EXHIBIT 1.1
_________ Shares
iTurf Inc.
Class A Common Stock
($.01 par value per share)
FORM OF UNDERWRITING AGREEMENT
_________ ,1999
BT ALEX. ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
As Representatives of the Several Underwriters
named in Schedule I hereto
c/o BT Alex. ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
iTurf Inc., a Delaware corporation (the "Company") and wholly-owned
subsidiary of ▇▇▇▇▇*s Inc., a Delaware corporation ("Parent"), proposes to sell
to the several underwriters named in Schedule I hereto (the "Underwriters" and
each individually an "Underwriter"), for whom you are acting as representatives
(in such capacity, the "Representatives"), an aggregate shares (the "Firm
Shares") of the Company's Class A Common Stock, $.01 par value per share (the
"Class A Common Stock"). The respective amounts of the Firm Shares to be so
purchased by the several Underwriters are set forth opposite their names in
Schedule I hereto. The Company also proposes to sell, at the Underwriters'
option, up to additional shares (the "Option Shares") of the Company's Class A
Common Stock as set forth below.
As the Representatives, you have advised the Company and Parent (a) that
you are authorized to enter into this Agreement on behalf of the several
Underwriters, and (b) that the several Underwriters are willing, acting
severally and not jointly, to purchase the numbers of Firm
Shares set forth opposite their respective names in Schedule I, plus their pro
rata portion of the Option Shares if you elect to exercise the over-allotment
option in whole or in part for the accounts of the several Underwriters. The
Firm Shares and the Option Shares (to the extent the aforementioned option is
exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT.
(a) The Company and Parent, severally and not jointly, represent and
warrant to each of the Underwriters as follows:
(i) A registration statement on Form S-1 (File No. 333-71123) with
respect to the Shares has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and
the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed
with the Commission. Such registration statement, as amended to the date
hereof, has become effective under the Act, and no post-effective amendment
to such registration statement has been filed as of the date of this
Agreement. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the
Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore
been delivered by the Company to you. The term "Registration Statement"
means such registration statement on the date it became effective, together
with any registration statement filed by the Company pursuant to Rule
462(b) under the Act, which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below. The term "Prospectus" means the form of
prospectus first filed with the Commission pursuant to Rule 424(b) and Rule
430A. Any reference herein to any Prospectus shall be deemed to include any
supplements or amendments thereto filed with the Commission after the date
of filing of the Prospectus under Rule 424(b) and Rule 430A and prior to
the termination of the offering of the Shares by the Underwriters. The term
"Preliminary Prospectus" means each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective.
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. The subsidiaries
of the Company listed in Exhibit 21.1 to the Registration Statement
(collectively, the "Subsidiaries") have been duly organized, and each is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in the
Registration Statement. The Subsidiaries are the
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only subsidiaries, direct or indirect, of the Company. The Company and the
Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of their business requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the earnings, business, properties, assets, operations, financial
condition or prospects of the Company and its subsidiaries taken as a
whole. The outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable and
are owned by the Company free and clear of all liens, encumbrances and
equities and claims, except for the lien held by First Union Bank which
shall be released on the Closing Date. No options, warrants or other rights
to purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests
in any Subsidiary are outstanding.
(iii) The outstanding shares of Class B Common Stock, $.01 par value
per share (the "Class B Common Stock," and, collectively with the Class A
Common Stock, the "Common Stock"), of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and owned by
Parent. No shares of Class A Common Stock have been issued prior to the
date hereof. The Shares to be issued and sold by the Company have been duly
authorized and, when issued and paid for as contemplated herein, will be
validly issued, fully paid and non-assessable. No preemptive rights of
stockholders exist with respect to any of the Shares or the issue and sale
thereof. Except as provided in the Material Agreements (as defined),
neither the filing of the Registration Statement nor the offering or sale
of the Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating to
the registration of any shares of Common Stock.
