EXHIBIT 1.1
Draft of 9/01/98
5,000,000 Shares(1)
VALUE AMERICA, INC.
Common Stock
UNDERWRITING AGREEMENT
, 1998
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, LLC
As Representatives of the several Underwriters
c/o BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Value America, Inc., a Virginia corporation (the "Company"), and ▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ (together the "Selling Stockholders") address you as the
Representatives of each of the persons, firms and corporations listed in
Schedule A hereto (herein collectively called the "Underwriters") and hereby
confirm their respective agreements with the several Underwriters as follows:
1. Description of Shares. The Company proposes to issue and sell
5,000,000 shares of its authorized and unissued common stock, without par value,
to the several Underwriters (the "Firm Shares"). The Company and the Selling
Stockholders propose to grant, severally and not jointly, to the Underwriters an
option to purchase up to 750,000 additional shares of the Company's common
stock, without par value (the "Option Shares"), as provided in Section 7 hereof.
As used in this Agreement, the term "Shares" shall refer collectively to the
Firm Shares and the Option Shares. All shares of the Company's common stock,
without par value, to be outstanding after giving effect to the sales
contemplated hereby, including the Shares, are hereinafter referred to as
"Common Stock."
2. Representations, Warranties and Agreements of the Company and
the Selling Stockholders.
I. The Company represents and warrants to and agrees with
each Underwriter that:
(a) A registration statement on Form S-1 (File No.
333-58469) with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and
the applicable rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Act and
has been filed with the Commission; such amendments to such registration
statement, such amended prospectuses subject to completion and such
abbreviated registration statements pursuant to Rule 462(b) of the Rules
and Regulations as may have been required prior to the date hereof have
been similarly prepared and filed with the Commission; and the Company
will file such additional amendments to such registration statement, such
amended prospectuses subject to completion and such abbreviated
registration statements as may hereafter be required. Copies of such
registration statement and amendments, of each related prospectus subject
to completion (the "Preliminary Prospectuses") and of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and
Regulations have been delivered to you.
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1 Plus an option to purchase up to 750,000 additional shares from the Company
and certain stockholders of the Company to cover over-allotments.
If the registration statement relating to the
Shares has been declared effective under the Act by the Commission, the
Company will prepare and promptly file with the Commission the
information omitted from the registration statement pursuant to Rule
430A(a) or, if BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., on behalf of the
several Underwriters, shall agree to the utilization of Rule 434 of the
Rules and Regulations, the information required to be included in any
term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the
Rules and Regulations pursuant to subparagraph (1), (4) or (7) of Rule
424(b) of the Rules and Regulations or as part of a post-effective
amendment to the registration statement (including a final form of
prospectus). If the registration statement relating to the Shares has not
been declared effective under the Act by the Commission, the Company will
prepare and promptly file an amendment to the registration statement,
including a final form of prospectus, or, if BancBoston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc., on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information
required to be included in any term sheet filed pursuant to Rule 434(b)
or (c), as applicable, of the Rules and Regulations. The term
"Registration Statement" as used in this Agreement shall mean such
registration statement, including financial statements, schedules and
exhibits, in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the
registration statement pursuant to Rule 430A(a) or files a term sheet
pursuant to Rule 434 of the Rules and Regulations, the information deemed
to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) or Rule 434(d) of the Rules and
Regulations) and, in the event of any amendment thereto or the filing of
any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations relating thereto after the effective date of such
registration statement, shall also mean (from and after the effectiveness
of such amendment or the filing of such abbreviated registration
statement) such registration statement as so amended, together with any
such abbreviated registration statement. The term "Prospectus" as used in
this Agreement shall mean the prospectus relating to the Shares as
included in such Registration Statement at the time it becomes effective
(including, if the Company omitted information from the Registration
Statement pursuant to Rule 430A(a) of the Rules and Regulations, the
information deemed to be a part of the Registration Statement at the time
it became effective pursuant to Rule 430A(b) of the Rules and
Regulations); provided, however, that if in reliance on Rule 434 of the
Rules and Regulations and with the consent of BancBoston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc., on behalf of the several Underwriters, the Company shall
have provided to the Underwriters a term sheet pursuant to Rule 434(b) or
(c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the term "Prospectus"
shall mean the "prospectus subject to completion" (as defined in Rule
434(g) of the Rules and Regulations) last provided to the Underwriters by
the Company and circulated by the Underwriters to all prospective
purchasers of the Shares (including the information deemed to be a part
of the Registration Statement at the time it became effective pursuant to
Rule 434(d) of the Rules and Regulations). Notwithstanding the foregoing,
if any revised prospectus shall be provided to the Underwriters by the
Company for use in connection with the offering of the Shares that
differs from the prospectus referred to in the immediately preceding
sentence (whether or not such revised prospectus is required to be filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the
Underwriters for such use. If in reliance on Rule 434 of the Rules and
Regulations and with the consent of BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.,
on behalf of the several Underwriters, the Company shall have provided to
the Underwriters a term sheet pursuant to Rule 434(b) or (c), as
applicable, prior to the time that a confirmation is sent or given for
purposes of Section 2(10)(a) of the Act, the Prospectus and the term
sheet, together, will not be materially different from the prospectus in
the Registration Statement.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or
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instituted proceedings for that purpose, and each such Preliminary
Prospectus has conformed in all material respects to the requirements of
the Act and the Rules and Regulations and, as of its date, has not
included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the
time the Registration Statement became or becomes, as the case may be,
effective and at all times subsequent thereto up to and on the Closing
Date (hereinafter defined) and on any later date on which Option Shares
are to be purchased, (i) the Registration Statement and the Prospectus,
and any amendments or supplements thereto, contained and will contain all
material information required to be included therein by the Act and the
Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, (ii) the
Registration Statement, and any amendments or supplements thereto, did
not and will not include any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (iii) the Prospectus, and
any amendments or supplements thereto, did not and will not include any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties contained in
this subparagraph (b) shall apply to information contained in or omitted
from the Registration Statement or Prospectus, or any amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter specifically for use in the preparation thereof.
(c) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, with full power and authority (corporate and
other) to own, lease and operate its properties and conduct its business
as described in the Prospectus; the Company is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a
material adverse effect on its condition (financial or otherwise),
earnings, operations, business or business prospects; no proceeding has
been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification; the Company is in possession of and operating
in compliance with all authorizations, licenses, certificates, consents,
orders and permits from state, federal and other regulatory authorities
that are material to the conduct of its business, all of which are valid
and in full force and effect; the Company is not in violation of its
articles of incorporation or bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness,
or in any material lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which
the Company is a party or by which it or its properties may be bound; and
Company is not in violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company
or its properties of which it has knowledge, except for violations that,
in the aggregate, would not have a material adverse effect on the
Company's condition (financial or otherwise), earnings, operations,
business or business prospects. The Company does not own or control,
directly or indirectly, any corporation, association or other entity.
(d) The Company has full legal right, power and
authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement on the
part of the Company, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law and
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except as the enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles; the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default
under, (i) any bond, debenture, note or other evidence of indebtedness,
or under any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the
Company is a party or by which it or its properties may be bound, (ii)
the articles of incorporation or bylaws of the Company, or (iii) any law,
order, rule, regulation, writ, injunction, judgment or decree of any
court, government or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or its properties. No consent,
approval, authorization or order of or qualification with any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its properties is required for the
execution and delivery of this Agreement and the consummation by the
Company of the transactions herein contemplated, except such as may be
required under the Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or under state or other securities or Blue Sky
laws, all of which requirements have been satisfied in all material
respects.
(e) There is not any pending or, to the best of the
Company's knowledge, threatened action, suit, claim or proceeding against
the Company or any of its officers, properties, assets or rights before
any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or its officers, properties
or otherwise that (i) might result in any material adverse change in the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company or might materially and adversely
affect their properties, assets or rights, (ii) might prevent
consummation of the transactions contemplated hereby or (iii) is required
to be disclosed in the Registration Statement or Prospectus and is not so
disclosed; and there are no agreements, contracts, leases or documents of
the Company of a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement by the Act or the Rules and Regulations that have
not been accurately described in all material respects in the
Registration Statement or Prospectus or filed as exhibits to the
Registration Statement.
