EXHIBIT 1.1
TH&T Draft: 5/14/98
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3,000,000 SHARES
LYCOS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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June __, 1998
Credit Suisse First Boston Corporation
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a division of
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities, Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Lycos, Inc., a Delaware corporation ("Company"), proposes
to issue and sell 2,000,000 shares of its common stock, par value $.01 per share
("Securities"), and CMG@Ventures I, LLC, a Delaware limited liability company
("Selling Stockholder"), proposes to sell 1,000,000 outstanding shares of the
Securities (such aggregate 3,000,000 shares of Securities being hereinafter
referred to as the "Firm Securities"). The Company also proposes to sell to the
Underwriters (defined below), at the option of the Underwriters, an aggregate of
not more than 450,000 additional shares of its Securities as set forth below
(such 450,000 aggregate additional shares being hereinafter referred to as the
"Optional Securities"). The Firm Securities and the Optional Securities are
herein collectively called the "Offered Securities". The Company and the Selling
Stockholder hereby agree with the several Underwriters named in Schedule A
hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling Stockholder.
(a) The Company represents and warrants to, and agrees with, the several
Underwriters that:
(i) A registration statement (No. 333-______) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (A) has been
declared effective under the Securities Act of 1933, as amended ("Act"),
and is not proposed to be amended or (B) is proposed to be amended by
amendment or post-effective amendment. If such registration statement (the
"initial registration statement") has been declared effective, either (A)
an additional registration statement (the "additional registration
statement") relating to the Offered Securities may have been filed with the
Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so
filed, has become effective upon filing pursuant to such Rule
and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (B) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule
462(b) and will become effective upon filing pursuant to such Rule and upon
such filing the Offered Securities will all have been duly registered under
the Act pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives to the several Underwriters named
herein ("Representatives") that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any)
filed prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing pursuant to
Rule 462(c), or (B) if the Company has advised the Representatives that it
proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as the
case may be, is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised the Representatives
that it proposes to file one, "Effective Time" with respect to such
additional registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration statement
or the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended at
its Effective Time, including all material incorporated by reference
therein, including all information contained in the additional registration
statement (if any) and deemed to be a part of the initial registration
statement as of the Effective Time of the additional registration statement
pursuant to the General Instructions of the Form on which it is filed and
including all information (if any) deemed to be a part of the initial
registration statement as of its Effective Time pursuant to Rule 430A(b)
("Rule 430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as amended
at its Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "Additional Registration Statement". The Initial Registration Statement
and the Additional Registration Statement are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, including all
material incorporated by reference in such prospectus, is hereinafter
referred to as the "Prospectus". No document has been or will be prepared
or distributed in reliance on Rule 434 under the Act.
(ii) The Commission has not issued any order preventing or suspending
the use of the Prospectus or any preliminary prospectus contained in the
Initial Registration Statement or instituted any proceedings for that
purpose. If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all respects to the requirements of the Act
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and the rules and regulations of the Commission ("Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed or will conform, in all respects to the requirements of the Act
and the Rules and Regulations and did not include, or will not include, any
untrue statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, each Registration Statement
and the Prospectus will conform, in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents includes,
or will include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all
respects to the requirements of the Act and the Rules and Regulations,
neither of such documents will include any untrue statement of a material
fact or will omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do not
apply to statements in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein, it
being understood and agreed that the only such information is that
described as such in Section 7(c) hereof.
(iii) The Company has not distributed and, prior to the later of (a) any
Closing Date (as defined herein) and (b) the completion of the distribution
of the Offered Securities, will not distribute any offering material in
connection with the offering of the Offered Securities other than a
Registration Statement, any preliminary prospectus contained therein or the
Prospectus or any amendment or supplement thereto.
(iv) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.
