Exhibit 1.1
_________ Shares of Common Stock
IPAYMENT, INC.
UNDERWRITING AGREEMENT
_____________, 2003
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLC
WACHOVIA SECURITIES, INC.
As Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
iPayment, Inc., a corporation organized and existing under the laws
of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of ________ shares (the "Firm Shares")
of its common stock, par value $0.01 per share (the "Common Stock"), and, for
the sole purpose of covering over-allotments in connection with the sale of the
Firm Shares, at the option of the Underwriters, up to an additional ______
shares (the "Additional Shares") of Common Stock. The Firm Shares and any
Additional Shares purchased by the Underwriters are referred to herein as the
"Shares." The Shares are more fully described in the Registration Statement and
Prospectus referred to below. Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇"), ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners LLC ("▇▇▇▇▇▇ ▇▇▇▇▇▇") and Wachovia Securities, Inc. ("Wachovia"
and, together with Bear ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, the "Representatives") are
acting as co-lead managers in connection with the offering and sale of the
Shares (the "Offering").
The Company also proposes, subject to the terms of this agreement
(this "Agreement"), the applicable rules, regulations and interpretations of the
NASD (as defined below) and all other applicable laws, rules and regulations,
that up to ___% of the Firm Shares (the "Directed Shares") shall be reserved for
sale by the Underwriters to certain officers, directors, employees and other
persons having business relationships with the Company and designated by the
Company ("Directed Share Purchasers"). To the extent that sales of Directed
Shares are not orally confirmed for purchase by Directed Share Purchasers by the
end of the first day after the date of this Agreement, the Directed Shares will
be offered to the public as part of the Offering.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-101705), and amendments thereto, and related preliminary prospectuses for
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the Shares which registration statement, as so amended (including
post-effective amendments, if any), has been declared effective by the
Commission and copies of which have heretofore been delivered to the
Underwriters. The registration statement, as amended at the time it became
effective, including the exhibits and information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A or
434(d) under the Securities Act, is hereinafter referred to as the "Registration
Statement." If the Company has filed or is required pursuant to the terms hereof
to file a registration statement pursuant to Rule 462(b) under the Securities
Act increasing the size of the Offering by registering additional shares of
Common Stock (a "Rule 462(b) Registration Statement"), then, unless otherwise
specified, any reference herein to the term "Registration Statement" shall be
deemed to include such Rule 462(b) Registration Statement. Other than a Rule
462(b) Registration Statement, which, if filed, becomes effective upon filing,
no other document with respect to the Registration Statement has heretofore been
filed with the Commission. All of the Shares have been registered under the
Securities Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the Securities
Act with the filing of such Rule 462(b) Registration Statement. No stop order
suspending the effectiveness of either the Registration Statement or the Rule
462(b) Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or threatened by the Commission. The Company, if
required by the rules and regulations of the Commission (the "Rules and
Regulations") or by the Securities Act, proposes to file the Prospectus with the
Commission pursuant to Rule 424(b) under the Securities Act ("Rule 424(b)"). The
prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b), or, if the prospectus is not to be filed with the Commission
pursuant to Rule 424(b), the prospectus in the form included as part of the
Registration Statement at the time the Registration Statement became effective,
is hereinafter referred to as the "Prospectus," except that if any revised
prospectus or prospectus supplement shall be provided to the Underwriters by the
Company for use in connection with the Offering which differs from the
Prospectus (whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b)), the term
"Prospectus" shall also refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided to
the Underwriters for such use. Any preliminary prospectus or prospectus subject
to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 under the Securities Act is hereafter called a
"Preliminary Prospectus." Any reference herein to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any wrapper or supplement thereto prepared in connection with the
distribution of Directed Shares in any jurisdiction. All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
a Preliminary Prospectus and the Prospectus, or any amendments or supplements to
any of the foregoing shall be deemed to include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System (the "▇▇▇▇▇ System").
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(b) At the time of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 under the
Securities Act ("Rule 434"), when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied and will comply in all material respects with the
applicable provisions of the Securities Act and the Rules and Regulations and
did not and will not contain an untrue statement of a material fact and did not
and will not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of the Prospectus or
any related Preliminary Prospectus in light of the circumstances under which
they were made, not misleading. When any related Preliminary Prospectus was
first filed with the Commission (whether filed as part of the Registration
Statement for the registration of the Shares or any amendment thereto or
pursuant to Rule 424(a) under the Securities Act) and when any amendment thereof
or supplement thereto was first filed with the Commission, such Preliminary
Prospectus and any amendments thereof and supplements thereto complied in all
material respects with the applicable provisions of the Securities Act and the
Rules and Regulations and did not contain an untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
Preliminary Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for use therein. The parties acknowledge and agree that such
information provided by or on behalf of any Underwriter consists solely of the
statements set forth in the table under the first paragraph under the caption
"Underwriting," in the table under the second paragraph under the subcaption
"-Commissions and Discounts," in the first two paragraphs under the subcaption
"Price Stabilization, Short Positions and Penalty Bids," and under the
subcaption "Passive Market Making," under the subcaption "Other Relationships,"
in each case, under the caption "Underwriting."
(c) Ernst & Young LLP, who have certified the financial
statements and supporting schedules and information of the Company and its
subsidiaries that are included in the Registration Statement are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(d) Subsequent to the date of the latest audited financial
statements of the Company included in the Registration Statement and the
Prospectus, except as disclosed in the Registration Statement and the
Prospectus, the Company has not declared, paid or made any dividends or
distributions of any kind on its capital stock and there has been no material
adverse change or any development involving a prospective material adverse
change, whether or not arising from transactions in the ordinary course of
business, in (i) the business, condition (financial or otherwise), results of
operations, stockholders' equity or properties of the Company and each
subsidiary of the Company listed on Exhibit 21 of the Registration
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Statement (the "Subsidiaries"), individually or taken as a whole; (ii) the
long-term debt of the Company or capital stock of the Company and its
Subsidiaries; or (iii) the Offering or any other transaction contemplated by
this Agreement, the Registration Statement or the Prospectus (any of the events
described in clauses (i) through (iii), a "Material Adverse Change" or "Material
Adverse Effect"). Since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has incurred or undertaken any material liabilities or obligations,
whether direct or indirect, liquidated or contingent, matured or unmatured, or
entered into any transactions which are material to the Company and the
Subsidiaries individually or taken as a whole, except for liabilities,
obligations and transactions which are reflected in the Registration Statement
and the Prospectus.
(e) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column heading "Actual"
under the caption "Capitalization" and, after giving effect to the Offering and
the other transactions contemplated by this Agreement, the Registration
Statement and the Prospectus, will be as set forth in the column heading "Pro
Forma As Adjusted" under the caption "Capitalization." All of the issued and
outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable state, federal and foreign securities laws and
not in violation of or subject to any preemptive or similar right that does or
will entitle any person, upon the issuance or sale of any security, to acquire
from the Company or any Subsidiary any Common Stock or other security of the
Company or any Subsidiary or any security convertible into, or exercisable or
exchangeable for, Common Stock or any other such security (each, a "Relevant
Security"), except for such rights as may have been fully satisfied or waived
prior to the effectiveness of the Registration Statement. The Shares to be
delivered on the Closing Date and the Additional Closing Date, if any (as
hereinafter respectively defined), have been duly and validly authorized and,
when delivered in accordance with this Agreement, will be duly and validly
issued, fully paid and non-assessable, will have been issued in compliance with
all applicable state, federal and foreign securities laws and will not have been
issued in violation of or subject to any preemptive or similar right that does
or will entitle any person to acquire any Relevant Security from the Company or
any Subsidiary upon issuance or sale of Shares in the Offering. The Common Stock
and the Shares conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. Except as disclosed
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, or any equity or debt securities
convertible into or exchangeable for, or any contracts or commitments to issue
or sell, any Relevant Security.