(f) All outstanding shares of capital stock of the
Company (including the Option Shares to be sold by the Selling
Stockholders) have been duly authorized and validly issued and are fully
paid and nonassessable, have been issued in compliance with all federal
and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
securities, and the authorized and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the
Prospectus (and such statements correctly state in all material respects
the substance of the instruments defining the capitalization of the
Company); the Firm Shares and the Option Shares to be sold by the Company
hereunder have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by
the Company against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued and fully paid and
nonassessable, and will be sold free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest; and no
preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to any
of the Firm Shares or Option Shares to be sold by the Company hereunder
or the issuance and sale thereof other than those that have been
expressly waived prior to the date hereof and those that will
automatically expire upon and will not apply to the consummation of the
transactions contemplated on the Closing Date. No further approval or
authorization of any stockholder, the Board of Directors of the Company
or others is required for the issuance and sale or transfer of the Shares
except as may be required under the Act, the Exchange Act or under state
or other securities or Blue Sky laws. Except as disclosed in the
Prospectus and the financial statements of the Company, and the related
notes thereto, included in the Prospectus, the Company does not have any
outstanding options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
4
shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents in all material respects the
information required to be shown with respect to such plans,
arrangements, options and rights.
(g) PricewaterhouseCoopers LLP, which has examined
the financial statements of the Company, together with the related
schedules and notes, as of December 31, 1996 and 1997 and June 30, 1998
and for the period from March 13, 1996 (inception) through December 31,
1996, the year ended December 31, 1997 and the six months ended June 30,
1998, filed with the Commission as a part of the Registration Statement,
which are included in the Prospectus, are independent accountants within
the meaning of the Act and the Rules and Regulations; the audited
financial statements of the Company, together with the related schedules
and notes, forming part of the Registration Statement and Prospectus,
fairly present the financial position and the results of operations of
the Company at the respective dates and for the respective periods to
which they apply; and all audited financial statements of the Company,
together with the related schedules and notes, filed with the Commission
as part of the Registration Statement, have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved except as may be otherwise stated
therein. The selected and summary financial and statistical data included
in the Registration Statement present fairly the information shown
therein and have been compiled on a basis consistent with the audited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there
has not been (i) any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company, (ii) any transaction that is material to the Company, except
transactions entered into in the ordinary course of business, (iii) any
material obligation, direct or contingent, incurred by the Company,
except any obligation incurred in the ordinary course of business, (iv)
any material change in the capital stock or outstanding indebtedness of
the Company (other than exercises, if any, of options outstanding as
disclosed in the Prospectus), (v) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company, or (vi)
any loss or damage (whether or not insured) to the property of the
Company that has been sustained or will have been sustained and that has
a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(i) Except as set forth in the Registration Statement
and Prospectus, (i) the Company has good and marketable title to all
properties and assets described in the Registration Statement and
Prospectus as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, other than such as
would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company, (ii) the agreements to which the Company is a party described in
the Registration Statement and Prospectus are valid agreements,
enforceable by the Company, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles and, to the best of the
Company's knowledge, the other contracting party or parties thereto are
not in material breach or material default under any of such agreements,
and (iii) the Company has valid and enforceable leases for all properties
described in the Registration Statement and Prospectus as leased by it,
except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
5
relating to or affecting creditors' rights generally or by general
equitable principles. Except as set forth in the Registration Statement
and Prospectus, the Company owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted.
(j) The Company has timely filed all necessary
federal, state and foreign income and franchise tax returns and has paid
all taxes shown thereon as due, and there is no tax deficiency that has
been or, to the best of the Company's knowledge, might be asserted
against the Company that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company; and all tax liabilities are adequately
provided for on the books of the Company.
(k) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies in similar businesses, including
insurance covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in
full force and effect; the Company has not been refused any insurance
coverage sought or applied for; and the Company does not have any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company.
(l) To the best of Company's knowledge, no labor
disturbance by the employees of the Company exists or is imminent; and
the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its licensors or its significant customers that
might be expected to result in a material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company. No collective bargaining agreement exists with
any of the Company's employees and, to the best of the Company's
knowledge, no such agreement is imminent.
(m) The Company owns or possesses adequate rights to
use all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names and copyrights that are necessary
to conduct its businesses as described in the Registration Statement and
Prospectus; the expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not have a
material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company; the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company by others
with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights; and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect
to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights that, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company.
(n) The Common Stock has been approved for quotation
on the Nasdaq National Market, subject to official notice of issuance.
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(o) The Company has been advised concerning the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to
conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" within the meaning of such Act and rules
and regulations.
(p) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on
which Option Shares are to be purchased, as the case may be, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Act.
(q) The Company has not 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 or any jurisdiction thereof.
(r) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(s) Each officer, director and director-nominee of
the Company and each record owner of shares of Common Stock has agreed in
writing that such person will not, for a period of 180 days after the
date of the Prospectus (the "Lock-Up Period"), offer to sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights
with respect to (collectively, a "Disposition") any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or
any securities convertible into or exchangeable for shares of Common
Stock (collectively, "Securities") now owned or hereafter acquired
directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona
fide gift or a distribution to limited partners, members or partners or
shareholders of such person, provided that the donees or distributees
thereof (as the case may be) agree in writing to be bound by the terms of
this restriction or (ii) with the prior written consent of BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which is designed to or reasonably expected
to lead to or result in a Disposition of Securities during the Lock-Up
Period, even if such Securities would be disposed of by someone other
than such holder. Such prohibited hedging or other transactions would
include any short sale (whether or not against the box) or any purchase,
sale or grant of any right (including any put or call option) with
respect to any Securities or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives
any significant part of its value from the Securities. Notwithstanding
the foregoing, this restriction shall not prohibit (i) the sale of Option
Shares to the Underwriters pursuant to this Agreement or (ii) resales of
shares of Common Stock acquired either in the public offering to which
the Registration Statement relates or in subsequent open-market
purchases. Furthermore, such person also has agreed and consented to the
entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Securities held by such person except in
compliance with this restriction. The Company has provided to ▇▇▇▇▇, ▇▇▇▇
& Eliot LLP, counsel for the several Underwriters ("Underwriters'
Counsel"), a complete and accurate list of all securityholders of the
Company and the number and type of securities held by each
securityholder. The Company has provided to Underwriters' Counsel true,
accurate and complete copies of all of the agreements pursuant to which
its officers, directors and stockholders have agreed to such or similar
restrictions (the "Lock-Up Agreements") presently in effect or effected
hereby. The Company hereby represents and warrants that it will not
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release any of its officers, directors or other stockholders from any
Lock-Up Agreements currently existing or hereafter effected without the
prior written consent of BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
(t) Except as set forth in the Registration Statement
and Prospectus, (i) the Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental
Laws") that are applicable to its business, (ii) the Company has received
no notice from any governmental authority or third party of an asserted
claim under Environmental Laws, which claim is required to be disclosed
in the Registration Statement and the Prospectus, (iii) the Company will
not be required to make future material capital expenditures to comply
with Environmental Laws and (iv) no property that is owned, leased or
occupied by the Company has been designated as a Superfund site pursuant
to the Comprehensive Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. ss. 9601, et seq.), or has been otherwise
designated as a contaminated site under applicable state or local law.
(u) The Company maintains a system of internal
accounting 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 accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(v) 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 the members of the
families of any of them, except as disclosed in the Registration
Statement and the Prospectus.
(w) The Company has complied with all provisions of
Section 517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
II. Each Selling Stockholder, severally and not jointly,
represents and warrants to and agrees with each Underwriter and the Company
that:
(a) Such Selling Stockholder now has, and on any
later date on which Option Shares are purchased, will have valid
marketable title to the Option Shares to be sold by such Selling
Stockholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than pursuant to this
Agreement; and upon delivery of such Option Shares hereunder and payment
of the purchase price as herein contemplated, each of the Underwriters
will obtain valid marketable title to the Option Shares purchased by it
from such Selling Stockholder, free and clear of any pledge, lien,
security interest pertaining to such Selling Stockholder or such Selling
Stockholder's property, encumbrance, claim or equitable interest,
including any liability for estate or inheritance taxes, or any liability
to or claims of any creditor, devisee, legatee or beneficiary of such
Selling Stockholder.
(b) Such Selling Stockholder has duly authorized,
executed and delivered, in the form heretofore furnished to the
Representatives, an irrevocable Power of Attorney (the "Power of
Attorney") appointing ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as
attorneys-in-fact (collectively, the "Attorneys" and individually, an
"Attorney") and a Letter of Transmittal and Custody Agreement (the
8
"Custody Agreement") with , as custodian (the "Custodian"); each of the
Power of Attorney and the Custody Agreement constitutes a valid and
binding agreement on the part of such Selling Stockholder, enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; and each of such Selling
Stockholder's Attorneys, acting alone, is authorized to execute and
deliver this Agreement and the certificate referred to in Section 6(h)
hereof on behalf of such Selling Stockholder, to determine the purchase
price to be paid by the several Underwriters to such Selling Stockholder
as provided in Section 3 hereof, to authorize the delivery of the Option
Shares to be sold by such Selling Stockholder under this Agreement and to
duly endorse (in blank or otherwise) the certificate or certificates
representing such Option Shares or a stock power or powers with respect
thereto, to accept payment therefor, and otherwise to act on behalf of
such Selling Stockholder in connection with this Agreement.