(v) Each of Tripod, Inc. ("Tripod") and WiseWire Corporation
("WiseWire") has been duly incorporated and is an existing corporation in
good standing under the laws of the jurisdiction of its incorporation, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and each of Tripod and
WiseWire, except where the failure to be so qualified will not have a
material adverse effect on the condition (financial or other), business,
properties or results of operations of the Company, is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification; all of the issued and outstanding
capital stock of each subsidiary of the Company has been duly authorized
and validly issued and is fully paid and nonassessable; and the capital
stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from any liens, encumbrances and defects.
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(vi) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized and validly issued, fully
paid and nonassessable and conform to the description thereof contained in
the Prospectus; and no stockholder of the Company has any preemptive rights
with respect to the Securities. The information set forth under the
caption "Capitalization" in the Prospectus is true and correct. There are
no outstanding options, warrants or other rights granted to or by the
Company to purchase Securities or other securities of the Company other
than as described in the Prospectus.
(vii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
this offering.
(viii) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to cause any securities of the Company owned or to be owned by such
person to be registered pursuant to the Registration Statement filed by the
Company under the Act covering the Offered Securities which have not been
fully satisfied or waived.
(ix) The Offered Securities have been approved for listing subject to
notice of issuance on the Nasdaq Stock Market's National Market.
(x) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required to be obtained or
made by the Company for the consummation of the transactions contemplated
by this Agreement in connection with the sale of the Offered Securities,
except such as have been obtained and made under the Act, required under
state securities laws or the by-laws and rules of the National Association
of Securities Dealers, Inc. ("NASD") in connection with the purchase and
distribution by the Underwriters of the Offered Securities.
(xi) This Agreement, the Irrevocable Power of Attorney of Selling
Stockholder by and between the Selling Stockholder and the Attorneys-In-
Fact named therein, dated May __, 1998 ("Power of Attorney"), and the
Custody Agreement by and between the Selling Stockholder and the Custodian
named therein, dated May __, 1998 ("Custody Agreement") have been duly
authorized, executed and delivered by the Company.
(xii) The execution, delivery and performance of this Agreement, the
Power of Attorney and the Custody Agreement, and the consummation of the
transactions herein and therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
the Company or any subsidiary of the Company or any of their properties, or
any agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is subject, or
the charter or bylaws of the Company or any such subsidiary.
(xiii) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its subsidiaries
hold any leased real or personal property under valid and
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enforceable leases with no exceptions that would materially interfere with
the use made or to be made thereof by them.
(xiv) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(xv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(xvi) Except as disclosed in the Prospectus, the Company and each of its
subsidiaries have the right to use all trademarks, trade names, trade
secrets, servicemarks, inventions, patent rights, mask works, copyrights,
licenses, software code, audiovisual works, formats, algorithms and
underlying data required to operate its business as presently being
conducted and proposed to be conducted as described in the Prospectus, and
the Company and each of its subsidiaries have all required approvals and
governmental authorizations now used in, or which are necessary for
fulfillment of their respective obligations or the conduct of their
respective businesses as now conducted or proposed to be conducted as
described in the Prospectus; and neither the Company nor any of its
subsidiaries is infringing any trademark, trade name rights, patent rights,
mask works, copyrights, licenses, trade secret, servicemarks or other
similar rights of others, and there is no claim being made against the
Company or any of its subsidiaries regarding trademark, trade name, patent,
mask work, copyright, license, trade secret or other infringement or
assertion of intellectual property rights which could have a material
adverse effect on the earnings, properties, business affairs or business
prospects, stockholders' equity, net worth or results of operations of the
Company. The Company has agreements in place with each employee,
consultant or other person or party engaged by the Company or any
subsidiary sufficient to enable the Company and any subsidiary to fulfill
their contractual obligations and to conduct their respective businesses as
now conducted or proposed to be conducted as described in the Prospectus
and providing for the assignment to the Company or any of its subsidiaries,
as the case may be, of all intellectual property and exploitation rights in
the work performed and the protection of the trade secrets and confidential
information of the Company, each of its subsidiaries and of third parties
which have been developed by such person for or on behalf of the Company or
any of its subsidiaries. The Company's and its subsidiaries' computer
software (the "Software") is "Millennium Compliant". For the purposes of
this Agreement "Millennium Compliant" means: (a) the functions,
calculations, and other computing processes of the Software (collectively,
"Processes") perform in an accurate manner regardless of the date in time
on which the Processes are actually performed and regardless of the date
input to the Software, and whether or not the dates are affected by leap
years; (b) the Software can accept, store, sort, extract, sequence, and
otherwise manipulate date inputs and date values, and return and display
date values, in a materially accurate manner regardless of the dates used
or format of the date input; (c) the Software will function without
interruptions caused by the date in time on which the Processes are
actually performed or by the date input to the Software; (d) the Software
accepts and responds to four (4) digit year date input in a manner that
resolves any material ambiguities as to the century in an accurate manner;
and (e) the Software displays, prints and provides electronic output of
date information in ways that are unambiguous as to the determination of
the century.