(f) The Subsidiaries are the only subsidiaries of the Company
required to be listed on Exhibit 21 of the Registration Statement. Except for
the Subsidiaries, and the three subsidiaries of the Company with no assets or
operations (Direct Check LLC, E-Commerce Exchange LLC and Super G, LLC), the
Company holds no ownership or other interest, nominal or beneficial, direct or
indirect, in any corporation, partnership, joint venture or other business
entity. All of the issued shares of capital stock of or other ownership
interests in each Subsidiary have been duly and validly authorized and issued
and are fully paid and non-
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assessable and are owned directly or indirectly by the Company free and clear of
all liens, encumbrances, equities, defects or claims.
(g) Each of the Company and the Subsidiaries has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of organization. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the character or location of
its properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to be so
qualified or in good standing which would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect. Each of the Company and
the Subsidiaries has all requisite power and authority (corporate and other),
and all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all judicial,
regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (collectively, the "Consents"), to own, lease and
operate its properties and conduct its business as it is now being conducted and
as disclosed in the Registration Statement and the Prospectus, and each such
Consent is valid and in full force and effect, except for those failures to
obtain such Consents that would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect. Each of the Company and the
Subsidiaries is in compliance with all applicable laws, rules, regulations,
ordinances, directives, judgments, decrees and orders, foreign and domestic,
except where failure to be in compliance would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(h) The Company has full right, power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus. This Agreement and the transactions contemplated
by this Agreement, the Registration Statement and the Prospectus have been duly
and validly authorized by the Company. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(i) The execution, delivery, and performance of this Agreement
and consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus do not and will not (i) conflict with,
require consent under or result in a breach of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement, instrument, franchise, license or permit to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or their respective properties, operations or assets may be bound or
(ii) violate or conflict with any provision of the certificate or articles of
incorporation, by-laws or other organizational documents of the Company or any
Subsidiary, or (iii) violate or conflict with any law, rule, regulation,
ordinance, directive, judgment, decree or
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order of any judicial, regulatory or other legal or governmental agency or body,
domestic or foreign, except (in the case of clauses (i) and (iii) above) as
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance of this
Agreement or consummation of the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered by the Company
hereunder, except the registration under the Securities Act of the Shares, which
has become effective, and such Consents as may be required under state
securities or blue sky laws or the by-laws and rules of the National Association
of Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution of the Shares by the Underwriters, each of which has been obtained
and is in full force and effect.
(j) Except as disclosed in the Registration Statement and the
Prospectus, there is no judicial, regulatory or other legal or governmental
proceeding or other litigation pending to which the Company or any Subsidiary is
a party or of which any officer, director, property, operations or assets of the
Company or any Subsidiary is the subject which, if determined adversely to the
Company or any Subsidiary, would, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect; to the best of the
Company's knowledge, no such proceeding or litigation is threatened or
contemplated; and the defense of any or all such proceedings and litigation
against or involving the Company or any Subsidiary would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect.
(k) The financial statements, including the notes thereto
included in the Registration Statement and the Prospectus present fairly in all
material respects the financial position as of the dates indicated and the cash
flows and results of operations for the periods specified of the Company and its
consolidated subsidiaries and the other entities for which financial statements
are included in the Registration Statement and the Prospectus; except as
otherwise stated in the Registration Statement and the Prospectus, said
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved; and the supporting schedules included in the Registration Statement
and the Prospectus present fairly in all material respects the information
required to be stated therein. No other financial statements or supporting
schedules are required to be included in the Registration Statement. The other
financial and statistical information and data included in the Registration
Statement and the Prospectus present fairly the information included therein and
have been prepared on a basis consistent with that of the financial statements
that are included in the Registration Statement and the Prospectus and the books
and records of the respective entities presented therein.
(l) There are no pro forma or as adjusted financial statements
which are required to be included in the Registration Statement and Prospectus
in accordance with Regulation S-X which have not been included as so required.
The pro forma and pro forma as adjusted financial information included in the
Registration Statement and the Prospectus has been properly compiled and
prepared in accordance with the applicable requirements of the Securities Act
and the Rules and Regulations and include all adjustments necessary to present
fairly in accordance with generally accepted accounting principles the pro forma
and as
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adjusted financial position of the respective entity or entities presented
therein at the respective dates indicated and their cash flows and the results
of operations for the respective periods specified.
(m) The assumptions used in preparing the pro forma and pro
forma as adjusted financial information included in the Registration Statement
and the Prospectus provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described therein;
the related pro forma and pro forma as adjusted adjustments give appropriate
effect to those assumptions; and the pro forma and pro forma as adjusted
financial information reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(n) The Shares have been approved for quotation on the NASDAQ
(as defined in Section 11(b) below) subject to notice of issuance and evidence
of satisfactory distribution, and the Company has taken no action designed to
terminate, or likely to have the effect of terminating, the quotation of the
Shares on the NASDAQ, nor has the Company received any notification that the
NASDAQ is contemplating terminating such quotation.
(o) The Company and its Subsidiaries maintain a system of
internal accounting and other controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accounting for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(p) Neither the Company nor any of its affiliates (within the
meaning of Rule 144 under the Securities Act) has taken, directly or indirectly,
any action which constitutes or is designed to cause or result in, or which
might reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
(q) The Company has not prior to the date hereof made any
offer or sale of any securities which would be "integrated" for purposes of the
Securities Act or the Rules and Regulations with the offer and sale of the
Shares pursuant to the Registration Statement.
(r) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
(s) Neither the Company nor any Subsidiary is or, and upon
consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus and after giving effect to the
application of the net proceeds of the Offering,
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will be, subject to registration as an "investment company" under the Investment
Company Act of 1940, as amended.
(t) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or the Rules and Regulations and
which have not been so described or filed.
(u) No relationship, direct or indirect, exists between or
among any of the Company or any affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Securities
Act or the Rules and Regulations to be described in the Registration Statement
or the Prospectus which is not so described and described as required. There are
no outstanding loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees of indebtedness by the Company to
or for the benefit of any of the officers or directors of the Company or any of
their respective family members, except as disclosed in the Registration
Statement and the Prospectus.
(v) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus.
(w) Each of the Company and Subsidiaries owns or leases all
such properties as are necessary to the conduct of its business as presently
operated and proposed to be operated as described in the Registration Statement
and Prospectus. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Registration Statement and the
Prospectus or such as do not (individually or in the aggregate) materially
affect the value of such property or materially interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries; and
any real property and buildings held under lease or sublease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material to, and do not materially interfere
with, the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries. Neither the Company nor any Subsidiary has
received any notice of any claim adverse to its ownership of any real or
personal property or of any claim against the continued possession of any real
property, whether owned or held under lease or sublease by the Company or any
Subsidiary.
(x) Except as otherwise disclosed in the Registration
Statement, the Company and each Subsidiary (i) owns or possesses adequate rights
to use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses,
formulae, customer lists, and know-how and other intellectual property
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, "Intellectual Property")
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necessary for the conduct of their respective businesses as being conducted and
as described in the Registration Statement and Prospectus, except where the
failure to own or possess such rights would not, individually, or in the
aggregate, be reasonably likely to have a Material Adverse Effect and (ii) have
no reason to believe that the conduct of their respective businesses does or
will conflict with, and have not received any notice of any claim of conflict
with, any such right of others. To the Company's knowledge, all material
technical information developed by and belonging to the Company which has not
been patented and which the Company considers to be its trade secrets has been
kept confidential. To the Company's knowledge, there is no infringement by third
parties of any such Intellectual Property; there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's or any Subsidiary's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim; and there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any other fact which would form a reasonable basis for any such claim.