(c) All consents, approvals, authorizations and
orders required for the execution and delivery by such Selling
Stockholder of the Power of Attorney and the Custody Agreement, the
execution and delivery by or on behalf of such Selling Stockholder of
this Agreement and the sale and delivery of the Option Shares to be sold
by such Selling Stockholder under this Agreement (other than, at the time
of the execution hereof (if the Registration Statement has not yet been
declared effective by the Commission), the issuance of the order of the
Commission declaring the Registration Statement effective and such
consents, approvals, authorizations or orders as may be necessary under
state or other securities or Blue Sky laws) have been obtained and are in
full force and effect; and such Selling Stockholder has full legal right
to enter into and perform its obligations under this Agreement and such
Power of Attorney and Custody Agreement, and to sell, assign, transfer
and deliver the Shares to be sold by such Selling Stockholder under this
Agreement.
(d) Such Selling Stockholder will not, during the
Lock-Up Period, effect the Disposition of any Securities now owned or
hereafter acquired directly by such Selling Stockholder or with respect
to which such Selling Stockholder has or hereafter acquires the power of
disposition, otherwise than (i) as a bona fide gift, provided that the
donees thereof agree in writing to be bound by this restriction, or (ii)
with the prior written consent of BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. The
foregoing restriction is expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition
of Securities during the Lock-Up Period, even if such Securities would be
disposed of by someone other than the Selling Stockholder. Such
prohibited hedging or other transactions would include any short sale
(whether or not against the box) or any purchase, sale or grant of any
right (including any put or call option) with respect to any Securities
or with respect to any security (other than a broad-based market basket
or index) that includes, relates to or derives any significant part of
its value from the Securities. Notwithstanding the foregoing, this
restriction shall not prohibit (i) the sale of Option Shares to the
Underwriters pursuant to this Agreement or (ii) resales of shares of
Common Stock acquired either in the public offering to which the
Registration Statement relates or in subsequent open-market purchases.
Such Selling Stockholder also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the
transfer of Securities held by such Selling Stockholder except in
compliance with this restriction.
(e) Certificates in negotiable form for all Option
Shares to be sold by such Selling Stockholder under this Agreement,
together with a stock power or powers duly endorsed in blank by such
Selling Stockholder, have been placed in custody with the Custodian for
the purpose of effecting delivery hereunder.
(f) This Agreement has been duly executed and
delivered by or on behalf of such Selling Stockholder and is a valid and
9
binding agreement of such Selling Stockholder, enforceable in accordance
with its terms, except as rights to indemnification hereunder may be
limited by applicable law or public policy and except as the enforcement
hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles; and the performance
of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the terms
and provisions of or constitute a default under any bond, debenture, note
or other evidence of indebtedness, or under any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder, or any Option Shares to be
sold by such Selling Stockholder hereunder, may be bound or, to the best
of such Selling Stockholder's knowledge, result in any violation of any
law, order, rule, regulation, writ, injunction, judgment or decree of any
court, government or governmental agency or body, domestic or foreign,
having jurisdiction over such Selling Stockholder or over the properties
of such Selling Stockholder.
(g) Such Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares.
(h) Such Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in
connection with the offering and sale of the Shares.
(i) All information furnished by or on behalf of such
Selling Stockholder relating to such Selling Stockholder and the Option
Shares that is contained in the representations and warranties of such
Selling Stockholder in such Selling Stockholder's Power of Attorney or
set forth in the Registration Statement or the Prospectus is, and at the
time the Registration Statement became or becomes, as the case may be,
effective and at all times subsequent thereto up to and on any date on
which Option Shares are to be purchased, was or will be, true, correct
and complete, and does not, and at the time the Registration Statement
became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on any date on which Option Shares are to be
purchased, will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make such information not misleading.
(j) Such Selling Stockholder will review the
Prospectus and will comply with all agreements and satisfy all conditions
on its part to be complied with or satisfied pursuant to this Agreement
on or prior to any date on which Option Shares are to be purchased and
will advise one of its Attorneys and BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
prior to such date on which Option Shares are to be purchased if any
statement to be made on behalf of such Selling Stockholder in the
certificate contemplated by Section 6(h) would be inaccurate if made as
of such date on which Option Shares are to be purchased.
(k) Such Selling Stockholder does not have, or has
waived prior to the date hereof, any preemptive right, co-sale right or
right of first refusal or other similar right to purchase any of the
Shares that are to be sold by the Company or the other Selling
Stockholder to the Underwriters pursuant to this Agreement; such Selling
Stockholder does not have, or has waived prior to the date hereof, any
registration right or other similar right to participate in the offering
made by the Prospectus, other than such rights of participation as have
been satisfied by the participation of such Selling Stockholder in the
transactions to which this Agreement relates in accordance with the terms
of this Agreement; and such Selling Stockholder does not own any
warrants, options or similar rights to acquire, and does not have any
right or arrangement to acquire, any capital stock, rights, warrants,
10
options or other securities from the Company, other than those described
in the Registration Statement and the Prospectus.
(l) Such Selling Stockholder hereby confirms the
truth and accuracy of each of the representations and warranties of the
Company set forth in Section 2.I. above, as if such representations and
warranties were set forth in this Section 2.II.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell the Firm
Shares to the Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase the Firm Shares from the Company at a purchase price of $
per share. The obligation of each Underwriter to the Company shall be to
purchase from the Company that number of Firm Shares that (as nearly as
practicable, as determined by you) is in the same proportion to the total number
of Firm Shares to be purchased by all the Underwriters under this Agreement as
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A hereto (subject to adjustment as provided in Section 10) is to the
total number of Firm Shares to be purchased by all the Underwriters under this
Agreement.
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the several Underwriters by certified
or official bank check or checks drawn in or by wire transfer of same-day funds,
payable to the order of the Company at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇, A
Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (or at such
other place as may be agreed upon among the Representatives and the Company), at
7 A.M., San Francisco time, (a) on the third full business day following the
first day that Shares are traded, (b) if this Agreement is executed and
delivered after 1:30 P.M., San Francisco time, the fourth full business day
following the day that this Agreement is executed and delivered or (c) at such
other time and date not later than seven full business days following the first
day that Shares are traded as the Representatives and the Company may determine
(or at such time and date to which payment and delivery shall have been
postponed pursuant to Section 10 hereof), such time and date of payment and
delivery being herein called the "Closing Date"; provided, however, that if the
Company has not made available to the Representatives copies of the Prospectus
within the time provided in Section 4(d) hereof, the Representatives may, in
their sole discretion, postpone the Closing Date until no later than two full
business days following delivery of copies of the Prospectus to the
Representatives. The certificates for the Firm Shares to be so delivered will be
made available to you at such office or such other location, including in New
York City, as you may reasonably request for checking at least one full business
day prior to the Closing Date and will be in such names and denominations as you
may request, such request to be made at least two full business days prior to
the Closing Date. If the Representatives so elect, delivery of the Firm Shares
may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the Closing
Date for the Firm Shares to be purchased by such Underwriter or Underwriters.
Any such payment by you shall not relieve any such Underwriter or Underwriters
of any of its or their obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters intend to make an initial public offering (as such term is
described in Section 11 hereof) of the Firm Shares at an initial public offering
price of $ per share. After the initial public offering, the several
Underwriters may, in their discretion, vary the public offering price.