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(xvii) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.
(xviii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against the Company, any of its subsidiaries
or any of their respective properties that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the condition (financial or other),
business, prospects, properties or results of operations of the Company and
its subsidiaries taken as a whole, or would materially and adversely affect
the ability of the Company to perform its obligations under this Agreement
and no such actions, suits or proceedings are threatened or, to the
Company's knowledge, contemplated.
(xix) The financial statements included in each Registration Statement
and the Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the schedules included in each Registration Statement present fairly
the information required to be stated therein; and the assumptions used in
preparing the pro forma financial statements included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(xx) Except as disclosed in the Prospectus, since the date of the latest
audited financial statements included in the Prospectus, there has been no
material adverse change, in the condition (financial or other), business,
prospects, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(xxi) The Company and each of its subsidiaries has filed all foreign,
federal, state and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure so to
file would not have a materially adverse effect on the Company and its
subsidiaries, taken as a whole) and the Company and each of its
subsidiaries has paid all material taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith or as described
in or contemplated by the Registration Statement or the Prospectus.
(xxii) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940.
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(xxiii) Neither the Company, nor any of its affiliates, has taken or may
take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the shares of the
Securities to facilitate the sale or resale of the Offered Securities.
(xxiv) KPMG Peat Marwick LLP, who have certified the financial
statements filed with the Commission as part of each Registration
Statement, are independent public accountants as required by the Act and
the Rules and Regulations. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (a)
transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
and (c) access to assets is permitted only in accordance with management's
general or specific authorization.
(xxv) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(xxvi) The Company and each of its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or any of its
subsidiaries would have any liability; the Company and each of its
subsidiaries have not incurred and do not expect to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Section 412 or 4971 of the Internal Revenue Code
of 1986, as amended, including the regulations and published
interpretations thereunder ("Code"); and each "pension plan" for which the
Company and each of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified
in all material respect and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(xxvii) Except as set forth in each Registration Statement and the
Prospectus, there are no agreements, claims, payment, issuances,
arrangements or understandings, whether oral or written, for services in
the nature of finder's, consulting or origination fees with respect to the
sale of the Offered Securities or any other arrangements, agreements,
understandings, payments or issuance with respect to the Company or any of
its officers, directors, shareholders, partners, employees, subsidiaries or
affiliates that may affect the Underwriters' compensation as determined by
the NASD.
(xxviii) Except as set forth in each Registration Statement (including
without limitation the documents incorporated by reference therein) and the
Prospectus, no officer, director or shareholder of the Company or any
"affiliate" or "associate" (as these terms are defined in Rule 405 under
the Act) of any of the foregoing persons or entities has or has had, either
directly or indirectly (a) an interest in any person or entity that (x)
furnishes or sells services or products which are furnished or sold or that
are proposed to be furnished or sold by the Company, or (y) purchases from
or sells or furnishes to the Company any goods or services, or (b) a
beneficial interest in any contract or agreement to which the Company is a
party or by which it may be bound or affected. Except as set forth in each
Registration Statement and the Prospectus under the caption "Certain
Transactions" and "Management", there are no existing or proposed
agreements, arrangements, understandings or transactions, between or among
the Company and any officer, director, principal shareholder of the Company
or any partner, affiliate or associate of any of the foregoing persons or
entities.