(y) The Company and the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company reasonably
considers adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries.
(z) Each of the Company and the Subsidiaries has accurately
prepared and timely filed all material federal, state and other tax returns that
are required to be filed by it and has paid or made provision for the payment of
all material taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the
Company or any Subsidiary is obligated to withhold from amounts owing to
employees, creditors and third parties, with respect to the periods covered by
such tax returns (whether or not such amounts are shown as due on any tax
return). No deficiency assessment with respect to a proposed adjustment of the
Company's or any Subsidiary' federal, state, local or foreign taxes is pending
or, to the best of the Company's knowledge, threatened. The Company believes
that the accruals and reserves on the books and records of the Company and the
Subsidiaries in respect of tax liabilities for any taxable period not finally
determined are adequate to meet any assessments and related liabilities for any
such period and, since December 31, 2002, the Company and the Subsidiaries have
not incurred any liability for taxes other than in the ordinary course of its
business. There is no tax lien, whether imposed by any federal, state or other
taxing authority, outstanding against the assets, properties or business of the
Company or any Subsidiary, except with respect to current taxes not yet due or
delinquent.
(aa) No labor disturbance by the employees of the Company or
any Subsidiary exists or, to the Company's knowledge, is imminent and, without
independent investigation, the Company is not aware of any existing or imminent
labor disturbances by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers', customers or contractors, which would, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect.
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(bb) No "prohibited transaction" (as defined in either Section
406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")), "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or other event of the kind described in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under Section
4043 of ERISA has been waived) has occurred with respect to any employee benefit
plan for which the Company or any Subsidiary would have any liability which
could, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect; each employee benefit plan for which the Company or any
Subsidiary would have any liability is in compliance in all respects with
applicable law, including (without limitation) ERISA and the Code, except for
any failure to so comply that would not be reasonably likely to have a Material
Adverse Effect; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from any "pension plan"; and each plan for which the Company would
have any liability that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter or opinion letter from the
Internal Revenue Service (or has submitted, or is within the remedial amendment
period for submitting, an application for a determination letter and is awaiting
a response from the Internal Revenue Service) and, to the knowledge of the
Company, nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(cc) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company (or, to the Company's knowledge, any other entity for whose acts or
omissions the Company is or may be liable) upon any other property now or
previously owned or leased by the Company or any Subsidiary, or upon any other
property, which would be a violation of or give rise to any liability under any
applicable law, rule, regulation, order, judgment, decree or permit
("Environmental Law"), except for violations and liabilities that would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect. There has been no disposal discharge, emission or other release
of any kind onto such property or into the environment surrounding such property
of any toxic or other wastes or other hazardous substances with respect to which
the Company or any Subsidiary has knowledge, except as would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect. The
Company has not agreed to assume, undertake or provide indemnification for any
liability of any other person under any Environmental Law, including any
obligation for cleanup or remedial action, except as would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect.
(dd) Neither the Company, any Subsidiary nor, to the Company's
knowledge, any of its employees or agents has at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States of any jurisdiction
thereof.
(ee) Neither the Company nor any Subsidiary (i) is in
violation of its certificate or articles of incorporation, by-laws or other
organizational documents, (ii) is in
10
default under, and no event has occurred which, with notice or lapse of time or
both, would constitute a default under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or (iii)
is in violation in any respect of any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal
or governmental agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect and except
(in the case of clause (ii) alone) for any lien, charge or encumbrance disclosed
in the Registration Statement and the Prospectus.
(ff) The Registration Statement, the Prospectus and any
Preliminary Prospectus comply in all material respects, and any further
amendments or supplements thereto will comply in all material respects, with all
applicable laws, rules, regulations, ordinances, directives, judgments, decrees
and orders of foreign jurisdictions in which Directed Shares are offered or the
Prospectus or any Preliminary Prospectus, as amended or supplemented, if
applicable, may be distributed in connection with therewith; and no Consent of,
from or with any judicial, regulatory or other legal or governmental agency or
body, other than such as have been obtained, is necessary under the any such
law, rule, regulation, ordinance, directive, judgment, decree or order.
(gg) The Company has not offered, or caused the Underwriters
to offer, Directed Shares to any person with the intention of unlawfully
influencing (i) a customer or supplier of the Company or any Subsidiary to alter
the customer's or supplier's level or type of business with the Company or any
Subsidiary or (ii) a trade journalist or publication to write or publish
favorable information about the Company, any Subsidiary or its products.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at a purchase
price per share of $_______, the number of Firm Shares set forth opposite the
respective names of on Schedule I hereto together with any additional number of
Shares which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates representing, the Firm Shares shall be made at the office of ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP ("Underwriters' Counsel"), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, or at such other place as shall be agreed upon by the Representatives and
the Company, at 10:00 A.M., New York City time, on the third or fourth business
day (as permitted under Rule 15c6-1 under the Exchange Act)(1) (unless postponed
in accordance with the provisions of Section 9 hereof)
----------
(1) If the transaction is priced after 4:30 p.m. Washington, D.C. time, T+4
will apply to the transaction. If the pricing takes place before or during
market hours, the closing will be three business days after pricing.
11
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A under the Securities Act, the
third or fourth business day (as permitted under Rule 15c6-1 under the Exchange
Act) after the determination of the public offering price of the Shares), or
such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called the "Closing Date").
Payment of the purchase price for the Firm Shares shall be made by
wire transfer in same day funds to the Company upon delivery of certificates for
the Firm Shares to Bear ▇▇▇▇▇▇▇ through the facilities of The Depository Trust
Company for the respective accounts of the several Underwriters. Certificates
for the Firm Shares shall be registered in such name or names and shall be in
such denominations as the Representatives may request at least two business days
before the Closing Date. The Company will permit the Representatives to examine
and package such certificates for delivery at least one full business day prior
to the Closing Date.
(c) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants to the Underwriters,
acting severally and not jointly, the option to purchase up to ______ Additional
Shares at the same purchase price per share to be paid by the Underwriters for
the Firm Shares as set forth in Section 2(a) above, for the sole purpose of
covering over-allotments in the sale of Firm Shares by the Underwriters. This
option may be exercised at any time and from time to time, in whole or in part
on one or more occasions, on or before the thirtieth day following the date of
the Prospectus, by written notice from the Representatives to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time, as reasonably determined by the
Representatives, when the Additional Shares are to be delivered (any such date
and time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that no Additional Closing Date shall occur earlier than the
Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Upon any exercise of the option as to all or any portion of
the Additional Shares, each Underwriter, acting severally and not jointly,
agrees to purchase from the Company the number of Additional Shares that bears
the same proportion of the total number of Additional Shares then being
purchased as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the total number of Firm Shares that the Underwriters
have agreed to purchase hereunder, subject, however, to such adjustments to
eliminate fractional shares as the Representatives in their sole discretion
shall make.
(d) Payment of the purchase price for, and delivery of
certificates representing, the Additional Shares shall be made at the office of
Underwriters' Counsel, or at such other place as shall be agreed upon by the
Representatives and the Company, at 10:00 A.M., New York City time, on the
Additional Closing Date (unless postponed in accordance with the provisions of
Section 9 hereof), or such other time as shall be agreed upon by the
Representatives and the Company.