11
The information set forth in the last paragraph on the front cover
page (insofar as such information relates to the Underwriters), on the inside
front cover concerning stabilization and over-allotment by the Underwriters, and
under the second, sixth and eighth paragraphs and the third sentence of the
fifth paragraph under the caption "Underwriting" in any Preliminary Prospectus
and in the Prospectus constitutes the only information furnished by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Prospectus or the Registration Statement, and you, on behalf of the respective
Underwriters, represent and warrant to the Company and the Selling Stockholders
that the statements made therein do not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4. Further Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the
time and date that this Agreement is executed and delivered by the
parties hereto, to become effective as promptly as possible; the Company
will use its best efforts to cause any abbreviated registration statement
pursuant to Rule 462(b) of the Rules and Regulations as may be required
subsequent to the date the Registration Statement is declared effective
to become effective as promptly as possible; the Company will notify you,
promptly after it shall receive notice thereof, of the time when the
Registration Statement, any subsequent amendment to the Registration
Statement or any abbreviated registration statement has become effective
or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules
and Regulations, the Company will provide evidence satisfactory to you
that the Prospectus contains such information and has been filed, within
the time period prescribed, with the Commission pursuant to subparagraph
(1) or (4) of Rule 424(b) of the Rules and Regulations or as part of a
post-effective amendment to such Registration Statement as originally
declared effective that is declared effective by the Commission; if the
Company files a term sheet pursuant to Rule 434 of the Rules and
Regulations, the Company will provide evidence satisfactory to you that
the Prospectus and term sheet meeting the requirements of Rule 434(b) or
(c), as applicable, of the Rules and Regulations, have been filed, within
the time period prescribed, with the Commission pursuant to subparagraph
(7) of Rule 424(b) of the Rules and Regulations; if for any reason the
filing of the final form of Prospectus is required under Rule 424(b)(3)
of the Rules and Regulations, it will provide evidence satisfactory to
you that the Prospectus contains such information and has been filed with
the Commission within the time period prescribed; it will notify you
promptly of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare and
file with the Commission any amendments or supplements to the
Registration Statement or Prospectus that, in the reasonable opinion of
Underwriters' Counsel, may be necessary or advisable in connection with
the distribution of the Shares by the Underwriters; it will promptly
prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus that may be necessary to correct any statements or omissions,
if, at any time when a prospectus relating to the Shares is required to
be delivered under the Act, any event shall have occurred as a result of
which the Prospectus or any other prospectus relating to the Shares as
then in effect would include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; in case any Underwriter is required to deliver a prospectus
nine months or more after the effective date of the Registration
Statement in connection with the sale of the Shares, it will prepare
promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus
or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act; and it will file no
amendment or supplement to the Registration Statement or Prospectus that
12
shall not previously have been submitted to you a reasonable time prior
to the proposed filing thereof or to which you shall reasonably object in
writing, subject, however, to compliance with the Act and the Rules and
Regulations and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement
or of the initiation or threat of any proceeding for that purpose; and it
will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
(c) The Company will use its best efforts to qualify the
Shares for offering and sale under the securities laws of such
jurisdictions as you may designate and to continue such qualifications in
effect for so long as may be required for purposes of the distribution of
the Shares, except that the Company shall not be required in connection
therewith or as a condition thereof to qualify as a foreign corporation
or to execute a general consent to service of process in any jurisdiction
in which it is not otherwise required to be so qualified or to so execute
a general consent to service of process. In each jurisdiction in which
the Shares shall have been qualified as above provided, the Company will
make and file such statements and reports in each year as are or may be
required by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available,
and, in the case of the Prospectus and any term sheet or abbreviated term
sheet under Rule 434, in no event later than the first full business day
following the first day that Shares are traded, copies of the
Registration Statement (three of which will be signed and which will
include all exhibits), each Preliminary Prospectus, the Prospectus and
any amendments or supplements to such documents, including any prospectus
prepared to permit compliance with Section 10(a)(3) of the Act, all in
such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., on
behalf of the several Underwriters, shall agree to the utilization of
Rule 434 of the Rules and Regulations, the Company shall provide to you
copies of a Preliminary Prospectus updated in all respects through the
date specified by you in such quantities as you may from time to time
reasonably request.
(e) The Company will make generally available to its
securityholders as soon as practicable, but in any event not later than
the forty-fifth day following the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the
Registration Statement, an earnings statement (which will be in
reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and covering a twelve-month period beginning
after the effective date of the Registration Statement.
(f) During a period of five years after the date hereof, the
Company will furnish to its stockholders as soon as practicable after the
end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and
unaudited quarterly reports of operations for each of the first three
quarters of the fiscal year, and will furnish to you and the other
several Underwriters hereunder, upon request (i) concurrently with
furnishing such reports to its stockholders, statements of operations of
the Company for each of the first three quarters in the form furnished to
the Company's stockholders, (ii) concurrently with furnishing to its
stockholders, a balance sheet of the Company as of the end of such fiscal
13
year, together with statements of operations, of stockholders' equity,
and of cash flows of the Company for such fiscal year, accompanied by a
copy of the certificate or report thereon of independent certified public
accountants, (iii) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders, (iv) as soon as they are
available, copies of all reports and financial statements furnished to or
filed with the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD"), (v) every material
press release and every material news item or article in respect of the
Company or its affairs that was delivered to stockholders in their
capacities as stockholders of the Company, and (vi) any additional
information of a public nature concerning the Company, or its business
that you may reasonably request. During such five-year period, if the
Company shall have any active subsidiaries, the foregoing financial
statements shall be on a consolidated basis to the extent that the
accounts of the Company and such subsidiaries are consolidated and shall
be accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
(g) The Company will apply the net proceeds from the sale of
the Shares being sold by it in the manner set forth under the caption
"Use of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its
Common Stock.
(i) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of
the Company or either Selling Stockholder to perform any agreement on
their respective parts to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, or if the Company
shall terminate this Agreement pursuant to Section 11(a) hereof, or if
the Underwriters shall terminate this Agreement pursuant to Section
11(b)(i), the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including fees and disbursements of Underwriters'
Counsel) reasonably incurred by the Underwriters in investigating or
preparing to market or marketing the Shares.
(j) If at any time during the ninety-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in
your opinion the market price of the Common Stock has been or is likely
to be materially affected (regardless of whether such rumor, publication
or event necessitates a supplement to or amendment of the Prospectus),
the Company will, after written notice from you advising the Company to
the effect set forth above, forthwith prepare, consult with you
concerning the substance of and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(k) During the Lock-Up Period, the Company will not, without
the prior written consent of BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., effect
the Disposition of, directly or indirectly, any Securities other than the
sale of the Company Shares and the Option Shares to be sold by the
Company hereunder and the Company's issuance of options or Common Stock
under the Company's presently authorized 1997 Stock Incentive Plan.
(l) During a period of ninety days from the effective date
of the Registration Statement, the Company will not file a registration
statement registering shares under the Company's presently authorized
1997 Stock Incentive Plan or any other benefit plan.
5. Expenses.
(a) The Company and the Selling Stockholders agree with each
Underwriter that:
14
(i) The Company will pay and bear all costs and
expenses in connection with the preparation, printing and filing
of the Registration Statement (including financial statements,
schedules and exhibits), Preliminary Prospectuses and the
Prospectus and any amendments or supplements thereto; the issuance
and delivery of the Shares hereunder to the several Underwriters,
including transfer taxes, if any, the cost of all certificates
representing the Shares, and transfer agents' and registrars'
fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent certified
public accountants; the cost of furnishing to the several
Underwriters copies of the Registration Statement (including
appropriate exhibits), Preliminary Prospectuses and the Prospectus
and any amendments or supplements to any of the foregoing; NASD
filing fees and the cost of qualifying the Shares under the laws
of such jurisdictions as you may designate (including filing fees
and fees and disbursements of Underwriters' Counsel in connection
with such NASD filings and Blue Sky qualifications); and all other
expenses directly incurred by the Company and the Selling
Stockholders in connection with the performance of their
obligations hereunder. Any additional expenses incurred as a
result of the sale of the Shares by the Selling Stockholders will
be borne collectively by the Company and the Selling Stockholders.
The provisions of this Section 5(a)(i) are intended to relieve the
Underwriters from the payment of the expenses and costs that the
Company and the Selling Stockholders hereby agree to pay, but
shall not affect any agreement that the Company and the Selling
Stockholders may make, or may have made, for the sharing of any of
such expenses and costs. Such agreements shall not impair the
obligations of the Company and the Selling Stockholders hereunder
to the several Underwriters.
(ii) In addition to its other obligations under
Section 8(a) hereof, the Company agrees that, as an interim
measure during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 8(a) hereof, it
will reimburse the Underwriters on a monthly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of
the Company's obligation to reimburse the Underwriters for such
expenses and the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so
held to have been improper, the Underwriters shall promptly return
such payment to the Company together with interest, compounded
daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit
standing) listed from time to time in The Wall Street Journal that
represents the base rate on corporate loans posted by a
substantial majority of the nation's thirty largest banks (the
"Prime Rate"). Any such interim reimbursement payments that are
not made to the Underwriters within thirty days of a request for
reimbursement shall bear interest at the Prime Rate from the date
of such request.