(iv) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct in all material respects. The Company's
Common Stock conforms in all material respects to the description thereof
contained in the Registration Statement. The form of certificate for the
Shares conforms to the corporate law of the jurisdiction of the Company's
incorporation. Except as described in the Prospectus, there are no
outstanding securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital
stock of the Company and there are no outstanding or authorized options,
warrants or rights of any character obligating the Company to issue any
shares of its capital stock or any securities convertible or exchangeable
into or evidencing the right to purchase or subscribe for any shares of
such stock. Except as described in the Prospectus, no holder of any
securities of the Company or any other person has the right, contractual or
otherwise, which has not been satisfied or effectively waived, to cause the
Company to sell or otherwise issue to them, or permit them to underwrite
the sale of, any of the Shares or the right to have any shares of Common
Stock or other securities of the Company included in the Registration
Statement or the right, as a result of the filing of the Registration
Statement, to require registration under the Act of any shares of Common
Stock or other securities of the Company.
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(v) None of Parent, the Company nor any Subsidiary is, nor with the
giving of notice or lapse of time or both will be, in violation of its
Certificate of Incorporation or Bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound and which default is of material significance in
respect of the earnings, business, management, properties, assets, rights,
operations, financial condition or prospects of the Company and its
Subsidiaries taken as a whole. The execution, delivery and performance of
this Agreement and the Material Agreements by the Parent and Company and
the consummation by Parent and the Company of the transactions contemplated
hereby and thereby (A) have been duly authorized by all requisite corporate
and stockholder action, (B) will not violate the Certificate of
Incorporation or Bylaws of Parent, the Company or any Subsidiary or
conflict with or result in a default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which Parent, the Company or any Subsidiary is a
party or by which they or any of their respective properties may be bound
and (C) will not result in a breach of any law, order, rule or regulation
applicable to Parent, the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction, or result in the creation or imposition of a material lien or
encumbrance of any kind on any of the properties of Parent, the Company or
any Subsidiary.
(vi) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares
nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein, and will
conform, to the requirements of the Act and the Rules and Regulations. The
Registration Statement and any amendment thereto do not contain, and will
not contain, any untrue statement of a material fact and do not omit, and
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus and
any amendment and supplement thereto at the time the Prospectus or any such
amendment or supplement was issued does not contain, and will not contain,
any untrue statement of material fact and do not omit, and will not omit,
to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes
no representations or warranties as to information contained in or omitted
from the Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives, specifically for use in the preparation thereof.
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(vii) The consolidated financial statements of the Company and its
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly in all material respects the
financial position and the results of operations and cash flows of the
Company and the consolidated Subsidiaries, at and as of the indicated dates
and for the indicated periods. Such financial statements and related
schedules have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods
presented, except as disclosed therein, and all adjustments necessary for a
fair presentation of results for such periods have been made. The summary
financial data included in the Registration Statement present fairly in all
material respects the information shown therein, and such data have been
compiled, as applicable, on a basis consistent with the financial
statements presented therein and the books and records of the Company. The
pro forma information labeled "as adjusted" that is included in the
Registration Statement and the Prospectus present fairly the information
shown therein, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company and Parent, the assumptions
used in the preparation thereof are reasonable, and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(viii) Ernst & Young, LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement,
are independent public accountants as required by the Act and the Rules and
Regulations.
(ix) There is no action, suit, claim or proceeding pending or, to the
knowledge of Parent or the Company, threatened against Parent or the
Company or any Subsidiary before any court or administrative agency or
otherwise which if determined adversely to Parent or the Company or such
Subsidiary could reasonably be expected to be of material significance to
the earnings, business, management, properties, assets, rights, operations,
financial condition or prospects of the Company and the Subsidiaries taken
as a whole or prevent the consummation of the transactions contemplated
hereby, except as set forth in the Registration Statement.
