...................
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ International
Limited........................................
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International.....
▇▇▇▇▇▇▇ ▇▇▇▇▇ International....................
---------
Total International Firm Shares... 1,100,000
=========
III-1
EXHIBIT A
[FORM OF LOCK-UP LETTER]
August __, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇ & Company Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇▇▇▇▇▇ Sachs International
▇▇▇▇▇ & Company Incorporated
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ International Limited
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
England
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited ("MSIL")
propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
with ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation (the "COMPANY")
providing for the public offering (the "PUBLIC OFFERING") by the several
underwriters, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and MSIL (the "UNDERWRITERS") of shares
(the "SHARES") of the Common Stock (par value $.008 per share) of the Company
(the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap 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 (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. In addition, the undersigned agrees that, without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
The foregoing provisions shall not apply to the sale or other transfer
of shares of Common Stock by the undersigned to any associate (as such term is
defined in Rule 12b-2 of the Securities Exchange Act of 1934) of the
undersigned; PROVIDED THAT, prior to any such sale or other transfer of shares
of Common Stock, any such associated transferee agrees in writing to the
restrictions on transfer set forth herein.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. In the event that the
Public Offering shall not have been consummated on or before October 31, 1999,
this Lock-Up Agreement shall be of no further force or effect.
Very truly yours,
--------------------------------
Name
--------------------------------
Address
2
Annex I
Opinion of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
August 16, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇ SACHS & CO.
▇▇▇▇▇ & COMPANY INCORPORATED
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
As Representatives of the several U.S. Underwriters
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INTERNATIONAL LIMITED
▇▇▇▇▇▇▇ SACHS INTERNATIONAL
▇▇▇▇▇ & COMPANY INCORPORATED
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INTERNATIONAL INC.
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ INTERNATIONAL
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
As Representatives of the several International
Underwriters
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Incorporated
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
England
Re: ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
Public Offering of Common
Stock, par value $.008 per share
--------------------------------
Ladies and Gentlemen:
We have acted as special counsel to ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated, a Delaware corporation (the "Company") in
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 2
connection with the Underwriting Agreement, dated August 10, 1999 (the
"Underwriting Agreement"), between the Company, certain stockholders of the
Company named therein (the "Selling Stockholders"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, ▇▇▇▇▇▇▇ Sachs & Co., ▇▇▇▇▇ & Company Incorporated, BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated as representatives of the
several U.S. Underwriters named therein (the "U.S. Underwriters"), and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. International Limited, ▇▇▇▇▇▇▇ Sachs International, ▇▇▇▇▇ &
Company Incorporated, BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ International Inc.,
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ ▇▇▇▇▇ International as
representatives of the several International Under writers named therein (the
"International Underwriters" and together with the U.S. Underwriters, the
"Underwriters"), relating to the sale to the several Underwriters by the
Company of 2,000,000 shares (the "Primary Shares") of the Company's common
stock, par value $.008 per share ("Common Stock") and by the Selling
Stockholders of 3,500,000 shares of Common Stock (the "Secondary Shares" and
together with the Primary Shares, the "Shares").