(iii) In addition to his other obligations under
Section 8(b) hereof, each Selling Stockholder agrees that, as an
interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section
8(b) hereof relating to such Selling Stockholder, it will
reimburse the Underwriters on a monthly basis for all reasonable
legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of such
15
Selling Stockholder's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later
be held to have been improper by a court of competent
jurisdiction, provided, that if such claim, action, investigation
or other proceeding is within the purview of Section 8(a) hereof,
the Underwriters shall first demand interim reimbursement from the
Company pursuant to Section 5(a)(ii) hereof and shall have failed
to be so reimbursed in full within fifteen days of such demand
prior to invoking their rights against such Selling Stockholder
pursuant to this Section 5(a)(iii). To the extent that any such
interim reimbursement payment is so held to have been improper,
the Underwriters shall promptly return such payment to the Selling
Stockholders, together with interest, compounded daily, determined
on the basis of the Prime Rate. Any such interim reimbursement
payments that are not made to the Underwriters within thirty days
of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request.
(b) In addition to their other obligations under Section
8(c) hereof, the Underwriters severally and not jointly agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 8(c) hereof, they will
reimburse the Company and each Selling Stockholder on a monthly basis for
all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Underwriters'
obligation to reimburse the Company and each such Selling Stockholder for
such expenses and the possibility that such payments might later be held
to have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been
improper, the Company and each such Selling Stockholder shall promptly
return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments that are not made to the Company and each
such Selling Stockholder within thirty days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
(c) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections
5(a)(ii), 5(a)(iii) and 5(b) hereof, including the amounts of any
requested reimbursement payments, the method of determining such amounts
and the basis on which such amounts shall be apportioned among the
reimbursing parties, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of the
New York Stock Exchange, Inc. or pursuant to the Code of Arbitration
Procedure of the NASD. Any such arbitration must be commenced by service
of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the
party demanding arbitration does not make such designation of an
arbitration tribunal in such demand or notice, then the party responding
to said demand or notice is authorized to do so. Any such arbitration
will be limited to the operation of the interim reimbursement provisions
contained in Sections 5(a)(ii), 5(a)(iii) and 5(b) hereof and will not
resolve the ultimate propriety or enforceability of the obligation to
indemnify for expenses that is created by the provisions of Sections
8(a), 8(b) and 8(c) hereof or the obligation to contribute to expenses
that is created by the provisions of Section 8(e) hereof.
6. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein shall
be subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased, as the case may be, of
the representations and warranties of the Company and the Selling Stockholders
herein, to the performance by the Company and the Selling Stockholders of their
respective obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 2 P.M., San Francisco time, on the date following the date
of this Agreement, or such later date as shall be consented to in writing
by you; and no stop order suspending the effectiveness thereof shall have
been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company, either Selling Stockholder or any
16
Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the reasonable satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and
the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to
Underwriters' Counsel, and Underwriters' Counsel shall have been
furnished with such papers and information as they may reasonably have
requested to enable them to pass upon the matters referred to in this
Section.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, or any later date on which
Option Shares are to be purchased, as the case may be, there shall not
have been any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company from that set
forth in the Registration Statement or Prospectus that, in your
reasonable judgment, is material and adverse and that makes it, in your
reasonable judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be,
the following opinion of ▇▇▇▇▇▇▇ ▇▇▇▇, A Professional Corporation, counsel
for the Company and the Selling Stockholders, dated the Closing Date or
such later date on which Option Shares are to be purchased, addressed to
the Underwriters and with reproduced copies or signed counterparts thereof
for each of the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the Commonwealth of Virginia.
(ii) The Company has the corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Prospectus.
(iii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under the
caption "Capitalization" as of the dates stated therein. The issued
and outstanding shares of capital stock of the Company (including
the Option Shares to be sold by the Selling Stockholders) have been
duly and validly issued and are fully paid and nonassessable and, to
such counsel's knowledge, have not been issued in violation of or
subject to any preemptive right, co-sale right, registration right,
right of first refusal or other similar right.
(iv) The Firm Shares or the Option Shares, as the case
may be, to be issued by the Company pursuant to the terms of this
Agreement have been duly authorized and, upon issuance and delivery
against payment therefor in accordance with the terms hereof, will
be duly and validly issued and fully paid and nonassessable, and
will not have been issued in violation of or subject to any
preemptive right, co-sale right, registration right, right of first
refusal or other similar right.
(v) The Company has the corporate power and authority
to enter into this Agreement and to issue, sell and deliver to the
Underwriters the Shares to be issued and sold by it hereunder.
(vi) This Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been
duly executed and delivered by the Company and, assuming due
17
authorization, execution and delivery by you, is a valid and binding
agreement of the Company, enforceable in accordance with its terms,
except insofar as indemnification provisions may be limited by
applicable law and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally or by general
equitable principles.
(vii) The Registration Statement has become effective
under the Act, and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are pending or threatened under the Act.
(viii) The Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than the financial
statements, including supporting schedules, and financial data
derived therefrom, as to which such counsel need express no
opinion), as of the effective date of the Registration Statement,
complied as to form in all material respects with the requirements
of the Act and the applicable Rules and Regulations.
(ix) The information in the Prospectus under the
caption "Description of Capital Stock," to the extent that it
constitutes matters of law or legal conclusions, has been reviewed
by such counsel and is a fair summary of such matters and
conclusions; and the forms of certificates evidencing the Common
Stock and filed as exhibits to the Registration Statement comply
with the corporation law of the Commonwealth of Virginia.
(x) The description in the Registration Statement and
the Prospectus of the articles of incorporation and bylaws of the
Company and of statutes are accurate and fairly present the
information required to be presented by the Act and the applicable
Rules and Regulations.
(xi) To such counsel's knowledge, there are no
agreements, contracts, leases or documents to which the Company is a
party of a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement that are not described or referred to
therein or filed as required.
(xii) The performance of this Agreement and the
consummation of the transactions herein contemplated (other than
performance of the Company's indemnification obligations hereunder,
concerning which no opinion need be expressed) will not (a) result
in any violation of the Company's articles of incorporation or
bylaws or (b) to such counsel's knowledge, result in a material
breach or violation of any of the terms and provisions of, or
constitute a default under, (1) any bond, debenture, note or other
evidence of indebtedness, or any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument known to such counsel to which the Company
is a party or by which its properties are bound, (2) any applicable
statute, rule or regulation known to such counsel or (3) any order,
writ or decree known to such counsel of any court, government or
governmental agency or body having jurisdiction over the Company or
any of its properties or operations.
(xiii) No consent, approval, authorization or order of
or qualification with any court, government or governmental agency
or body having jurisdiction over the Company or any of its
properties or operations is necessary in connection with the
consummation by the Company of the transactions herein contemplated,
except such as have been obtained under the Act or such as may be
required under state or other securities or Blue Sky laws in
connection with the purchase and the distribution of the Shares by
the Underwriters.
18
(xiv) To such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened against the
Company of a character required to be disclosed in the Registration
Statement or the Prospectus by the Act or the Rules and Regulations,
other than those described therein.
(xv) To such counsel's knowledge, the Company is not
presently (a) in material violation of its articles of incorporation
or bylaws or (b) in material breach of any applicable statute, rule
or regulation known to such counsel or, to such counsel's knowledge,
any order, writ or decree of any court or governmental agency or
body having jurisdiction over the Company or any of its properties
or operations.
(xvi) To such counsel's knowledge, except as set forth
in the Registration Statement and Prospectus, no holders of Common
Stock or other securities of the Company have registration rights
with respect to securities of the Company and, except as set forth
in the Registration Statement and Prospectus, all holders of
securities of the Company having rights known to such counsel to
registration of such shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company
have, with respect to the offering contemplated thereby, waived such
rights or such rights have expired by reason of lapse of time
following notification of the Company's intent to file the
Registration Statement or have included securities in the
Registration Statement pursuant to the exercise of and in full
satisfaction of such rights.
(xvii) The Power of Attorney and Custody Agreement of
each Selling Stockholder has been duly executed and delivered by or
on behalf of such Selling Stockholder; and the Power of Attorney and
Custody Agreement of each Selling Stockholder constitutes the valid
and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(xviii) Each of the Selling Stockholders has full
right to enter into and to perform its obligations under this
Agreement and to sell, transfer, assign and deliver the Option
Shares to be sold by such Selling Stockholder hereunder.
(xix) This Agreement has been duly executed and
delivered by or on behalf of each Selling Stockholder.
(xx) Upon the delivery of and payment for the Option
Shares as contemplated in this Agreement, each of the Underwriters
will receive valid marketable title to the Option Shares purchased
by it from such Selling Stockholder, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest.