(x) The Company and its Subsidiaries have good and marketable title
to all of their respective properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except for the lien of First Union Bank which shall be released on
the Closing Date those reflected in such financial statements, (or as
described in the Registration Statement), customary restrictions that are
contained in the Company's personal property leases and software license
agreements or which are not material in amount. The Company and its
Subsidiaries occupy their respective leased properties under valid and
binding leases conforming in all material respects to the descriptions
thereof set forth in the Registration Statement. Parent has transferred to
the Company and its Subsidiaries good and marketable title to all the
assets and properties of Parent that are used primarily for the provision
of Internet community and e-commerce services.
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(xi) Parent, the Company and its Subsidiaries have filed all material
Federal, state, local and foreign tax returns which have been required to
be filed and have paid all taxes indicated by said returns and all
assessments received by them or any of them to the extent that such taxes
have become due. All tax liabilities have been adequately provided for in
the financial statements of the Company, and neither Parent nor the Company
knows of any actual or proposed additional material tax assessments.
(xii) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, as each may be amended or
supplemented, except as otherwise stated therein, there has not been any
material adverse change in, or any development relating specifically to the
Company and its Subsidiaries taken as a whole involving a prospective
material adverse change in, or affecting the earnings, business,
management, properties, assets, rights, operations, financial condition or
prospects of the Company and its Subsidiaries taken as a whole, whether or
not occurring in the ordinary course of business, and there has not been
any material transaction entered into or any material transaction that is
probable of being entered into by the Company or its Subsidiaries, other
than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be amended
or supplemented. The Company and its Subsidiaries have no material
contingent obligations that are not disclosed in the Company's financial
statements, which are included in the Registration Statement.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required by the
Commission, The National Association of Securities Dealers, Inc. (the
"NASD") or such additional steps as may be necessary to qualify the Shares
for public offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(xiv) The Company and its Subsidiaries each hold all material
licenses, certificates and permits from governmental authorities which are
necessary to the conduct of their respective businesses now operated by
them, and neither the Company nor any Subsidiary has infringed any patents,
patent rights, trade names, trademarks or copyrights, which infringement is
material to the business of the Company and its Subsidiaries taken as a
whole. Neither Parent nor the Company knows of any material infringement by
others of patents, patent rights, trade names, trademarks or copyrights
owned by or licensed to the Company.
(xv) Neither Parent, the Company, nor to Parent's or the Company's
knowledge, any of their respective affiliates, has taken or may take,
directly or indirectly, any action designed to cause or result in, or which
has constituted or which might reasonably be
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expected to constitute, the stabilization or manipulation of the price of
any securities of the Company or Parent to facilitate the sale or resale of
the Shares.
(xvi) Neither the Company nor any Subsidiary is, and upon the issuance
and sale of the Shares as herein contemplated and the application of the
proceeds therefrom as described in the Prospectus will not be, an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations of the Commission thereunder.
(xvii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared
with existing assets at reasonable intervals, and appropriate action is
taken with respect to any differences.
(xviii) The Company and its Subsidiaries each carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses as such businesses are currently
conducted and the value of their respective properties and as is customary
for companies in similar industries.
(xix) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"). No "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability. The Company has not
incurred and does not expect to incur liability under (A) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"). Each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified, and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(xx) To the Company's and Parent's knowledge, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater securityholders, except as
set forth in the Registration Statement.
(xxi) The Restated Certificate of Incorporation of the Company in the
form filed as Exhibit 3.3 to the Registration Statement has been duly
authorized and duly filed with
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the Secretary of State of the State of Delaware and has not been amended
since the date of such filing. The Bylaws of the Company in the form filed
as Exhibit 3.4 to the Registration Statement have been duly adopted as and
for the bylaws of the Company and have not been amended since the date of
such adoption.