This opinion is being furnished pursuant to Section 6(c) of
the Underwriting Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-1 (File No. 333-83513) relating to the Shares,
filed with the Securities and Exchange Commission (the "Commission") on July 23,
1999 under the Securities Act of 1933, as amended, (the "Act"), Amendment No. 1
thereto filed with the Commission on August 2, 1999 and Amendment No. 2 thereto
filed with the Commission on August 10, 1999, including information deemed
to be a part of the registration
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 3
statement at the time of effectiveness pursuant to Rule 430A of the General
Rules and Regulations under the Act (the "Rules and Regulations") (such
Registration Statement, as so amended, being hereinafter referred to as the
"Registration Statement"); (ii) the final prospectuses dated August 10, 1999
relating to the Shares in the form filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations (the "Prospectuses"); (iii) a specimen
certificate representing the Common Stock; (iv) an executed copy of the
Underwriting Agreement; (v) the Certificate of Incorporation of the Company, as
currently in effect (the "Certificate of Incorporation"); (vi) the Bylaws of the
Company, as currently in effect (the "By-laws");(vii) certain resolutions of the
Board of Directors of the Company and a Pricing Committee of the Board of
Directors of the Company; (viii) the Amended and Restated Registration Rights
Agreement, dated as of December 8, 1998, among the Company, General Atlantic
Partners 48, L.P., GAP Coinvestment Partners, L.P., General Atlantic Partners
50, L.P., and the stockholders named therein (the "Registration Rights
Agreement") and those other agreements and instruments listed on Schedule I
hereto (together with the Registration Rights Agreement, the "Applicable
Contracts"); (ix) executed acknowledgements from each of the parties to the
Registration Rights Agreement (other than America West Airlines, Inc.,
Continental Airlines, Inc., Northwest Airlines, Inc. and Trans World Airlines,
Inc. (the "Non-Consenting Stock holders") and the Company) consenting to the
assignment of registration rights by certain stockholders and waiving rights to
notice under the Registration Rights Agreement; and (x) an officer's
certificate, dated the date hereof, a copy of which is attached as Exhibit A
hereto. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 4
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photo static copies and the
authenticity of the originals of such latter documents. In making our
examination of executed documents, we have assumed that the parties thereto,
other than the Company, had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. As to any facts material to the opinions expressed herein which we did
not independently establish or verify, we have relied upon oral or written
statements and representations of officers and other representatives of the
Company and others. In rendering the opinion set forth in paragraph 4 below, we
have also assumed, with your consent, that the certificates representing the
Primary Shares will be manually signed by one of the authorized officers of the
Transfer Agent and Registrar for the Common Stock and registered by such
Transfer Agent and Registrar and will conform to the specimen thereof examined
by us.
As used herein, (i) the term "Applicable Laws" means those
laws of the State of New York, the State of Delaware and the United States of
America that, in each case, in our experience, are normally applicable to
transactions of the type contemplated by the Underwriting Agreement (except for
United States, state and foreign securities or Blue Sky laws, anti-fraud laws
and the rules and regulations of the National Association of Securities Dealers,
Inc.) but without our having made any special
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 5
investigation regarding any other laws; (ii) the term "Governmental Authorities"
means any federal, New York or Delaware executive, legislative, judicial,
administrative or regulatory body; (iii) the term "Applicable Orders" means
those judgments, orders or decrees of any Governmental Authorities specifically
identified to us by the Company to be applicable to the Company, as identified
on Schedule II hereto and (iv) the term "Governmental Approval" means any
consent, approval, license, authorization or validation of, or filing,
qualification or registration with, any Governmental Authority required to be
made or obtained by the Company pursuant to Applicable Laws, other than any
consent, approval, license, authorization, validation, filing, qualification or
registration which may have become applicable as a result of your involvement in
the transactions contemplated by the Underwriting Agreement or because of your
legal or regulatory status or because of any other facts specifically
pertaining to you.
Our opinion set forth in paragraph 1 below as to the existence
and good standing of the Company under the laws of the State of Delaware is
based solely on our review of a certificate to such effect from the Secretary of
State of the State of Delaware.
Members of our firm are admitted to the bar in the State of
New York and the State of Delaware and we do not express any opinion as to the
laws of any other jurisdiction other than the laws of the United States of
America to the extent referred to specifically herein.
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 6
1. The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
2. The Company has the corporate power and corporate authority
to own, lease and operate its proper ties and to conduct its business as
described in the Registration Statement.
3. The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in each Prospectus.
4. The Primary Shares have been duly authorized by the
Company and, when delivered to and paid for by the Underwriters in accordance
with the terms of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable shares of Common Stock; and the issuance of the Primary
Shares will not be subject to any preemptive or similar rights arising under the
Certificate of Incorporation or the By-laws or the General Corporation Law of
the State of Delaware, in each case as currently in effect.
5. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
6. The execution and delivery of the Underwriting Agreement by
the Company and the consummation by the Company of the transactions
contemplated thereby will not contravene (i) the Certificate of Incorporation or
the By-laws; (ii) any Applicable Law; (iii) except to the extent disclosed in
the Prospectuses, any Applicable Contract; (iv) any Applicable Order; or (v) the
Act, the Rules and Regulations, the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or the rules and regulations thereunder, PROVIDED, HOWEVER,
that we express no opinion in this paragraph 6 with regard to the anti-fraud
provisions of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 7
the Act, the Rules and Regulations, the Exchange Act or the rules and
regulations thereunder or the information contained in, the accuracy,
completeness or correctness of, or the adequacy of the disclosure contained in,
each Prospectus or the Registration Statement or the responsiveness thereof to
the requirements of the Act and the Rules and Regulations, which matters are
addressed in paragraph 10 below and the second paragraph following paragraph 11
below.