In rendering such opinion, such counsel may assume that the
Underwriters are without notice of any defect in the title of the
Option Shares being purchased from the Selling Stockholders.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of
the Company, the Representatives, Underwriters' Counsel and the
independent certified public accountants of the Company, at which such
conferences the contents of the Registration Statement and Prospectus and
related matters were discussed, and although they have not verified the
accuracy or completeness of the statements contained in the Registration
Statement or the Prospectus, nothing has come to the attention of such
19
counsel that leads them to believe that, at the time the Registration
Statement became effective and at all times subsequent thereto up to and
on the Closing Date and on any later date on which Option Shares are to be
purchased, the Registration Statement and any amendment or supplement
thereto (other than the financial statements, including supporting
schedules, and other financial and statistical information derived
therefrom, as to which such counsel need express no comment) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or at the Closing Date or any later date on which the
Option Shares are to be purchased, as the case may be, the Registration
Statement, the Prospectus and any amendment or supplement thereto (except
as aforesaid) contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to
questions of law not involving the laws of the United States or the
Commonwealth of Virginia upon opinions of local counsel, and as to
questions of fact upon representations or certificates of officers of the
Company, of the Selling Stockholders, and of government officials, in
which case their opinion is to state that they are so relying and that
they have no knowledge of any material misstatement or inaccuracy in any
such opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Representatives of the Underwriters, and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be,
an opinion of Underwriters' Counsel, in form and substance satisfactory to
you, with respect to the sufficiency of all such corporate proceedings and
other legal matters relating to this Agreement and the transactions
contemplated hereby as you may reasonably require, and the Company shall
have furnished to Underwriters' Counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be,
a letter from PricewaterhouseCoopers LLP addressed to the Underwriters,
dated the Closing Date or such later date on which Option Shares are to be
purchased, as the case may be, confirming that they are independent
certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations and
based upon the procedures described in such letter delivered to you
concurrently with the execution of this Agreement (herein called the
"Original Letter"), but carried out to a date not more than five business
days prior to the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be, (i) confirming, to the extent
true, that the statements and conclusions set forth in the Original Letter
are accurate as of the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement
or Prospectus that, in your sole judgment, is material and adverse and
that makes it, in your sole judgment, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus. The Original Letter from PricewaterhouseCoopers LLP shall be
addressed to or for the use of the Underwriters in form and substance
satisfactory to the Underwriters and shall (i) represent that they are
independent certified public accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and
Regulations, (ii) set forth their opinion with respect to their
examination of the balance sheets of the Company as of December 31, 1996
and 1997 and June 30, 1998 and related statements of operations,
stockholders' equity, and cash flows for the period from March 13, 1996
(inception) through December 31, 1996, the year ended December 31, 1997
20
and the six months ended June 30, 1998, and (iii) address other matters
agreed upon by PricewaterhouseCoopers LLP and you. In addition, you shall
have received from PricewaterhouseCoopers LLP a letter addressed to the
Company and made available to you for the use of the Underwriters stating
that they had reviewed the Company's system of internal accounting
controls to the extent they deemed necessary in establishing the scope of
their examination of the Company's financial statements as of June 30,
1998; such letter shall not disclose any weakness in internal controls
that PricewaterhouseCoopers LLP deemed to constitute a reportable
condition.
(g) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be,
a certificate of the Company, dated the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, signed by the
Chief Executive Officer and Chief Financial Officer of the Company, to the
effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of the
Closing Date or any later date on which Option Shares are to be
purchased, as the case may be, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date or any later
date on which Option Shares are to be purchased, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Act;
(iii) When the Registration Statement became effective
and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus, and any
amendments or supplements thereto, contained all material
information required to be included therein by the Act and the Rules
and Regulations and in all material respects conformed to the
requirements of the Act and the Rules and Regulations, the
Registration Statement, and any amendment or supplement thereto, did
not and does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, the
Prospectus, and any amendment or supplement thereto, did not and
does not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus that has not been so set
forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company, (b) any transaction that is material to
the Company, except transactions entered into in the ordinary course
of business, (c) any material obligation, direct or contingent,
incurred by the Company, except obligations incurred in the ordinary
course of business, (d) any change in the capital stock or
outstanding indebtedness of the Company that is material to the
Company (other than exercises, if any, of options outstanding as
disclosed in the Prospectus), (e) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company,
or (f) any loss or damage (whether or not insured) to the property
of the Company that has been sustained or will have been sustained
and that has a material adverse effect on the condition (financial
21
or otherwise), earnings, operations, business or business prospects
of the Company.
(h) You shall be satisfied that, and you shall have received a
certificate dated any date on which Option Shares are to be purchased from
the Attorneys for each Selling Stockholder to the effect that, as of such
date on which Option Shares are to be purchased they have not been
informed that:
(i) The representations and warranties made by such
Selling Stockholder herein are not true or correct in any material
respect on such date on which Option Shares are to be purchased; or
(ii) Such Selling Stockholder has not complied with
any obligation or satisfied any condition that is required to be
performed or satisfied on the part of such Selling Stockholder at or
prior to such date on which Option Shares are to be purchased.
(i) The Company shall have obtained and delivered to you an
agreement from each officer, director and director-nominee of the Company
and each record owner of Common Stock (including each Selling Stockholder)
in writing prior to the date hereof that such person will not, during the
Lock-Up Period, effect the Disposition of any Securities now owned or
hereafter acquired directly by such person or with respect to which such
person has or hereafter acquires the power of disposition, otherwise than
(i) as a bona fide gift or a distribution to limited partners, members or
shareholders of such person, provided that the donees or distributees
thereof (or as the case may be) agree in writing to be bound by the terms
of this restriction or (ii) with the prior written consent of BancBoston
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. The foregoing restriction shall have been
expressly agreed to preclude the holder of the Securities from engaging in
any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a Disposition of Securities during the
Lock-Up Period, even if such Securities would be disposed of by someone
other than the such holder. Such prohibited hedging or other transactions
would include any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including any put or call option)
with respect to any Securities or with respect to any security (other than
a broad-based market basket or index) that includes, relates to or derives
any significant part of its value from the Securities. Notwithstanding the
foregoing, this restriction shall not prohibit (i) the sale of Shares to
the Underwriters pursuant to this Agreement or (ii) resales of shares of
Common Stock acquired either in the public offering to which the
Registration Statement relates or in subsequent open-market purchases.
Furthermore, such person will have also agreed and consented to the entry
of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by such person except in compliance
with this restriction.
(j) The Company and the Selling Stockholders shall have
furnished to you such further certificates and documents as you shall
reasonably request (including certificates of officers of the Company and
of the Selling Stockholders as to the accuracy of the representations and
warranties of the Company and the Selling Stockholders herein, as to the
performance by the Company and the Selling Stockholders of their
respective obligations hereunder and as to the other conditions concurrent
and precedent to the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company and the Selling Stockholders will furnish
you with such number of conformed copies of such opinions, certificates, letters
and documents as you shall reasonably request.
22
7. Option Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company and the Selling Stockholders hereby grant,
severally and not jointly, to the several Underwriters, for the purpose of
covering over-allotments in connection with the distribution and sale of
the Firm Shares only, nontransferable options to purchase the respective
number of Option Shares as set forth opposite the names of the Company and
the Selling Stockholders in Schedule B hereto, all at the purchase price
per share for the Firm Shares set forth in Section 3 hereof. Such option
may be exercised by the Representatives on behalf of the several
Underwriters on one or more occasions in whole or in part during the
period of thirty days after the date on which the Firm Shares are
initially offered to the public, by giving written notice to the Company
and the Selling Stockholders in accordance with Section 12 hereof. The
number of Option Shares to be purchased by each Underwriter upon the
exercise of such option shall be the same proportion of the total number
of Option Shares to be purchased by the several Underwriters pursuant to
the exercise of such option as the number of Firm Shares purchased by such
Underwriter (set forth in Schedule A hereto) bears to the total number of
Firm Shares purchased by the several Underwriters (set forth in Schedule A
hereto), adjusted by the Representatives in such manner as to avoid
fractional shares. In the event such option is exercised for less than all
of the Option Shares, the Option Shares to be purchased shall be purchased
from the Company and the Selling Stockholders on a pro rata basis,
adjusted by the Representatives in such manner as to avoid fractional
shares.