(xxii) Annexed hereto as Schedule 1(a)(xxii) is a list setting forth
certain contracts and agreements (collectively, the "Material Agreements")
(A) between the Company and Parent and (B) between the Company and certain
of its executive officers. True and complete copies of all the Material
Agreements or forms thereof have been provided to the Representatives and
their counsel. There does not exist under any such Material Agreement any
existing default or event of default or event which with notice or lapse of
time or both would constitute such a default and to the knowledge of the
Parent and the Company, there is no claim that any Material Agreement
referred to in said Schedule is not valid and enforceable in accordance
with its terms for the periods stated therein; provided, however, that the
Company makes no representation as to the enforceability of non-competition
provisions contained in the Material Agreements.
(xxiii) The shares of common stock, $.01 par value ("Parent Company
Stock"), to be issued and sold to the Company pursuant to the Subscription
Agreement dated as of the date hereof (the "Subscription Agreement")
between Parent and the Company have been duly authorized and, when issued
and paid for as contemplated therein, will be validly issued, fully paid
and non-assessable.
(xxiv) The Web sites at the URLs listed in Schedule 1(a)(xxiv)
(collectively, the "Sites"), which, in each case, are owned by the Company
or owned by Parent and licensed by the Company, and the features and
functionality of such Sites (individually and in relation to one another)
conform in all material respects to the description thereof contained in
the Prospectus.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase, at a price of $ per share, the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made by wire
transfer to the Company of immediately available funds to a bank account or bank
accounts designated by the Company against delivery of certificates therefor to
the Representatives for the several accounts of the Underwriters. Such payment
and delivery are to be made through the facilities of the Depository Trust
Company, New York, New York at 10:00 a.m., New York time, on the third business
day after the date of this Agreement or at such other time and date not later
than five
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business days thereafter as you and the Company shall agree upon, such time and
date being herein referred to as the "Closing Date." (As used herein, "business
day" means a day on which the New York Stock Exchange is open for trading and on
which banks in New York are open for business and are not permitted by law or
executive order to be closed.) The certificates for the Firm Shares will be
delivered in such denominations and in such registrations as the Representatives
request in writing not later than the second full business day prior to the
Closing Date, and will be made available for inspection by the Representatives
at least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase the Option
Shares at the price per share set forth in the first paragraph of this Section
2. The option granted hereby may be exercised in whole or in part by giving
written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to be delivered.
The time and date at which certificates for Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than three
nor later than ten full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred to
as the "Option Closing Date"). If the date of exercise of the option is three or
more days before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be purchased by
each Underwriter shall be in the same proportion to the total number of Option
Shares being purchased as the number of Firm Shares being purchased by such
Underwriter bears to the total number of Firm Shares, adjusted by you in such
manner as to avoid fractional shares. The option with respect to the Option
Shares granted hereunder may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters. You, as Representatives of the
several Underwriters, may cancel such option at any time prior to its expiration
by giving written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date by wire transfer to the Company of immediately
available funds to the bank account or bank accounts designated by the Company
for the Option Shares to be sold by it, against delivery of certificates
therefor to the Representatives for the several accounts of the Underwriters.
Such payment and delivery are to be made through the facilities of the
Depository Trust Company, New York, New York, on the Option Closing Date.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other
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selling terms. To the extent, if at all, that any Option Shares are purchased
pursuant to Section 2 hereof, the Underwriters will offer them to the public on
the foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a Master
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY AND PARENT.
(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company will (A) use its reasonable best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule
430A of the Rules and Regulations is followed, to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a
Prospectus in a form approved by the Representatives containing information
previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations, and (B)
not file any amendment to the Registration Statement or supplement to the
Prospectus of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives shall
have reasonably objected in writing or which is not in compliance with the
Rules and Regulations.
(ii) The Company will advise the Representatives promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of
the Prospectus or of the institution of any proceedings for that purpose.
The Company will use its reasonable best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the Prospectus and
to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish
such information as may be reasonably required for that purpose, provided
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction where it
is not now so qualified or required to file such a consent. The Company
will, from time to time, prepare and file such statements, reports and
other documents as are or may be required to continue such qualifications
in effect for so long a period as the Representatives may reasonably
request for distribution of the Shares.