7. No Governmental Approval, or consent, filing, registration
or approval of or with the Commission, is required to be made or obtained by
the Company for the execution and delivery by the Company of the Underwriting
Agreement or the issuance and sale of the Primary Shares by the Company pursuant
to the Underwriting Agreement, except such as have been obtained or made.
8. The statements set forth in each Prospectus under the
caption "Description of Capital Stock" and in Item 14 of the Registration
Statement, insofar as such statements constitute summaries of legal matters or
certain provisions of the documents referred to therein, fairly summarize the
matters referred to therein in all material respects.
9. Although the discussion set forth in each Prospectus under
the caption "Certain United States Federal Tax Consequences to Non-U.S.
Investors" does not purport to discuss all possible United States federal income
tax consequences of the purchase, ownership, and disposition of Shares, such
discussion constitutes, in all material respects, a fair summary of the United
States federal income tax consequences to Non-U.S. Investors of the purchase,
ownership and disposition of Shares under current law.
10. The Registration Statement, at the time it became
effective, and each Prospectus, as of its date,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 8
appeared on their face to be appropriately responsive in all material respects
to the requirements of the Act and the Rules and Regulations, except that, in
each case, we express no opinion as to the financial statements, schedules and
other financial and statistical data included therein or excluded therefrom or
the exhibits thereto, and, except to the extent expressly stated in paragraphs 8
and 9 above, we do not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or either
Prospectus.
11. The Company is not and, upon the consummation of the
transactions contemplated by the Underwriting Agreement, will not be, an
investment company under the Investment Company Act of 1940, as amended.
We have been orally advised by the Commission that the
Registration Statement was declared effective under the Act at ____ p.m. on
August 10, 1999. We have been orally advised by the Commission that no stop
order suspending the effectiveness of the Registration Statement has been
issued and, to the best of our knowledge, no proceedings for that purpose have
been instituted or are pending or threatened by the Commission.
In addition, we have participated in conferences with officers
and other representatives of the Company, certain Selling Stockholders, counsel
for the Selling Stockholders, representatives of the independent accountants of
the Company, your counsel and you at which the contents of the Registration
Statement and the Prospectuses and related matters were discussed and, although
we 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 Prospectuses and have made no independent check or
verification thereof (except to the extent expressly stated in paragraphs 8 and
9
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 9
above), on the basis of the foregoing, no facts have come to our attention that
have led us to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that either Prospectus, as of its date and
as of the date hereof, contained or contains an untrue statement of a material
fact or omitted 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, except that we express no opinion or belief with respect to the
financial statements, schedules and other financial and statistical data
included therein or excluded therefrom or the exhibits to the Registration
Statement.
This opinion is furnished to you solely for your benefit in
connection with the closing under the Underwriting Agreement occurring today and
is not to be used, circulated, quoted or otherwise referred to for any other
purpose or relied upon by any other person without our express written
permission.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 10
SCHEDULE I
APPLICABLE CONTRACTS
Stock Purchase Agreement, dated July 31, 1998, by and among ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated, General Atlantic Partners 48, L.P. and GAP Coinvestment Partners,
L.P., as amended on September 18, 1998
Stock Purchase Agreement, dated December 8, 1998, by and between ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated and the Investors listed on Schedule 2.1 thereto
Airline Participation Agreement, dated April 1998, by and among ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated, Priceline Travel, Inc.
and Trans World Airlines, Inc.
Airline Participation Agreement, dated October 2, 1998, by and among
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, Priceline Travel, Inc. and Northwest Airlines, Inc.
Airline Participation Agreement, dated August 31, 1998, by and among
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, Priceline Travel, Inc. and Delta Air Lines, Inc., as
amended on January 19, 1999
General Agreement, dated August 31, 1998, by and among ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated, Priceline Travel, Inc. and Delta Air Lines, Inc., as amended on
January 19, 1999
Participation Warrant Agreement, dated August 31, 1998, between ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated and Delta Air Lines, Inc., as amended on December 31, 1998
Participation Warrant Agreement, dated December 31, 1998, between ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated and America West Airlines, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 11
Participation Warrant Agreement, dated December 31, 1998, between ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated and Trans World Air lines, Inc.