The certificates in negotiable form for the Option Shares to
be sold by the Selling Stockholders pursuant to the exercise of the option
granted by this Section 7 have been placed in custody (for delivery under
this Agreement) under the Custody Agreement. Each Selling Stockholder
agrees that the certificates for the Option Shares of such Selling
Stockholder so held in custody are subject to the interests of the
Underwriters hereunder, that the arrangements made by such Selling
Stockholder for such custody, including the Power of Attorney is to that
extent irrevocable and that the obligations of such Selling Stockholder
hereunder shall not be terminated by the act of such Selling Stockholder
or by operation of law, whether by the death or incapacity of such Selling
Stockholder or the occurrence of any other event, except as specifically
provided herein or in the Custody Agreement. If either Selling Stockholder
should die or be incapacitated, or if any other such event should occur,
before the delivery of the certificates for the Option Shares to be sold
by such Selling Stockholder, such Option Shares shall, except as
specifically provided herein or in the Custody Agreement, be delivered by
the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not occurred,
regardless of whether the Custodian shall have received notice of such
death or other event.
Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of the
option granted by this Section 7 shall be made against payment of the
purchase price therefor by the several Underwriters by certified or
official bank check or checks drawn in same-day funds or by wire transfer
of same-day funds, payable to the order of the Company with regard to the
Option Shares being purchased from the Company, and to the order of the
Custodian for the respective accounts of Selling Stockholders with regard
to the Option Shares being purchased from the Selling Stockholders. Such
delivery and payment shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇, A
Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at
such other place as may be agreed upon among the Representatives, the
Company and the Attorneys (i) on the Closing Date, if written notice of
the exercise of such option is received by the Company and the Selling
Stockholders at least two full business days prior to the Closing Date, or
(ii) on a date that shall not be later than the third full business day
following the date the Company and the Selling Stockholders receive
written notice of the exercise of such option, if such notice is received
23
by the Company and the Selling Stockholders less than two full business
days prior to the Closing Date.
The certificates for the Option Shares to be so delivered will
be made available to you at such office or such other location, including
in New York City, as you may reasonably request for checking at least one
full business day prior to the date of payment and delivery and will be in
such names and denominations as you may request, such request to be made
at least two full business days prior to such date of payment and
delivery. If the Representatives so elect, delivery of the Option Shares
may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any
Underwriter or Underwriters whose check or checks shall not have been
received by you prior to the date of payment and delivery for the Option
Shares to be purchased by such Underwriter or Underwriters. Any such
payment by you shall not relieve any such Underwriter or Underwriters of
any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section 7(a)
hereof, the obligations of the several Underwriters to purchase such
Option Shares will be subject (as of the date hereof and as of the date of
payment and delivery for such Option Shares) to the accuracy of and
compliance with the representations, warranties and agreements of the
Company and the Selling Stockholders herein, to the accuracy of the
statements of the Company, the Selling Stockholders and officers of the
Company made pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholders of their respective obligations
hereunder, to the conditions set forth in Section 6 hereof, and to the
condition that all proceedings taken at or prior to the payment date in
connection with the sale and transfer of such Option Shares shall be
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, and you shall have been furnished with all such documents,
certificates and opinions as you may reasonably request in order to
evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants or
agreements of the Company and the Selling Stockholders or the satisfaction
of any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including in its
capacity as an Underwriter or as a "qualified independent underwriter"
within the meaning of Schedule E of the Bylaws of the NASD), under the
Act, the Exchange Act or otherwise, specifically including losses, claims,
damages or liabilities (or actions in respect thereof) arising out of or
based upon (i) any breach of any representation, warranty, agreement or
covenant of the Company herein contained, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or any amendment or supplement thereto, or 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 (iii) any untrue statement or alleged untrue statement of
any material fact contained in any Preliminary Prospectus or the
24
Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state therein 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, and agrees to
reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, such Preliminary Prospectus
or the Prospectus, or any such amendment or supplement thereto, in
reliance upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by such Underwriter, directly or
through you, specifically for use in the preparation thereof and, provided
further that the indemnity agreement provided in this Section 8(a) with
respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any losses, claims,
damages, liabilities or actions based upon any untrue statement or alleged
untrue statement of material fact or omission or alleged omission to state
therein a material fact purchased Shares, if a copy of the Prospectus (or
any amendment or supplement thereto, to the extent available at the time)
in which such untrue statement or alleged untrue statement or omission or
alleged omission was corrected had not been sent or given to such person
within the time required by the Act and the Rules and Regulations, unless
such failure is the result of noncompliance by the Company with Section
4(d) hereof.
The indemnity agreement in this Section 8(a) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities that the Company may otherwise have.
(b) Subject to Section 8(f), each Selling Stockholder,
severally and not jointly, agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including in its
capacity as an Underwriter) under the Act, the Exchange Act or otherwise,
specifically including losses, claims, damages or liabilities (or actions
in respect thereof) arising out of or based upon (i) any breach of any
representation, warranty, agreement or covenant of such Selling
Stockholder herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
any amendment or supplement thereto, or 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 (iii) any
untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in
the case of subparagraphs (ii) and (iii) of this Section 8(b) to the
extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company or
such Underwriter by such Selling Stockholder, directly or through such
Selling Stockholder's representatives, specifically for use in the
preparation thereof, and agrees to reimburse each Underwriter for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that:
(i) any payment obligation of the Selling Stockholders under
this Section 8(b) shall be limited to the amount of losses, claims,
damages and liabilities that are not paid by the Company pursuant to
Section 8(a), and any payment by the Selling Stockholders under this
Section 8(b) shall not be required until after (A) compliance with
the provisions of Section 8(d) with respect to the obligations of
the Company under Section 8(a) and (B) demand for payment has been
25
made by the Underwriters first upon the Company and such payment has
not made by the Company within fifteen days of such demand,
provided, however, that this clause (i) shall not apply with respect
to any Selling Stockholder in the event and to the extent that any
such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus or the Prospectus, or any amendment or supplement
thereto, in reliance upon, and in conformity with, written
information relating to such Selling Stockholder furnished to the
Company by such Selling Stockholder specifically for use in the
preparation thereof; and
(ii) the indemnity agreement provided in this Section 8(b)
with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any
losses, claims, damages, liabilities or actions based upon any
untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state therein a material fact
purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person
within the time required by the Act and the Rules and Regulations,
unless such failure is the result of noncompliance by the Company
with Section 4(d) hereof.
The indemnity agreement in this Section 8(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities that such Selling Stockholder otherwise may have.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and each Selling Stockholder
against any losses, claims, damages or liabilities, joint or several, to
which the Company or such Selling Stockholder may become subject under the
Act or otherwise, specifically including losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon
(i) any breach of any representation, warranty, agreement or covenant of
such Underwriter herein contained, (ii) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or 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
(iii) any untrue statement or alleged untrue statement of any material
fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
in the case of subparagraphs (ii) and (iii) of this Section 8(c) to the
extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company by
such Underwriter, directly or through you, specifically for use in the
preparation thereof, and agrees to reimburse the Company and each such
Selling Stockholder for any legal or other expenses reasonably incurred by
the Company and each such Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or
action.
The indemnity agreement in this Section 8(c) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
officer of the Company who signed the Registration Statement and each
director of the Company, each Selling Stockholder and each person, if any,
who controls the Company or either Selling Stockholder within the meaning
of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities that each Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
26
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof but the omission so to notify the
indemnifying party will not relieve it from any liability that it may have
to any indemnified party otherwise than under this Section 8. In case any
such action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it shall
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with
the proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more
than one separate counsel (together with appropriate local counsel)
approved by the indemnifying party representing all the indemnified
parties under Section 8(a), 8(b) or 8(c) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party; provided
that in no event shall the indemnifying party be liable to such
indemnified party for any legal fees or expenses in excess of reasonable
legal fees and expenses. In no event shall any indemnifying party be
liable in respect of any amounts paid in settlement of any action unless
the indemnifying party shall have approved the terms of such settlement;
provided that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnification could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on all claims that
are the subject matter of such proceeding.
(e) In order to provide for just and equitable contribution in
any action in which a claim for indemnification is made pursuant to this
Section 8 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact
that this Section 8 provides for indemnification in such case, all the
parties hereto shall contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from
others) in such proportion so that, except as set forth in Section 8(f)
hereof, the Underwriters severally and not jointly are responsible pro
rata for the portion represented by the percentage that the underwriting
discount bears to the initial public offering price, and the Company and
the Selling Stockholders are responsible for the remaining portion,
provided, however, that (i) no Underwriter shall be required to contribute
any amount in excess of the amount by which the underwriting discount
27
applicable to the Shares purchased by such Underwriter exceeds the amount
of damages that such Underwriter has otherwise required to pay and (ii) no
person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. The
contribution agreement in this Section 8(e) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person,
if any, who controls any Underwriter, the Company or either Selling
Stockholder within the meaning of the Act or the Exchange Act and each
officer of the Company who signed the Registration Statement and each
director of the Company.