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(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period
when delivery of a prospectus is required under the Act, as many copies of
the Prospectus in final form, or as thereafter amended or supplemented, as
the Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto, including all exhibits
filed therewith, and will deliver to the Representatives such number of
copies of the Registration Statement (including such number of copies of
the exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the
Representatives, it becomes necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and
file with the Commission an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so
amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with
the law.
(vi) The Company will make generally available to its securityholders,
as soon as it is practicable to do so, but in any event not later than 15
months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a
period of at least twelve consecutive months beginning not later than the
first day of the fiscal quarter next following the effective date of the
Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so
made available.
(vii) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim quarterly financial statements of
the Company for any period ending subsequent to the period covered by the
most recent financial statements appearing in the Registration Statement
and the Prospectus.
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(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company (other than the Shares) or other
securities convertible into or exchangeable or exercisable for shares of
Common Stock or derivative of Common Stock (or agreement for such) will be
made for a period of 180 days after the date of this Agreement, directly or
indirectly, by the Company otherwise than hereunder or with the prior
written consent of BT Alex. ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.
The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and referred to in the Prospectus, (C) any
shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in
the Prospectus or (D) any shares of Common Stock issued pursuant to any
non-employee director stock plan or dividend reinvestment plan and (E) any
shares of Common Stock issued in connection with an acquisition, a merger,
a consolidation or sale of assets or in connection with a strategic
investment, partnership or joint venture, provided that the holders of such
shares so issued enter into Lockup Agreements (as hereinafter defined) that
restrict the sale or other disposition of such shares for a period of 180
days from the date of the Prospectus.
(ix) The Company will use its reasonable best efforts to cause the
Shares to be listed, subject to notice of issuance, on The Nasdaq National
Market.
(x) The Company has caused each beneficial owner of the Company's
Common Stock listed on Schedule 4(a)(x) hereto to furnish to you, on or
prior to the date of this agreement, a letter or letters, in form and
substance satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose of
any shares of Common Stock of the Company or other capital stock of the
Company, or any other securities convertible, exchangeable or exercisable
for shares of Common Stock or derivative of Common Stock owned by such
person or request the registration for the offer or sale of any of the
foregoing (or as to which such person has the right to direct the
disposition of) for a period of 180 days after the date of this Agreement,
directly or indirectly except with the prior written consent of BT Alex.
▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC (collectively, the "Lockup
Agreements").
(xi) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Shares and the application of
the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(xii) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock as long as it is a reporting company under the Exchange Act.
12
(xiii) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the price
of any securities of the Company during the period prohibited by the Act
and the Rules and Regulations.
(b) Parent covenants and agrees with the several Underwriters that:
(i) No offering, sale, short sale or other disposition of any shares
of Common Stock of the Company or other capital stock of the Company or
other securities convertible, exchangeable or exercisable for shares of
Common Stock or derivative of shares of Common Stock owned by Parent or
request for the registration for the offer or sale of any of the foregoing
(or as to which Parent has the right to direct the disposition) will be
made for a period of 180 days after the date of this Agreement, directly or
indirectly, by Parent otherwise than hereunder or with the prior written
consent of BT Alex. ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC. The
foregoing sentence shall not apply to (A) the Shares to be sold hereunder,
(B) any shares of Common Stock issued by the Company upon the exercise of
an option or warrant or the conversion of a security outstanding on the
date hereof and referred to in the Prospectus, (C) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant to
existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued pursuant to any
non-employee director stock plan or dividend reinvestment plan and (E) any
shares of Common Stock issued in connection with an acquisition, a merger,
a consolidation or sale of assets or in connection with a strategic
investment, partnership or joint venture, provided that the holders of such
shares so issued enter into Lockup Agreements (as hereinafter defined) that
restrict the sale or other disposition of such shares for a period of 180
days from the date of the Prospectus.