Participation Warrant Agreement, dated December 31, 1998, between ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated and Northwest Air lines, Inc., as amended on February 4, 1999 and
March 3, 1999
Letter Agreement, dated July 16, 1999, between the Registrant and Delta Air
Lines, Inc.
Interactive Marketing Agreement, dated March 31, 1999, by and between the
Registrant and First USA Bank, N.A.
First Amendment to Interactive Marketing Agreement, dated as of April 26, 1999,
modifying the Interactive Marketing Agreement, dated March 31, 1999, by and
between the Registrant and First USA Bank, N.A.
Airline Participation Agreement, dated July 16, 1999, between the Registrant and
Continental Airlines, Inc.
Participation Warrant Agreement, dated July 16, 1999, between the Registrant and
Continental Airlines, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
August 16, 1999
Page 12
SCHEDULE I
APPLICABLE ORDERS
None
Exhibit A
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
OFFICER'S CERTIFICATE
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, am Chief Financial Officer of
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation (the "Company"). I understand
that pursuant to Section 6(c) of the Underwriting Agreement dated August 10,
1999 (the "Underwriting Agreement") among the Company, certain stockholders of
the Company and the several underwriters (the "Underwriters") named in Schedule
I thereto, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP is rendering an opinion, to
be dated August 13, 1999 (the "Opinion") to the Underwriters. I further
understand that Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP is relying on this
officer's certificate and the statements made herein in rendering such opinion.
Capitalized terms not defined herein have the meanings given
to such terms in the Opinion.
With regard to the foregoing, on behalf of the Company, I
certify that:
(i) the Company's sole business is the ownership and operation of an electronic
commerce business primarily over the Internet;
(ii) the Company (a) is not engaged and does not propose to engage in the
business of issuing face-amount certificates of the installment type, and has
not been engaged in such business and does not have any such certificate
outstanding, and (b) is not engaged and does not propose to engage in the
business of investing, reinvesting, owning, holding or trading in securities,
and does not own or propose to acquire investment securities (as defined in
Section 3(a) of the Investment Company Act of 1940, as amended) having a value
exceeding 40 percent of the value of the Company's
total assets (exclusive of government securities and cash items) on an
unconsolidated basis;
(iii) there are no judgments, orders or decrees of any Governmental Authorities
(as such term is defined in the Opinion) applicable or relating to, or
affecting, the Company;
(iv) the Company has complied with all its obligations under the
confidentiality, publicity and non-disclosure provisions of the Applicable
Contracts and, without limiting the generality of the foregoing, in those
circumstances where an Applicable Contract does not by its terms permit the
filing of the Applicable Contract as an exhibit to the Registration Statement or
a description of certain provisions of the Applicable Contract in the
Registration Statement, the Company has obtained the consent of the other party
or parties (as applicable) to such Applicable Contract to the filing of such
Applicable Contract as an exhibit to the Registration Statement or the
description of certain provisions of such Applicable Contract in the
Registration Statement; and
(v) except to the extent disclosed in the Prospectuses, the Company has complied
with all its obligations under Section 7 of the Registration Rights Agreement in
connection with the filing of the Registration Statement with the Commission
and the offerings contemplated by the Registration Statement, including (without
limitation) the procedural, notice and time period requirements of such Section.
IN WITNESS WHEREOF I have executed this certificate in the
name and on behalf of ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated this 16th day of August, 1999.
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
By:______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
Annex II
Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Senior Vice President, General Counsel and Secretary
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
Five ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
August 16, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇ SACHS & CO.
▇▇▇▇▇ & COMPANY INCORPORATED
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
As Representatives of the several U.S. Underwriters
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INTERNATIONAL LIMITED
▇▇▇▇▇▇▇ SACHS INTERNATIONAL
▇▇▇▇▇ & COMPANY INCORPORATED
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INTERNATIONAL INC.