12
Payment of the purchase price for the Additional Shares shall be
made by wire transfer in same day funds to the Company upon delivery of
certificates for the Additional Shares to the Representatives through the
facilities of The Depository Trust Company for the respective accounts of the
several Underwriters. Certificates for the Additional Shares shall be registered
in such name or names and shall be in such denominations as the Representatives
may request at least two business days before the Additional Closing Date. The
Company will permit the Representatives to examine and package such certificates
for delivery at least one full business day prior to the Additional Closing
Date.
3. Offering. Upon authorization of the release of the Firm Shares by
the Representatives, the Underwriters propose to offer the Shares for sale to
the public upon the terms and conditions set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
the Underwriters that:
(a) If Rule 430A is used or the filing of the Prospectus is
otherwise required under Rule 424(b) or Rule 434, the Company will file the
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) within the prescribed time period and will provide evidence satisfactory
to the Representatives of such timely filing. If the Company elects to rely on
Rule 434, the Company will prepare and file a term sheet that complies with the
requirements of Rule 434, and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the Prospectus included in
the Registration Statement at the time it became effective.
The Company will notify the Representatives promptly (and, if
requested by the Representatives, will confirm such notice in writing) (i) when
the Registration Statement and any amendments thereto become effective, (ii) of
any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the Company's intention to file or prepare any supplement or amendment
to the Registration Statement or the Prospectus, (iv) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, including but not limited to Rule
462(b) under the Securities Act, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, it being understood that the Company shall make every
reasonable effort to avoid the issuance of any such stop order, (vi) of the
receipt of any comments from the Commission, and (vii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for that purpose. If the Commission shall propose or enter a stop
order at any time, the Company will make every reasonable effort to prevent the
issuance of any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed pursuant to Rule 424(b) or Rule
434) that differs from the prospectus on file at the time of the effectiveness
of the Registration Statement to which the Representatives shall reasonably
object in writing after being timely furnished in advance a copy thereof. The
Company will provide the
13
Representatives with copies of all such amendments, filings and other documents
a sufficient time prior to any filing or other publication thereof to permit the
Representatives a reasonable opportunity to review and comment thereon.
(b) The Company shall comply with the Securities Act to permit
completion of the distribution as contemplated in this Agreement, the
Registration Statement and the Prospectus. If at any time when a prospectus
relating to the Shares is required to be delivered under the Securities Act in
connection with the sales of Shares, any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would, in the judgment
of the Underwriters or the Company, include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
existing at the time of delivery to the purchaser, not misleading, or if to
comply with the Securities Act or the Rules and Regulations it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement, the Company will notify the Representatives promptly and prepare and
file with the Commission, subject to Section 5(a) hereof, an appropriate
amendment or supplement (in form and substance satisfactory to the
Representatives) which will correct such statement or omission and will use its
best efforts to have any amendment to the Registration Statement declared
effective as soon as possible.
(c) The Company will promptly deliver to each of the
Representatives and Underwriters' Counsel a copy of the Registration Statement,
as initially filed and all amendments thereto, including all consents and
exhibits filed therewith, and will maintain in the Company's files manually
signed copies of such documents for at least five years after the date of
filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any Preliminary Prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, as
the Representatives may reasonably request. On the business day next succeeding
the date of this Agreement and from time to time thereafter, the Company will
furnish the Underwriters with copies of the Prospectus in New York City in such
quantities as the Representatives may reasonably request.
(d) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430 and
Section 5(b) of the Securities Act.
(e) The Company will use its commercially reasonable efforts,
in cooperation with the Representatives, at or prior to the time of
effectiveness of the Registration Statement, to qualify the Shares for offering
and sale under the securities laws relating to the offering or sale of the
Shares of such jurisdictions, domestic or foreign, as the Representatives may
designate and to maintain such qualification in effect for so long as required
for the distribution thereof; except that in no event shall the Company be
obligated in connection therewith to (i) become subject to taxation, to qualify
as a foreign corporation or to execute a general consent to service of process
in such jurisdiction, or (ii) prepare a separate disclosure document other than
the Registration Statement or the Prospectus or such supplementary disclosure
document as may be reasonably required for use with the Prospectus to form any
Canadian offering memorandum and that may be delivered in connection with the
distribution of Shares.
14
(f) The Company will make generally available to its security
holders and to the Underwriters as soon as practicable, but in any event not
later than twelve months after the effective date of the Registration Statement
(as defined in Rule 158(c) under the Securities Act), an earnings statement of
the Company and the Subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158).
(g) During the period of 180 days from the date of the
Prospectus, without the prior written consent of the Representatives, the
Company (i) will not, directly or indirectly, issue, offer, sell, agree to
issue, offer or sell, solicit offers to purchase, grant any call option, warrant
or other right to purchase, purchase any put option or other right to sell,
pledge, borrow or otherwise dispose of any Relevant Security, or make any
announcement of any of the foregoing, (ii) will not establish or increase any
"put equivalent position" or liquidate or decrease any "call equivalent
position" (in each case within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder) with respect to any Relevant
Security, and (iii) will not otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of a Relevant Security, whether or not such
transaction is to be settled by delivery of Relevant Securities, other
securities, cash or other consideration; and the Company will obtain an
undertaking in substantially the form of Annex II hereto of each of its
executive officers and directors, and its stockholders listed on Schedule II
attached hereto not to engage in any of the aforementioned transactions on their
own behalf, other than the sale of Shares as contemplated by this Agreement and
the Company's issuance of Common Stock upon (i) the conversion or exchange of
convertible or exchangeable securities outstanding on the date hereof; (ii) the
exercise of currently outstanding options; (iii) the exercise of currently
outstanding warrants; and (iv) the grant and exercise of options under, or the
issuance and sale of shares pursuant to, employee stock option plans in effect
on the date hereof, each as described in the Registration Statement and the
Prospectus. The Company will not file a registration statement under the
Securities Act in connection with any transaction by the Company or any person
that is prohibited pursuant to the foregoing, except for registration statements
on Form S-8 relating to employee benefit plans or Form S-4 relating to corporate
reorganizations or other transactions under Rule 145.
(h) During the period of five years from the effective date of
the Registration Statement, the Company will furnish to the Representatives
copies of all reports or other communications (financial or other) furnished to
its security holders generally or from time to time published or publicly
disseminated by the Company, and will deliver to the Representatives (i) as soon
as they are available, copies of any reports, financial statements and proxy or
information statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed;
and (ii) such additional information concerning the business and financial
condition of the Company as the Representatives may from time to time reasonably
request (such financial information to be on a consolidated basis to the extent
the accounts of the Company and the Subsidiaries are consolidated in reports
furnished to its security holders generally or to the Commission), provided that
the Representatives agree to keep such information confidential (and to cause
their employees and agents to do the same) prior to its publication or public
dissemination by the Company.
15
(i) The Company will apply the net proceeds from the sale of
the Shares as set forth under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to list for
quotation the Shares on the NASDAQ.
(k) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act, will file all documents
required to be filed with the Commission pursuant to the Securities Act and the
Rules and Regulations within the time periods required thereby.
(l) The Company will use its reasonable best efforts to do and
perform all things required to be done or performed under this Agreement by the
Company prior to the Closing Date or the Additional Date, as the case may be,
and to satisfy all conditions precedent to the delivery of the Firm Shares and
the Additional Shares.
(m) The Company will comply in all material respects with all
applicable securities and other applicable laws, rules and regulations in each
foreign jurisdiction in which the Directed Shares are offered.
(n) The Company hereby agrees that it will ensure that the
Directed Shares will be restricted as required by the NASD or NASD rules from
sale, transfer, assignment, pledge or hypothecation for a period of three months
following the date of this Agreement. At the request of Bear ▇▇▇▇▇▇▇, the
Company will direct the transfer agent to place a stop transfer restriction upon
such securities for such period of time.