(ii) Parent will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any securities of the Company during the period prohibited by the Act and
the Rules and Regulations.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company and Parent under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, this Agreement, the Listing Application, the Blue Sky Survey and any
supplements or amendments thereto; the filing fees of the Commission; the filing
fees and expenses (including legal fees and disbursements) incident to securing
any required review by the NASD of the terms of the sale of the Shares, the
Listing Fee of The Nasdaq Stock Market, and the expenses,
13
including the fees and disbursements of counsel for the Underwriters, incurred
in connection with the qualification of the Shares under State securities or
Blue Sky laws and the qualification of the terms of the sale of the Shares under
NASD regulation. The Company shall not, however, be required to pay for any of
the Underwriters' expenses (other than those related to qualification under NASD
regulation and State securities or Blue Sky laws), except that, if this
Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the
Representatives pursuant to Section 11 hereof, or by reason of any failure,
refusal or inability on the part of the Company or Parent to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on their part to be performed, unless such failure to satisfy
said condition or to comply with said terms is due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations hereunder;
but the Company and Parent shall not in any event be liable to any of the
several Underwriters for damages on account of loss of anticipated profits from
the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase the Firm Shares on
the Closing Date and the Option Shares, if any, on the Option Closing Date are
subject to the accuracy, as of the Closing Date or the Option Closing Date, as
the case may be, of the representations and warranties of the Company and Parent
contained herein, and to the performance by the Company and Parent of their
respective covenants and obligations hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective, and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any request of
the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued, and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or Parent, shall be contemplated by the
Commission, and no injunction, restraining order, or order of any nature by a
Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date and the
Option Closing Date, the opinion of Proskauer Rose LLP ("Proskauer Rose"),
counsel for the Company and Parent, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Underwriters (and stating that it may
be relied upon by counsel to the Underwriters) to the effect set forth in
Exhibit A hereto. In rendering such opinion, Proskauer Rose may rely as to
matters governed by the laws of states other than Delaware or Federal laws on
local counsel in such
14
jurisdictions, provided that in each case Proskauer Rose shall state that they
believe that they and the Underwriters are justified in relying on such other
counsel. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement, as of
the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, as the case may be, 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) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact, necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to such
statement, Proskauer Rose may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(c) The Representatives shall have received from Reboul, MacMurray,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol ("Reboul ▇▇▇▇▇▇▇▇▇"), counsel for the Underwriters, an
opinion dated the Closing Date and the Option Closing Date, to the effect set
forth in Exhibit B hereto. In rendering such opinion, Reboul ▇▇▇▇▇▇▇▇▇ may rely
as to all matters governed other than by the laws of the state of Delaware or
Federal laws on the opinion of counsel referred to in paragraph (b) of this
Section 6. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement, as of
the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, as the case may be, 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) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact, necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to such
statement, Reboul ▇▇▇▇▇▇▇▇▇ may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(d) The Representatives shall have received at or prior to the Closing
Date from Reboul ▇▇▇▇▇▇▇▇▇ a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
or Blue Sky laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
15
(e) The Representatives shall have received from Ernst & Young LLP (i) on
each of the date hereof, the Closing Date and the Option Closing Date, as the
case may be, a letter dated the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance satisfactory to you, of
Ernst & Young, LLP confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Registration Statement comply in
form in all material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations; and containing such other
statements and information as are ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration Statement
and Prospectus and (ii) an opinion dated the Closing Date to the effect set
forth in Exhibit C hereto.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
President and Chief Executive Officer and the Chief Financial Officer of the
Company and a certificate of Parent to the effect that, as of the Closing Date
or the Option Closing Date, as the case may be, each of them severally
represents as follows:
(i) In the case of the Company's Officers Certificate only, the
Registration Statement has become effective under the Act, and, to the best
knowledge of such officers, after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for such purpose have been taken or are, to his, her or its
knowledge, contemplated by the Commission.