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ INTERNATIONAL
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
As Representatives of the several International
Underwriters
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Incorporated
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
England
Re: ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated Public Offering
of common stock, par value $.008 per share
------------------------------------------
Ladies and Gentlemen:
I am Senior Vice President, General Counsel and Secretary of
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation (the "Company"), and have
acted as general counsel to the Company in connection with the Underwriting
Agreement, dated August 10, 1999 (the "Underwriting Agreement"), among the
Company, certain stockholders of the Company named therein (the "Selling
Stockholders"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇▇ Sachs & Co., ▇▇▇▇▇ &
Company Incorporated, BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated as representatives of the several U.S. Underwriters named therein
(the "U.S. Underwriters"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited,
▇▇▇▇▇▇▇ Sachs International, ▇▇▇▇▇ & Company Incorporated, BancBoston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ International Inc., ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ International and
▇▇▇▇▇▇▇ ▇▇▇▇▇ International as representatives of the several International
Under writers named therein (the "International Underwriters" and together with
the U.S. Underwriters, the "Underwriters"), relating to the sale to the several
Underwriters by the Company of 2,000,000 shares (the "Primary Shares") of the
Company's common stock, par value $.008 per share ("Common Stock"), and by the
Selling Stockholders of 3,500,000 shares of Common Stock (the "Secondary Shares"
and, together with the Primary Shares, the "Shares").
This opinion is being furnished pursuant to Section 6(d) of the
Underwriting Agreement.
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of (i) the Registration
Statement on Form S-1 (File No. 333-83513) relating to the Shares, filed with
the Securities and Exchange Commission (the "Commission") on July 23, 1999 under
the Securities Act of 1933, as amended, (the "Act"), Amendment No. 1 thereto
filed with the Commission on August 2, 1999 and Amendment No. 2 thereto filed
with the Commission on August [9][10], 1999, including information deemed to be
a part of the registration statement at the time of effectiveness pursuant to
Rule 430A of
2
the General Rules and Regulations under the Act (the "Rules and Regulations")
(such Registration Statement, as so amended, being here inafter referred to as
the "Registration Statement"); (ii) the final prospectuses dated August 10, 1999
relating to the Shares in the form filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations (the "Prospectuses"); (iii) a specimen
certificate representing the Common Stock; (iv) an executed copy of the Under
writing Agreement; (v) the Certificate of Incorporation of the Company, as
currently in effect (the "Certificate of Incorporation"); (vi) the By-laws of
the Company, as currently in effect (the "By-laws");(vii) certain resolutions
of the Board of Directors of the Company and a Pricing Committee of the Board of
Directors of the Company; (viii) a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company as to the factual matters covered
thereby, a copy of which is attached hereto (the "Officers' Certificate"); (ix)
the agreements included as exhibits to the Registration Statement (the "Material
Contracts"); and (x) certain documents purporting to assign the rights to United
States patents No. 5,794,207 and No. 5,797,127 (collectively, the "Patents") to
the Company. I have also examined originals or copies, certified or otherwise
identified to my satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
certificates and records as I have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In my examination, I have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making my examination
of executed documents, I have assumed that the parties thereto, other than the
Company, had the power, corporate or other, to enter into and perform all
obligations thereunder and I have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
3
parties of such documents and the validity and binding effect thereof on such
parties.
As used herein, (i) the term "Applicable Laws" means the General
Corporation Law of the State of Delaware and those laws of the State of
Connecticut and the United States of America that, in each instance, are
normally applicable to transactions of the type contemplated by the Underwriting
Agreement (except for United States, state and foreign securities or Blue Sky
laws, anti-fraud laws, laws affecting creditors rights generally and the rules
and regulations of the National Association of Securities Dealers, Inc.) but
without my having made any investigation regarding any other laws; (ii) the term
"Governmental Authorities" means any federal or Connecticut executive,
legislative, administrative or regulatory body and the Secretary of State of the
State of Delaware and (iii) the term "Governmental Approval" means any consent,
approval, license, authorization or validation of, or filing, qualification or
registration with, any Governmental Authority required to be obtained or made by
the Company pursuant to Applicable Laws, other than any consent, approval,
license, authorization, validation, filing, qualification or registration which
may have become applicable as a result of your involvement in the transactions
contemplated by the Underwriting Agreement or because of your legal or
regulatory status or because of any other facts specifically pertaining to you.
In providing the opinions set forth in paragraphs 2, 5, 6, 8, 9 and 10
below, I have made no investigation or search of public docket records of any
court, governmental or administrative agency or body, or of any filings,
applications or registrations with the United States Patent and Trademark Office
or the United States Copy right Office.
For the purposes of the opinions set forth in paragraphs 2, 5, 6, 8, 9
and 10 below, the expressions "to my knowledge" and "I have no knowledge" are
each limited to those matters brought to my attention after reasonable inquiry
of officers of the Company.