(f) The liability of each Selling Stockholder under the
indemnity and contribution agreements contained in the provisions of this
Section 8 shall be limited to an amount equal to the initial public
offering price of any Option Shares sold by such Selling Stockholder to
the Underwriters minus the amount of the underwriting discounts and
commissions paid thereon to the Underwriters by such Selling Stockholder.
Without limiting the foregoing, if no Option Shares are sold by the
Selling Stockholders to the Underwriters, the Selling Stockholders, as
such, shall have no liability under this Section 8. The Company and such
Selling Stockholders may agree, as among themselves and without limiting
the rights of the Underwriters under this Agreement, as to the respective
amounts of such liability for which they each shall be responsible.
(g) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including the provisions
of this Section 8, and are fully informed regarding said provisions. They
further acknowledge that the provisions of this Section 8 fairly allocate
the risks in light of the ability of the parties to investigate the
Company and its business in order to assure that adequate disclosure is
made in the Registration Statement and Prospectus as required by the Act
and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company, the Selling Stockholders and the Underwriters herein or in certificates
delivered pursuant hereto, and the indemnity and contribution agreements
contained in Section 8 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any person controlling any Underwriter within the meaning of the Act or the
Exchange Act, or by or on behalf of the Company or either Selling Stockholder,
or any of their officers, directors or controlling persons within the meaning of
the Act or the Exchange Act, and shall survive the delivery of the Shares to the
several Underwriters hereunder or termination of this Agreement.
10. Substitution of Underwriters. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such Firm
Shares in accordance with the terms hereof, and if the aggregate number of Firm
Shares that such defaulting Underwriter or Underwriters so agreed but failed to
purchase does not exceed ten percent of the Firm Shares, the remaining
Underwriters shall be obligated, severally in proportion to their respective
commitments hereunder, to take up and pay for the Firm Shares of such defaulting
Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares that such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds ten percent of the Firm Shares, the
remaining Underwriters shall have the right, but shall not be obligated, to take
up and pay for (in such proportions as may be agreed upon among them) the Firm
Shares that the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares that the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four hours to allow the several Underwriters the privilege of
substituting within twenty-four hours (including non-business hours) another
underwriter or underwriters (which may include any nondefaulting Underwriter)
satisfactory to the Company. If no such underwriter or underwriters shall have
28
been substituted as aforesaid by such postponed Closing Date, the Closing Date
may, at the option of the Company, be postponed for a further twenty-four hours,
if necessary, to allow the Company the privilege of finding another underwriter
or underwriters, satisfactory to you, to purchase the Firm Shares that the
defaulting Underwriter or Underwriters so agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted underwriter or
underwriters to take up the Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section 10, (i) the Company shall have the
right to postpone the time of delivery for a period of not more than seven full
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 or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement, supplements to the Prospectus or other such documents
that may thereby be made necessary, and (ii) the respective number of Firm
Shares to be purchased by the remaining Underwriters and substituted underwriter
or underwriters shall be taken as the basis of their underwriting obligation. If
the remaining Underwriters shall not take up and pay for all such Firm Shares so
agreed to be purchased by the defaulting Underwriter or Underwriters or
substitute another underwriter or underwriters as aforesaid and the Company
shall not find or shall not elect to seek another underwriter or underwriters
for such Firm Shares as aforesaid, then this Agreement shall terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section 10, neither the Company nor either Selling
Stockholder shall be liable to any Underwriter (except as provided in Sections 5
and 8 hereof) nor shall any Underwriter (other than an Underwriter who shall
have failed, otherwise than for some reason permitted under this Agreement, to
purchase the number of Firm Shares agreed by such Underwriter to be purchased
hereunder, which Underwriter shall remain liable to the Company, the Selling
Stockholders and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company or either Selling Stockholder (except to the
extent provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier of
(i) 6:30 A.M., San Francisco time, on the first full business day
following the effective date of the Registration Statement or (ii) the
time of the initial public offering of any of the Shares by the
Underwriters after the Registration Statement becomes effective. The time
of the initial public offering shall mean the time of the release by you,
for publication, of the first newspaper advertisement relating to the
Shares, or the time at which the Shares are first generally offered by the
Underwriters to the public by letter, telephone, telegram or telecopy,
whichever shall first occur. By giving notice as set forth in Section 12
before the time this Agreement becomes effective, you, as Representatives
of the several Underwriters, or the Company, may prevent this Agreement
from becoming effective without liability of any party to any other party,
except as provided in Sections 4(j), 5 and 8 hereof.
(b) You, as Representatives of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time on or prior to the Closing Date or on or prior to
any later date on which Option Shares are to be purchased, as the case may
be, (i) if the Company or either Selling Stockholder shall have failed,
refused or been unable to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled is not fulfilled, including any change
in the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company from that set forth in the
Registration Statement or Prospectus that, in your sole judgment, is
29
material and adverse, or (ii) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices
shall have been generally established on the New York Stock Exchange or on
the American Stock Exchange or in the over-the-counter market by the NASD,
or trading in securities generally shall have been suspended on either
such exchange or in the over-the-counter market by the NASD, or if a
banking moratorium shall have been declared by federal, New York or
California authorities, or (iii) if the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of
such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall
have been insured or (iv) if there shall have been a material adverse
change in the general political or economic conditions or financial
markets as in your reasonable judgment makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the
Shares, or (v) if there shall have been an outbreak or escalation of
hostilities or of any other insurrection or armed conflict or the
declaration by the United States of a national emergency that, in the
reasonable opinion of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as
contemplated by the Prospectus. In the event of termination pursuant to
subparagraph (i) above, the Company shall remain obligated to pay costs
and expenses pursuant to Sections 4(j), 5 and 8 hereof. Any termination
pursuant to any of subparagraphs (ii) through (v) above shall be without
liability of any party to any other party except as provided in Sections 5
and 8 hereof.
If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 11, you shall
promptly notify the Company by telephone, telecopy or telegram, in each
case confirmed by letter. If the Company shall elect to prevent this
Agreement from becoming effective, the Company shall promptly notify you
by telephone, telecopy or telegram, in each case, confirmed by letter.
12. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, delivered, telegraphed (and confirmed by letter) or telecopied
(and confirmed by letter) to you c/o BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: General Counsel; if sent to the Company, such
notice shall be mailed, delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to Value America, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier number (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Chief Executive Officer; if sent to one or more of the Selling
Stockholders, such notice shall be sent mailed, delivered, telegraphed (and
confirmed by letter) or telecopied (and confirmed by letter) to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as Attorney-in-Fact for the Selling Stockholders, at Value America, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier number (804)
817-7884.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company and the Selling Stockholders
and their respective executors, administrators, successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or entity, other than the parties hereto and their respective
executors, administrators, successors and assigns, and the controlling persons
within the meaning of the Act or the Exchange Act, officers and directors
referred to in Section 8 hereof, any legal or equitable right, remedy or claim
in respect of this Agreement or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or entity. No
purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and the Company and the Selling
Stockholders shall be entitled to act and rely upon any statement, request,
notice or agreement made or given by you jointly or by BancBoston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc. on behalf of you.
30
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. Construction. The headings in this Agreement are included only
for convenience and shall not affect the meaning or interpretation of this
Agreement. The words "herein" and "hereof" and other words of similar import
refer to this Agreement as a whole and not to any particular part of this
Agreement. The word "including" as used herein shall not be construed so as to
exclude any other thing not referred to or described.
16. Counterparts. This Agreement may be signed in several
counterparts, each of which will constitute an original.
If the foregoing correctly sets forth the understanding among the Company,
the Selling Stockholders and the several Underwriters, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
VALUE AMERICA, INC.
By_____________________________________________
Chairman, Chief Executive Officer and President
SELLING STOCKHOLDERS
By___________________________________________
Attorney-in-Fact for the Selling Stockholders
named in Schedule B hereto
Accepted as of the date first above written:
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, LLC
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto
By BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
By________________________________________
Authorized Signatory
31
SCHEDULE A
Number of
Firm Shares
To Be
Underwriters Purchased
--------------- -------------
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, LLC
-------------
Total 5,000,000
=============
SCHEDULE B
Number
of Option
Shares To
Company or Selling Stockholder Be Sold
--------------------------------- -----------
Value America, Inc. 283,334
▇▇▇▇▇ ▇. ▇▇▇▇ 333,333
▇▇▇ ▇▇▇▇▇▇▇ 133,333
-----------
Total 750,000
===========