(ii) The representations and warranties of the Company or Parent, as
applicable, contained in Section 1 hereof are true and correct as of the
Closing Date or the Option Closing Date, as the case may be.
(iii) In the case of the Company's Officers Certificate only, all
filings required to have been made pursuant to Rules 424 or 430A under the
Act have been made.
(iv) He, she or it has carefully examined the Registration
Statement and the Prospectus and, in his, her or its opinion, as of the
effective date of the Registration Statement, the statements contained in
the Registration Statement were true and correct in all material respects,
and such Registration Statement and Prospectus did not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set
forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such a supplement or amendment.
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been any material
adverse change or any
16
development involving a prospective material adverse change in or affecting
the condition, financial or otherwise, of the Company and its Subsidiaries
taken as a whole, or the earnings, business, management, properties,
assets, rights, operations, financial condition or prospects of the Company
and its Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business.
(g) The Company and Parent shall have furnished to the Representatives
such further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on The Nasdaq Stock Market.
(i) The Lock-up Agreements described in Section 4(a)(x) are in full force
and effect.
(j) The transactions contemplated by the Subscription Agreement and the
▇▇▇▇▇▇▇▇▇.▇▇▇ Asset Transfer Agreement described in the Prospectus shall have
been consummated simultaneously with the closing transactions contemplated
hereby, to the satisfaction of the Representatives and Reboul ▇▇▇▇▇▇▇▇▇.
(k) Each of the Material Agreements shall have been executed and delivered
by Parent and the Company.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Reboul ▇▇▇▇▇▇▇▇▇, counsel
for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be. In such event, the Company, Parent and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the Shares required to
be delivered as and when specified in this Agreement are subject to the
conditions that at the Closing Date or the Option Closing Date, as the case may
be, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and in effect or proceedings therefor initiated or
threatened.
17
8. INDEMNIFICATION.
(a) The Company and Parent, jointly and severally, agree: (i) to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act, against any losses,
claims, damages or liabilities ("Damages"), to which such Underwriter or any
such controlling person may become subject under the Act or otherwise, insofar
as such Damages (or actions or proceedings in respect thereof) arise out of or
are based upon (A) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (B) 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 the
light of the circumstances under which they were made; provided, however, that
neither the Company nor Parent will be liable in any such case to the extent
that any such Damages arise out of or are based upon an untrue statement or
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof; and (ii) to reimburse each
Underwriter and each such controlling person upon demand for any legal or other
out-of-pocket expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such
Damages, action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such Underwriter
or controlling person is a party to any action or proceeding; provided, however,
in the event that it is finally judicially determined that the Underwriters were
not entitled to receive payments for legal and other expenses pursuant to this
subparagraph, the Underwriters will promptly return all sums that had been
advanced pursuant hereto. The indemnity agreement will be in addition to any
liability which the Company or Parent may otherwise have. The liability of
Parent for indemnification pursuant to this Section 8(a) shall not exceed the
proceeds received by Parent pursuant to the Subscription Agreement, unless any
such Damages (or actions or proceedings in respect thereof) to which such
Underwriter or any such controlling person may become subject arise out of or
are based upon (A) information pertaining to Parent furnished by or on behalf of
the Company or Parent expressly for use in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
(B) facts that would constitute a breach of any representation or warranty of
Parent as to itself set forth in Section 1(a)(v), (ix), (x), (xi), (xiv), (xv),
(xx), (xxii), (xxiii) and (xxiv) hereof, or (C) any act or failure to act by
Parent, or unless and to the extent that indemnification from the Company is
unavailable due to any act by Parent.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each person named in the Prospectus
as about to become a director, each of its officers who have signed the
Registration Statement, Parent, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company, Parent or any such director, person, officer,
or controlling person may become subject under the Act or otherwise, insofar as
such losses, claims,
18
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company, Parent or any such
director, person, officer or controlling person in connection with investigating
or defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that each Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against an indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
reasonable fees and expenses of the counsel retained by the indemnified party in
the event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel, (ii) the named parties to any
such proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them or (iii) the indemnifying party shall have failed to assume the
defense and employ counsel acceptable to the indemnified party within a
reasonable period of time after notice of commencement of the action. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in
19
writing by you in the case of parties indemnified pursuant to Section 8(a) and