4
For the purposes of the opinion set forth in paragraph 10 below, the
term "Liens" means all presently asserted liens or other encumbrances.
Insofar as the opinion in paragraph 1 below relates to the laws of the
States of California, Ohio, New Jersey or New York [ANY OTHERS?], I have relied
solely on certificates of due qualification and good standing from the
Secretary of State of each such state.
I am the Senior Vice President, General Counsel and Secretary of the
Company, and have held such position since September 1998. I am admitted to the
bar in the State of Connecticut and, except to the extent set forth in the
preceding paragraph, I do not express any opinion as to the laws of any other
jurisdiction other than the General Corporation Law of the State of Delaware and
the laws of the United States of America to the extent referred to specifically
herein. I am not registered to practice before the US Patent and Trademark
Office as a Patent Attorney. Except to the extent expressly set forth in
paragraphs 4, 8, 9 and 10 below, I express no opinion with respect to any
intellectual property rights or intellectual property matters of the Company,
which are addressed in the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, out side intellectual
property counsel to the Company.
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, I am of the opinion that:
1. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing could not
reasonably be expected to have a material adverse effect on the Company.
2. The execution and delivery of the Underwriting Agreement by the
Company and the consummation by the Company
5
of the transactions contemplated thereby will not contravene (a) any Applicable
Law or (b) to my knowledge, except to the extent disclosed in the Prospectus,
any Material Contract; or (c) to my knowledge, any judgment, order or decree of
any court or Governmental Authority, applicable to the Company.
3. No Governmental Approval is required by the Company for the
execution and delivery of the Underwriting Agreement or the consummation of the
transactions contemplated therein, except such as have been obtained or made.
4. The statements in each Prospectus under the captions "Risk
Factors-We Face Potential Conflicts of Interest relating to ▇▇▇▇▇▇ Digital,"
"Risk Factors-Our Success Depends on Our Ability to Protect Our Intellectual
Property" (other than the statements under the subheading "-Pending Interference
Action"), "Risk Factors-Regulatory and Legal Uncertainties Could Harm Our
Business," "Business-Intellectual Property," "Business-Governmental
Regulation," and "Certain Transactions" and the final four paragraphs under the
caption "Business-Legal Proceedings," in each case, insofar as such statements
constitute summaries of legal matters, legal proceedings or certain provisions
of the documents referred to therein, fairly summarize the legal matters, legal
proceedings or provisions referred to therein in all material respects.
5. To my knowledge, except as described in each Prospectus, there are
no legal or governmental proceedings pending or threatened to which the Company
is a party or to which any of the properties of the Company is subject, the
unfavorable outcome of which could reason ably be expected to have a material
adverse effect on the Company.
6. To my knowledge, there are no statutes or regulations applicable to
the Company or its properties or material contracts or documents to which the
Company is party, that, in either case, are required to be described in the
Registration Statement or the Prospectuses or to be filed as an exhibit to the
Registration Statement, but are not described or filed as required.
6
7. The shares of Common Stock outstanding immediately prior to
issuance of the Shares (including the shares of Common Stock being sold by
certain selling stockholders in the concurrent underwritten offering of Common
Stock) have been duly authorized and are validly issued, fully paid and
non-assessable.
8. To my knowledge, there are currently no pending or threatened claims
of infringement of any material patent, trademark, service ▇▇▇▇ or copyright or
of misappropriation of trade secrets, necessary for the Company to conduct the
business currently conducted by it, the unfavorable outcome of which could
reasonably be expected to have a material adverse effect on the Company and that
are required to be described in the Registration Statement or the Prospectuses
but are not described as required.
9. Except as described in the Prospectuses, I have no knowledge that
the Company will be unable to continue to operate under any current license of a
patent, trade ▇▇▇▇, service ▇▇▇▇, copyright or trade secret, which license is
necessary for the Company to conduct the business currently conducted by it.
10. To my knowledge, the Company owns the Patents, free and clear of
all Liens, other than those that may arise from matters disclosed in the
Prospectuses.
This opinion is given as of the date hereof, and I assume no obligation
to update or supplement this opinion to reflect any facts or circumstances that
may come to my attention or any change in the law that may occur or become
effective after the time of delivery hereof. This opinion is provided to you as
a legal opinion only, and not as a guaranty or warranty of the matters discussed
herein or of any transaction or obligation.