(o) The Company will not take, and will cause its affiliates
(within the meaning of Rule 144 under the Securities Act) not to take, directly
or indirectly, any action which constitutes or is designed to cause or result
in, or which might reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
5. Payment of Expenses. Whether or not the transactions contemplated
by this Agreement, the Registration Statement and the Prospectus are consummated
or this Agreement is terminated, the Company hereby agrees to pay all costs and
expenses incident to the performance of its obligations hereunder, including the
following: (i) all expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and any and all amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers; (ii) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and the
Offering; (iii) the cost of producing this Agreement and any agreement among
Underwriters, blue sky survey, closing documents and other instruments,
agreements or documents (including any compilations thereof) in connection with
the Offering; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state securities or blue sky laws as provided
in Section 4(e) hereof and any offering of Directed Shares in outside the United
States), including the fees and disbursements of counsel for the Underwriters in
connection with such qualification or offering
16
and in connection with any blue sky survey; (which fees and disbursements shall
not exceed $7,500; (v) the filing fees incident to securing any required review
by the NASD of the terms of the Offering, including the fees and disbursements
of counsel for the Underwriters in connection with such filing; (which fees and
disbursements shall not exceed $15,000) (vi) all fees and expenses in connection
with listing the Shares on the NASDAQ; (vii) all travel expenses of the
Company's officers and employees and any other expense of the Company incurred
in connection with attending or hosting meetings with prospective purchasers of
the Shares; (viii) any stock transfer taxes incurred in connection with this
Agreement or the Offering; and (ix) any reasonable expenses (including, without
limitation, legal expenses) incurred by the Underwriters in connection with any
release, or any effort by the Company or any Directed Share Purchaser to seek
the release, of any of the Directed Shares from the restrictions referred to in
Section 4(n) above. The Company also will pay or cause to be paid: (x) the cost
of preparing stock certificates representing the Shares; (y) the cost and
charges of any transfer agent or registrar for the Shares; and (z) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section 5. It is
understood, however, that except as provided in this Section, and Sections 7, 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel and stock transfer taxes on resale of any of
the Shares by them. Notwithstanding anything to the contrary in this Section 5,
in the event that this Agreement is terminated pursuant to Section 6 or 11(b)
hereof, or subsequent to a Material Adverse Change, the Company will pay all
out-of-pocket expenses of the Underwriters (including but not limited to
reasonable fees and disbursements of counsel to the Underwriters) incurred in
connection herewith.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to the Representatives or to
Underwriters' Counsel pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
each of the following additional conditions:
(a) The Registration Statement shall have become effective and
all necessary regulatory or stock exchange approvals shall have been received
not later than [if pricing pursuant to Rule 430A: 5:30 P.M., New York time, on
the date of this Agreement] [if pricing pursuant to a pricing amendment: 12:00
P.M., New York time on the date an amendment to the Registration Statement
containing the public offering price has been filed with the Commission], or at
such later time and date as shall have been consented to in writing by the
Representatives; if the Company shall have elected to rely upon Rule 430A or
Rule 434 under the Securities Act, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof and a form
of the Prospectus containing information relating to the description of the
Shares and the method of distribution and similar matters shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the
17
Registration Statement or any post-effective amendment thereof shall have been
issued and no proceedings therefor shall have been initiated or threatened by
the Commission.
(b) At the Closing Date the Representatives shall have
received the written opinion of White &Case LLP, special counsel for the
Company, dated the Closing Date addressed to the Underwriters in the form
attached hereto as Annex I-A, and the written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
General Counsel of the Company, dated the Closing Date and addressed to the
Underwriters in the form attached hereto as Annex I-B.
(c) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and to Underwriters'
Counsel, and the Underwriters shall have received from Underwriters' Counsel a
written opinion, dated as of the Closing Date, with respect to the issuance and
sale of the Shares, the Registration Statement and the Prospectus and such other
related matters as the Representatives may require, and the Company shall have
furnished to Underwriters' Counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(d) At the Closing Date the Representatives shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company, dated the Closing Date to the effect that (i) the
condition set forth in subsection (a) of this Section 6 has been satisfied, (ii)
as of the Closing Date, the representations and warranties of the Company set
forth in Section 1 hereof are true and correct, (iii) as of the Closing Date all
agreements, conditions and obligations of the Company to be performed or
complied with hereunder on or prior thereto have been duly performed or complied
with in all material respects, (iv) the Company and the Subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, and (v) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus there has not been any
Material Adverse Change, except in each case as disclosed in the Prospectus.
(e) At the time this Agreement is executed and at the Closing
Date, the Representatives shall have received a comfort letter, from Ernst &
Young LLP, independent public accountants for the Company, dated, respectively,
as of the date of this Agreement and as of the Closing Date addressed to the
Underwriters and in customary form and substance reasonably satisfactory to the
Underwriters and Underwriters' Counsel.
(f) At the time this Agreement is executed and at the Closing
Date, the Representatives shall have received a letter, from Ernst & Young LLP,
dated, respectively, as of the date of this Agreement and as of the Closing Date
addressed to the Underwriters and in form and substance reasonably satisfactory
to the Underwriters and Underwriters' Counsel, stating that nothing caused them
to believe that the unaudited pro forma information of the Company included in
the Registration Statement does not comply as to form with the applicable
accounting requirements of Rule 11-02 of Regulation S-X promulgated under the
Securities Act or that the pro forma adjustments have not been applied properly
to the historical amounts in the compilation of such statements.
18
(g) You shall have received a duly executed lock-up agreement
from each person who is a director or an executive officer of the Company and
each shareholder listed on Schedule II hereto, in each case substantially in the
form attached hereto as Annex II, and each such lock-up agreement shall be in
full force and effect on the Closing Date.
(h) At the Closing Date, the Shares shall have been approved
for quotation on the NASDAQ.
(i) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
(j) The Company shall have complied with the provisions of
Section 4(c) hereof with respect to the furnishing of Prospectuses on the next
business day succeeding the date of this Agreement.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Representatives or to Underwriters' Counsel pursuant to this Section 6 shall not
be satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by the Representatives at, or at any time prior to, the Closing Date
and the obligations of the Underwriters to purchase the Additional Shares may be
cancelled by the Representatives at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone. Any such telephone notice shall be confirmed promptly
thereafter in writing.
7. Indemnification
(a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact included in the
supplement or prospectus wrapper material distributed in connection with the
reservation and sale of the Directed Shares or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, when
considered in conjunction with the Prospectus or
19
Preliminary Prospectus, not misleading; provided, however, that (i) the Company
will not be liable in any such case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives expressly for use therein, and (ii) with respect to any
untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this section shall not inure to
the benefit of any Underwriter from whom the person asserting any such loss,
claim, damage, liability or action purchased the securities concerned, to the
extent that any such loss, claim, damage, liability or action of such
Underwriter occurs under the circumstance where it shall have been determined by
a court of competent jurisdiction in a decision not subject to further appeal
that (w) the Company had furnished copies of the Prospectus, as amended or
supplemented, to the Representatives in the requisite quantity and on a timely
basis to permit proper delivery on or prior to the time at which written
confirmation of the sale of such securities was delivered by the Underwriter,
(x) delivery of the Prospectus, as amended or supplemented, was required by the
Securities Act to be made to such person at such time, (y) the untrue statement
or omission of a material fact contained in the Preliminary Prospectus was
corrected in the Prospectus as amended or supplemented, and (z) the Underwriter
did not send or give to such person, at or prior to the written confirmation of
the sale of such securities to such person, a copy of the Prospectus as amended
or supplemented. The parties agree that such information provided by or on
behalf of any Underwriter through the Representatives consists solely of the
material referred to in the last sentence of Section 1(b) hereof. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have, including but not limited to other liability under this Agreement.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for use
therein, it being expressly understood by the parties that such information
20
provided by or on behalf of any Underwriter through the Representatives consists
solely of the material referred to in the last sentence of Section 1(b) hereof;
provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares to be purchased by such Underwriter hereunder. This indemnity will be
in addition to any liability which any Underwriter may otherwise have, including
but not limited to other liability under this Agreement.