by the Company and Parent in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, the indemnifying party will
not, without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and Parent on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company and Parent on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company and Parent on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and Parent
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault 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 Parent on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, Parent and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) 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 this Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 8(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
20
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and Parent set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company or Parent), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and upon
the terms set forth herein, the Firm Shares or Option Shares, as the case may
be, which the defaulting Underwriter or Underwriters failed to purchase. If
during such 36 hours you, as such Representatives, shall not have procured such
other Underwriters, or any others, to purchase the Firm Shares or Option Shares,
as the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the
21
respective numbers of Firm Shares or Option Shares, as the case may be, which
they are obligated to purchase hereunder, to purchase the Firm Shares or Option
Shares, as the case may be, which such defaulting Underwriter or Underwriters
failed to purchase, or (b) if the aggregate number of shares of Firm Shares or
Option Shares, as the case may be, with respect to which such default shall
occur exceeds 10% of the Firm Shares or Option Shares, as the case may be,
covered hereby, the Company and Parent or you as the Representatives of the
Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company or of Parent except to the extent provided in Section 8 hereof. In the
event of a default by any Underwriter or Underwriters, as set forth in this
Section 9, the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as Representatives,
may determine in order that the required changes in the Registration Statement
or in the Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows: if to the Underwriters, to BT Alex. ▇▇▇▇▇ Incorporated,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, with
copies to BT Alex. ▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel, and Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
Kristol, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇; if to the Company or Parent, to iTurf Inc. or ▇▇▇▇▇*s Inc.,
respectively, at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇, with a copy to Proskauer Rose LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇.
▇▇. TERMINATION.
(a) This Agreement may be terminated by you as follows by notice to the
Company at any time prior to the Closing Date if any of the following has
occurred: (A) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, (B) any outbreak or escalation of hostilities or declaration of war or
national emergency or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, (C) suspension of trading in securities generally on
22
the New York Stock Exchange or The Nasdaq Stock Market or limitation on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such Exchange, (D) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or other
governmental authority which in your reasonable opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company, (E) declaration of a banking moratorium by United States or New York
State authorities, (F) the suspension of trading of the Company's Class A Common
Stock by The Nasdaq National Market, the Commission, or any other governmental
authority, or (G) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page (insofar as
such information relates to the Underwriters), legends required by Item 502(d)
of Regulation S-K under the Act and the information under the caption
"Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
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This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
24
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us he enclosed duplicates hereof, whereupon
it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
iTurf Inc.
By
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Executive Officer
▇▇▇▇▇*s Inc.
By
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
As Representatives of the several
Underwriters listed on Schedule I
By BT Alex. ▇▇▇▇▇ Incorporated
By
------------------------------------
Authorized Officer
By ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
By:
------------------------------------
Authorized Officer
SCHEDULE I
UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
BT Alex. ▇▇▇▇▇ Incorporated...........................
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.................................
▇.▇. ▇▇▇▇▇▇ Securities Inc............................
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.................................
-----------------
Total........................................
=================
Schedule 1(a)(xxii)
Material Agreements
(A) Intercompany Agreements
Intercompany Services Agreement
Trademark License and Customer List Agreement
Intercompany Indemnification Agreement
Tax Sharing Agreement
iTurf Common Stock Registration Rights Agreement
▇▇▇▇▇*s Common Stock Registration Rights Agreement
Customer Service Agreement
Letter Agreement relating to a sale of a controlling interest in the
Company by Parent
(B) Employment Agreements
Employment Agreement between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Employment Agreement between the Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Employment Agreement between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇
Employment Agreement between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Schedule 1(a)(xxiv)
Sites
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