This opinion is furnished to you solely for your benefit in connection
with the closing under the Under writing Agreement occurring today and is not to
be used, circulated, quoted or otherwise referred to for any
7
other purpose or relied upon by any other person without my express written
permission.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
8
EXHIBIT A
Officers' Certificate
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
The undersigned, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the Chief Executive Officer of
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation (the "Company"), and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, the Chief Financial Officer of the Company, each under stand that,
pursuant to Section 6(d) of the Underwriting Agreement dated August 10, 1999
(the "Underwriting Agreement") among the Company, certain selling stockholders
and the several underwriters (the "Underwriters") named in Schedule I thereto,
the General Counsel of the Company is rendering an opinion, to be dated August
13, 1999 (the "Opinion") to the Underwriters. We further understand that the
General Counsel of the Company is relying on this officer's certificate and the
statements made herein in rendering such Opinion.
With regard to the foregoing, on behalf of the Company, we certify
that:
(i) All contracts, agreements or other arrangements material
to the business of the Company (the "Material Contracts") have been filed with
the Securities and Exchange Commission as exhibits to the Registration Statement
(as such term is defined in the Opinion);
(ii) The Company has complied with all its obligations under
the confidentiality, publicity and non-disclosure provisions of the Material
Contracts and, without limiting the generality of the foregoing, in those
circumstances where a Material Contract does not by its terms permit the filing
of the Material Contract as an exhibit to the Registration Statement or a
description of certain provisions of the Material Contract in the Registration
Statement, the Company has obtained the consent of the other party or parties
(as applicable) to such Material Contract to the filing of such Material
Contract as an exhibit to the
9
Registration Statement or the description of certain provisions of such Material
Contract in the Registration Statement;
(iii) There are no judgments, orders or decrees of any
Governmental Authority (as such term is defined in the Opinion) applicable or
relating to, or affecting, the Company;
(iv) Except as described in each Prospectus (as such term is
defined in the Opinion), there are no legal or governmental proceedings pending
or threatened to which the Company is a party or to which any proper ties of the
Company is subject; and
(v) The shares of Common Stock outstanding immediately prior
to issuance of the Shares (including the shares of Common Stock being sold by
certain selling stockholders in the concurrent underwritten offering of Common
Stock) (as such terms are defined in the Opinion) are fully paid and
non-assessable and the amount reflected in the corporate records of the Company
as required to fully pay up such shares, has been received in full by the
Company.
IN WITNESS WHEREOF we have executed this certificate in the name and on
behalf of ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated this 16th day of August, 1999.
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
By:_____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive
Officer
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By:_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial
Officer
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Annex III
Opinion of outside patent counsel
The statements made in the Prospectus under the captions "Risk Factors
- Our Success Depends on Our Ability to Protect Our Intellectual Property" (only
the subsection entitled "Pending Interference Action") and "Business - Legal
Proceedings" (only the first three paragraphs related to the potential ▇▇▇▇▇▇▇▇
interference matter), appear to be fair and accurate summaries of the matters
described therein.
Annex IV
Opinion of Selling Stockholders' Counsel
(i) the Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(ii) the execution and delivery by each Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, the
Underwriting Agreement and the Custody Agreement and Powers of Attorney of such
Selling Stockholder will not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of such Selling Stockholder (if such
Selling Stockholder is a corporation), or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon such Selling
Stockholder or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over such
Selling Stockholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Stockholder of its obligations under this Agreement
or the Custody Agreement or Power of Attorney of such Selling Stockholder,
except such as may be required by the securities or Blue Sky laws of the various
states in connection with offer and sale of the Shares;
(i) each of the Selling Stockholders has valid title to the Shares to
be sold by such Selling Stockholder and the legal right and power, and all
authorization and approval required by law, to enter into the Underwriting
Agreement and the Custody Agreement and Power of Attorney of such Selling
Stockholder and to sell, transfer and deliver the Shares to be sold by such
Selling Stockholder;
(ii) the Custody Agreement and the Power of Attorney of each Selling
Stockholder have been duly authorized, executed and delivered by such Selling
Stockholder and are valid and binding agreements of such Selling Stockholder;
and
(iii) delivery of the Shares to be sold by each Selling Stockholder
pursuant to the Underwriting Agreement will pass title to such Shares free and
clear of any security interests, claims, liens, equities and other encumbrances.
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