(c) In connection with the offer and sale of Directed Shares
the Company agrees, promptly upon written notice, to indemnify and hold harmless
the Underwriters from and against any and all losses, liabilities, claims,
damages and expenses incurred by them (i) as a result of the failure of any
Directed Share Purchaser, who makes an oral agreement, properly confirmed by the
Underwriters, to purchase Directed Shares within twenty-four hours of
establishing the public offer price, to pay for and accept delivery of the
Directed Shares and (ii) the violation by the Company of any applicable laws or
regulations of any foreign jurisdictions where Directed Shares have been
offered. Under no circumstances will the Representatives or any other
Underwriter be liable to the Company or to any Directed Share Purchaser for any
action taken or omitted to be taken in connection with the Directed Shares or
any transaction effected with any Directed Share Purchaser, except to the extent
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have resulted primarily and directly from the gross
negligence or willful misconduct of the Representatives or such other
Underwriter, as the case may be.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of any claims or the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 7 to the extent that it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in the
defense of such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of
21
the indemnifying parties (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the indemnifying parties. No indemnifying party shall, without the prior
written consent of the indemnified parties, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened claim, investigation, action or proceeding in respect of which
indemnity or contribution may be or could have been sought by an indemnified
party under this Section 7 or Section 8 hereof (whether or not the indemnified
party is an actual or potential party thereto), unless (x) such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such claim, investigation, action or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or any failure to act, by or on behalf of the indemnified party, and
(y) the indemnifying party confirms in writing its indemnification obligations
hereunder with respect to such settlement, compromise or judgment.
8. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 8 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company) as incurred to which the Company and one or more
of the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the Offering or, if such allocation is not permitted by applicable law, in such
proportions as are appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as (x) the
total proceeds from the Offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company bears to (y) the
underwriting discount or commissions received by the respective Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of each of the Company and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in
22
this Section. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
8 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 8,
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
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. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company and any Selling Stockholder, as
applicable, subject in each case to clauses (i) and (ii) of the immediately
preceding sentence. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. The obligations of the
Underwriters to contribute pursuant to this Section 8 are several in proportion
to the respective number of Shares to be purchased by each of the Underwriters
hereunder and not joint.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
(the "Default Shares") do not (after giving effect to arrangements, if any, made
by the Representatives pursuant to subsection (b) below) exceed in the aggregate
10% of the number of Firm Shares or Additional Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Company that number of Default Shares that bears the same proportion of the
total number of Default Shares then being purchased as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto bears to
the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Representatives in their sole discretion shall make.
(b) In the event that the aggregate number of Default Shares
exceeds 10% of the number of Firm Shares or Additional Shares, as the case may
be, each Representative may in its discretion arrange for itself or for another
party or parties (including any non-
23
defaulting Underwriter or Underwriters who so agree) to purchase the Default
Shares on the terms contained herein. In the event that within five calendar
days after such a default the Representatives do not arrange for the purchase of
the Default Shares as provided in this Section 9, this Agreement or, in the case
of a default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Sections 5, 7, 8, 10 and 11(d)) or
the Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that any Default Shares are to be purchased
by the non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, the Representatives or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may be for a
period, not exceeding seven business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents and arrangements, and the Company agrees to file promptly
any amendment or supplement to the Registration Statement or the Prospectus
which, in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement or in certificates of officers of the Company or any
Subsidiary submitted pursuant hereto, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 10 and 11(d) hereof shall survive any termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of
(i) receipt by the Representatives and the Company of notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the public offering price or the purchase price per Share
has not been agreed upon prior to 5:00 P.M., New York City time, on the fifth
full business day after the Registration Statement shall have become effective,
this Agreement shall thereupon terminate without liability to the Company or the
Underwriters except as herein expressly provided. Until this Agreement becomes
effective as aforesaid, it may be terminated by the Company by notifying the
Representatives or by the Representatives notifying the Company. Notwithstanding
any termination of this Agreement, the provisions of
24
this Section 11 and of Sections 1, 5, 7, 8 and 12 through 17, inclusive, shall
be in full force and effect at all times after the execution hereof.
(b) The Representatives shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Representatives will in the immediate future materially disrupt,
the market for the Company's securities or securities in general; or (B) if
trading on The New York Stock Exchange (the "NYSE") or The NASDAQ National
Market (the "NASDAQ") shall have been suspended or been made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, by the NYSE,
the NASDAQ or order of the Commission or any other governmental authority having
jurisdiction; or (C) if a banking moratorium has been declared by any state or
federal authority or if any material disruption in commercial banking or
securities settlement or clearance services shall have occurred; or (D) in the
reasonable judgment of the Representatives, any Material Adverse Change shall
have occurred since the respective dates as of which information is given in the
Prospectus; or (E) (i) if there shall have occurred any outbreak or escalation
of hostilities or acts of terrorism involving the United States or there is a
declaration of a national emergency or war by the United States or (ii) if there
shall have been any other calamity or crisis or any change in political,
financial or economic conditions if the effect of any such event in (i) or (ii),
in the judgment of the Representatives, makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms and in the manner
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be in writing.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than pursuant to (i) notification by the
Representatives as provided in Section 11(a) hereof or (ii) Section 9(b)
hereof), or if the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth herein is
not satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Representatives, reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
expenses of their counsel), incurred by the Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co.
Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity Capital
Markets, with a copy to Underwriter's Counsel at the address, and to the
attention of the persons, set forth in the Registration Statement;
25
(b) if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to the Company and its counsel at the respective
addresses, and to the attention of the respective persons, set forth in the
Registration Statement;
provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to the Representatives, which
address will be supplied to any other party hereto by the Representatives upon
request. Any such notices and other communications shall take effect at the time
of receipt thereof.
13. Parties. This Agreement shall insure solely to the benefit of,
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and said
controlling persons and their respective successors, officers, directors, heirs
and legal representatives, and it is not for the benefit of any other person,
firm or corporation. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
14. Governing Law and Jurisdiction; Waiver of Jury Trial. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. The Company irrevocably (a) submits to the jurisdiction of
any court of the State of New York or the United State District Court for the
Southern District of the State of New York for the purpose of any suit, action,
or other proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus (each, a "Proceeding"), (b) agrees that all claims in respect of any
Proceeding may be heard and determined in any such court, (c) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the fullest extent
permitted by law, any claim that such Proceeding is brought in an inconvenient
forum. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY
LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
26
16. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
17. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
iPayment, Inc.
By:
--------------------------------------
Name:
Title:
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITES LLC
WACHOVIA SECURITIES, INC.
By: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
--------------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
SCHEDULE I
Number of Additional
Total Number of Firm Shares to be Purchased if
Name of Underwriter Shares to be Purchased Option is Fully Exercised
------------------- ---------------------- -------------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.........................
▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities LLC....................
Wachovia Securities, Inc........................
Total..................................
====================== =========================
SCHEDULE II
[List of Directors, Officers and Stockholders]
ANNEX I-A
Form of Opinion of White & Case LLP
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
Wachovia Securities, Inc.
As Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel for iPayment, Inc. (the "Company"), a
company organized under the laws of the State of Delaware, in connection with
the transactions contemplated by the underwriting agreement (the "Underwriting
Agreement") dated ____________, 2003, between the Company and Bear, ▇▇▇▇▇▇▇ &
Co. Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC and Wachovia Securities, Inc., as
representatives of the several underwriters (the "Underwriters") named in
Schedule 1 thereto. This opinion is delivered to you pursuant to Section 6(b)
of the Underwriting Agreement. Capitalized terms used herein and not otherwise
defined are used herein as defined in the Underwriting Agreement.
In so acting, we have examined certificates of officers of the
Company, and the originals (or copies thereof, certified to our satisfaction) of
such corporate documents and records of the Company, and such other documents,
records and papers as we have deemed relevant in order to give the opinions
hereinafter set forth. In this connection, we have assumed the genuineness of
signatures, the authenticity of all documents submitted to us as originals and
the conformity to authentic original documents of all documents submitted to us
as certified, conformed, facsimile or photostatic copies. In addition, we have
relied, to the extent that we deem such reliance proper, upon such certificates
of officers of the Company and the representations and warranties of the Company
in the Underwriting Agreement with respect to the accuracy of factual matters
contained therein which were not independently established. Our opinion in
paragraph 1 below as to valid existence and good standing is based solely upon
the good standing certificates obtained by us from the Office of the Secretary
of State of the State of Delaware. Our opinion in paragraph 8 below as to the
effectiveness of the Registration Statement is based solely upon telephonic
confirmation received by us from a member of the Staff of the Division of
Corporation Finance of the Commission. Our opinion in paragraph 9 below as to
the designation of the Shares for inclusion in the Nasdaq National Market is
based solely on a letter of confirmation, dated __________, from the Nasdaq
Stock Market, Inc.
Based upon and subject to the foregoing, we are of the opinion
that:
1. Each of the Company, E-Commerce Exchange, Inc., iPayment of
Eureka, Inc., iPayment of Maine, Inc. and Online Data Corp. has been duly
incorporated and validly exists as a corporation in good standing under the laws
of the State of Delaware, with the power and authority to own its properties and
conduct its business as described in the Registration Statement and the
Prospectus.
2. The Company has an authorized capitalization as set forth
in the Registration Statement and the Prospectus. The Shares to be delivered on
the Closing Date and the Additional Closing Date, if any, have been duly and
validly authorized and, when delivered in accordance with the Underwriting
Agreement, will be duly and validly issued, fully paid and non-assessable.
3. The Underwriting Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally and general principles of equity
(whether applied by a court of law or equity).
4. The execution and delivery of the Underwriting Agreement
and the consummation of the transactions contemplated by Underwriting Agreement
do not and will not (A) conflict with or result in a breach of any of the terms
and provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or any other material
agreement, instrument, franchise, license or permit known to us to which the
Company or any of the Subsidiaries is a party or by which any of the Company or
any of the Subsidiaries or their respective properties or assets are bound, or
(B) violate or conflict with any provision of the certificate of incorporation
or by-laws of the Company or any of the Subsidiaries, or, to our knowledge, any
judgment, decree, order, statute, rule or regulation of any court or any
judicial, regulatory or other legal or governmental agency or body.
5. No consent, approval, authorization or order of, or
qualification, filing or registration with, any New York State or U.S. Federal
governmental agency or body or any New York State or U.S. Federal court is
required to be obtained or made by the Company or the Subsidiaries for the
issuance and sale of the Shares as contemplated in the Underwriting Agreement,
except for (1) such as may be required under state securities or blue sky laws
or the securities laws of any foreign jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters (as to which we
express no opinion), (2) such as have been made or obtained under the Securities
Act, and (3) such as are required by the NASD.
6. The statements under the captions "Risk Factors -- New and
potential governmental regulations designed to protect or limit access to
consumer information could adversely affect our ability to provide the services
we provide our merchants," "Business -- Legal Proceedings," "Description of
Capital Stock," and "Shares Eligible for Future Sale," in the Prospectus, to the
extent they constitute a summary of agreements, statutes, legal proceedings,
legal matters and legal conclusions with respect thereto, are accurate in all
material respects. The statements under the caption "Material U.S. Federal Tax
Considerations for Non-U.S.
Holders of our Common Stock", to the extent that they constitute matters of U.S.
federal income tax law and legal conclusions with respect thereto, are accurate
in all material respects.
7. The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described
in the Registration Statement and the Prospectus, will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
8. The Registration Statement was declared effective by the
Commission under the Securities Act as of _____ pm on ____________, 2003, and
the Prospectus was filed with the Commission pursuant to Rule 424(b)(1) on
_____________, 2003. To our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
therefor have been initiated or threatened by the Commission. Any required
filing of the Prospectus pursuant to Rule 424 under the Act has been made in
accordance with Rule 424 and 430A under the Act.
9. The Shares have been designated for inclusion in the Nasdaq
National Market.
10. The Company has the corporate power to execute and deliver
the Underwriting Agreement and to perform its obligations thereunder, and has
taken all necessary corporate action to authorize the execution and delivery of
the Agreement, and consummation of the transactions contemplated by Underwriting
Agreement and as described in the Registration Statement and the Prospectus.
In the course of preparation by the Company of the
Registration Statement and the Prospectus, we have participated in conferences
with officers and other representatives of the Company, with representatives of
the independent auditors of the Company, and with you and your counsel. 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 Prospectus (except to the extent stated in paragraph 6 above),
and our judgments as to materiality are, to the extent we deem appropriate,
based in part upon the views of appropriate officers and other representatives
of the Company.
Based upon such participation in the preparation of the
Registration Statement and the Prospectus, but without independent check or
verification, and subject to the preceding paragraph and the final paragraph
hereof, (a) in our opinion, each of the Registration Statement at the time of
effectiveness and the Prospectus as of its date (except for the financial
statements and related schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which we express
no opinion) appears on its face to comply as to form in all material respects
with the requirements of the Securities Act and the Rules and Regulations, (b)
we do not know of any contract or other document of a character required by the
Securities Act or the Rules and Regulations to be described or summarized in the
Registration Statement or to be filed as an exhibit to the Registration
Statement that is not described, summarized or filed, and (c) nothing has come
to our attention which causes us to believe that, (i) as of its effective date,
the Registration Statement (other than the financial statements and related
schedules and other financial data included or incorporated by reference therein
or omitted therefrom, as to which we express no belief) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) as of its date and the date hereof, the Prospectus (other than the
financial statements and related schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which we express
no belief) contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The phrase, "to our knowledge," or words of similar import,
means the actual knowledge (without independent investigation except as
otherwise stated) of lawyers at White & Case LLP who have been principally
involved in negotiating and reviewing the Underwriting Agreement and in the
preparation and review of the Registration Statement and the Prospectus.
We do not express or purport to express any opinions with
respect to laws other than the laws of the State of New York, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States. This opinion is given solely for your use in connection with the
Underwriting Agreement and may not be relied on by any other person or for any
other purpose. We do not undertake to advise you of any changes in our opinions
expressed herein resulting from matters that may hereafter arise or that
hereafter may be brought to our attention.
Very truly yours,
ANNEX I-B
Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
Wachovia Securities, Inc.
As Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I am the general counsel of iPayment, Inc. (the "Company"), a
company organized under the laws of the State of Delaware. In that capacity, I
have acted as counsel to the Company in connection with the transactions
contemplated by the underwriting agreement (the "Underwriting Agreement") dated
____________, 2003, between the Company and Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners LLC and Wachovia Securities, Inc., as representatives of the
several underwriters (the "Underwriters") named in Schedule 1 thereto. This
opinion is delivered to you pursuant to Section 6(b) of the Underwriting
Agreement. Capitalized terms used herein and not otherwise defined are used
herein as defined in the Underwriting Agreement.
In so acting, I have examined certificates of officers of the
Company, and the originals (or copies thereof, certified to my satisfaction) of
such corporate documents and records of the Company, and such other documents,
records and papers as I have deemed relevant in order to give the opinions
hereinafter set forth. In this connection, I have assumed the genuineness of
signatures, the authenticity of all documents submitted to me as originals and
the conformity to authentic original documents of all documents submitted to me
as certified, conformed, facsimile or photostatic copies. In addition, I have
relied, to the extent that I deem such reliance proper, upon such certificates
of officers of the Company and the representations and warranties of the Company
in the Underwriting Agreement with respect to the accuracy of factual matters
contained therein which were not independently established. My opinion in
paragraph 1 below (a) as to the valid existence and good standing of CardSync
Processing, Inc., 1st National Processing, Inc. and iPayment of California, Inc.
is based solely upon the good standing certificates obtained by me from the
Offices of the Secretary of State of the States of California, Nevada and
Tennessee, and (b) as to the due qualification and good standing of 1st National
Processing, Inc. and iPayment of California, Inc. is based solely upon the good
standing certificates obtained by me from the Office of the Secretary of State
of the State of California.
1. Each of CardSync Processing, Inc., 1st National Processing,
Inc. and iPayment of California, Inc. has been duly incorporated and validly
exists as a corporation in good standing under the laws of its jurisdiction of
incorporation, with the power and authority to own its properties and conduct
its business as described in the Registration Statement and
the Prospectus. Each of 1st National Processing, Inc. and iPayment of
California, Inc. are duly qualified and in good standing as a foreign
corporation in the State of California.
2. All of the issued and outstanding shares of capital stock
of the Company (a) have been duly authorized, validly issued and are fully paid
and non-assessable, and (b) were not issued in violation of any preemptive or,
to my knowledge, similar rights that entitle or will entitle any person to
acquire any shares from the Company.
3. The Shares to be delivered on the Closing Date and the
Additional Closing Date, if any, will not have been issued in violation of any
preemptive or, to my knowledge, similar rights that entitle or will entitle any
person to acquire any Shares from the Company upon issuance or sale thereof. All
of the issued shares of capital stock of each Subsidiary of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
4. To my knowledge and other than as set forth in the
Prospectus, there are no judicial, regulatory or other legal or governmental
proceedings pending to which the Company or any of its Subsidiaries is a party
or of which any property of the Company or any of its Subsidiaries is the
subject which, if determined adversely to the Company or any of its
Subsidiaries, would, individually or in the aggregate, have a Material Adverse
Effect; and, to my knowledge, no such proceedings are threatened or
contemplated.
5. Neither the Company nor any of its Subsidiaries is (i) in
violation of its respective charter or by-laws, and (ii) to my knowledge,
neither the Company nor any of its Subsidiaries is in default in the performance
of any obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and its Subsidiaries, taken as a whole, and to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or their respective property is bound.
6. To my knowledge, neither the Company nor any of the
Subsidiaries has violated any environmental law, any provisions of the Employee
Retirement Income Security Act of 1974, as amended, or any provisions of the
Foreign Corrupt Practices Act, or the rules and regulations promulgated
thereunder, except for such violations which could not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
7. To my knowledge, (i) each of the Company and the
Subsidiaries has such authorizations of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without limitation,
under any applicable environmental laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such authorization or to make any such filing or notice
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect, and (ii) each such authorization is valid and in full
force and effect and each of the Company and the Subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto,
and no event has occurred (including, without limitation, the receipt of any
notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such authorization,
except where such failure to be valid and in full force and effect or to be in
compliance would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect.
The phrase, "to my knowledge," or words of similar import, is
intended to indicate that no information has come to my attention which would
give me actual knowledge of the existence or absence of such facts or the
accuracy of the statements made. Except as otherwise expressly indicated, I have
not undertaken any independent investigation to determine the accuracy of such
statements except to discuss them with officers of the Company, and any limited
inquiry undertaken by me during the preparation of this opinion should not be
regarded as such an investigation.
I am qualified to practice law in the State of Tennessee. This
opinion does not express or purport to express any opinions with respect to laws
other than the laws of the State of Tennessee and the Federal laws of the United
States.
This opinion is given solely for your use in connection with
the Underwriting Agreement and may not be relied on by any other person or for
any other purpose. I do not undertake to advise you of any changes in my
opinions expressed herein resulting from matters that may hereafter arise or
that hereafter may be brought to my attention.
Very truly yours,
ANNEX II
Form of Lock-Up Agreement
[Date]
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
WACHOVIA SECURITIES, INC.
as Representatives of the several Underwriters
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: iPayment, Inc.
Ladies and Gentlemen:
In consideration of the agreement of the several Underwriters, for
which Bear, ▇▇▇▇▇▇▇ & Co. Inc. and Wachovia Securities, Inc. intends to act as
Representatives, to underwrite a proposed public offering (the "Offering") of
shares of common stock (the "Common Stock") of iPayment, Inc., a corporation
organized under the laws of the State of Delaware (the "Company"), as
contemplated by a registration statement to be filed with the Securities and
Exchange Commission on Form S-1, the undersigned hereby (i) agrees that the
undersigned will not, directly or indirectly, during a period of one hundred
eighty (180) days from the date of the final prospectus for the Offering (the
"Lock-Up Period"), without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co.
Inc., issue, sell, offer or agree to sell, grant any option for the sale of,
pledge, make any short sale or maintain any short position, establish or
maintain a "put equivalent position" (within the meaning of Rule 16-a-1(h) under
the Securities Exchange Act of 1934, as amended), enter into any swap,
derivative transaction or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Stock
(whether any such transaction is to be settled by delivery of Common Stock,
other securities, cash or other consideration) or otherwise dispose of, any
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock) or interest therein of the Company or of any of
its subsidiaries, and (ii) authorizes the Company during the Lock-Up Period to
cause the transfer agent to decline to transfer and/or to note stop transfer
restrictions on the transfer books and records of the Company with respect to
any shares of Common Stock and any securities convertible into exercisable or
exchangeable for Common Stock for which the undersigned is the record holder
and, in the case of any such share or securities for which the undersigned is
the beneficial but not the record holder, agrees to cause the record holder to
cause the transfer agent to decline to transfer and/or to note stop transfer
restrictions on such books and records with respect to such shares or
securities.
Any Common Stock acquired by the undersigned in the open market or
in any issuer directed share program will not be subject to this Agreement.
Notwithstanding the foregoing, the undersigned may (a) transfer Common Stock (or
securities convertible into or exercisable or exchangeable for any Common Stock)
to a family member or trust, or (b) make a
bona fide gift of Common Stock (or securities convertible into or exercisable or
exchangeable for any Common Stock), provided the transferee or donee, as the
case may be, agrees to be bound in writing by the terms of this Agreement.
The undersigned further agrees, from the date hereof until the end
of the Lock-up Period, that the undersigned will not exercise and will waive
his, her or its rights, if any, to require the Company to register its Common
Stock and to receive notice thereof.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary in connection with enforcement hereof. Any obligations of the
undersigned shall be binding upon the successors and assigns of the undersigned.
[signature page to follow]
ANNEX II 2
This Agreement shall terminate and be of no further force and effect
in the event the Company has not consummated a public offering of its Common
Stock as contemplated by this Agreement by June 30, 2003.
Very truly yours,
-----------------------
ANNEX II 3