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(xxix) The minute books of the Company made available to the
Underwriters contain a complete summary of all meetings and actions of the
directors and shareholders of the Company since the time of its
incorporation and reflects accurately and fairly in all respects all
transactions referred to in such minutes.
(xxx) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
(b) The Selling Stockholder represents and warrants to, and agrees with,
the several Underwriters that:
(i) The Selling Stockholder has and on each Closing Date hereinafter
mentioned will have valid and unencumbered title to the Offered Securities
to be delivered by the Selling Stockholder on such Closing Date and full
right, power and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement and to sell, assign, transfer and
deliver the Offered Securities to be delivered by the Selling Stockholder
on such Closing Date hereunder; and upon the delivery of and payment for
the Offered Securities on each Closing Date hereunder the several
Underwriters will acquire valid and unencumbered title to the Offered
Securities to be delivered by the Selling Stockholder on such Closing Date.
(ii) To the best knowledge of the Selling Stockholder, the Selling
Stockholder has reviewed the Prospectus and each Registration Statement,
and the information regarding the Selling Stockholder set forth therein
under the caption "Selling Stockholder" is complete and accurate.
(iii) The Registration Statement, on the Effective Date, and the
Prospectus on the Effective Date and on any Closing Date, do not, and will
not, include any untrue statement of a material fact or omit, or will omit,
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(iv) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Selling Stockholder and any person
that would give rise to a valid claim against the Selling Stockholder or
any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(v) The execution, delivery and performance of this Agreement, the Power
of Attorney and the Custody Agreement, and the consummation of the
transactions herein and therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over
the Selling Stockholder or any subsidiary of the Selling Stockholder or any
of their properties, or any agreement or instrument to which the Selling
Stockholder or any such subsidiary is a party or by which the Selling
Stockholder or any such subsidiary is bound or to which any of the
properties of the Selling Stockholder or any such subsidiary is subject, or
the charter or by-laws of the Selling Stockholder or any such subsidiary.
(vi) All consents, approvals, authorizations and orders necessary for
the execution and delivery by the Selling Stockholder of this Agreement,
the Power of Attorney and the Custody Agreement (assuming the making of all
filings required under Rule 424(b) or Rule 430A), and have been obtained.
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(vii) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to, or which has constituted, or which
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Securities of the Company and, other than
as permitted by the Act, the Selling Stockholder has not distributed, and
will not distribute, any prospectus or other offering material in
connection with the Offered Securities.
(viii) Neither the Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section (m) of the By-
Laws of the NASD), any member firm of the NASD.
3. Purchase, Sale and Delivery of Offered Securities. 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 Stockholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
the Selling Stockholder, at a purchase price of $_________ per share, the number
of Firm Securities set forth below the caption "Company" or "Selling
Stockholder", as the case may be, and opposite the name of such Underwriter in
Schedule A hereto.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholder hereunder have been placed in custody, for delivery
under this Agreement, under the Custody Agreement made with the Company, as
custodian ("Custodian"). The Selling Stockholder agrees that the shares
represented by the certificates held in custody for the Selling Stockholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Stockholder for such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholder hereunder shall not be terminated by operation of law, dissolution
or termination of the Selling Stockholder or the occurrence of any other event.
If the Selling Stockholder should be dissolved or otherwise terminated, before
the delivery of the Offered Securities hereunder, certificates for such Offered
Securities shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such dissolution or termination had not
occurred, regardless of whether or not the Custodian shall have received notice
of such dissolution or termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, at the office of ▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, High Street Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, against payment of the purchase price in Federal (same day)
funds by official bank check or checks or wire transfer to an account at a bank
acceptable to Credit Suisse First Boston Corporation ("CSFBC") at 10:00 A.M.,
New York time, on ___________, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "First Closing Date". The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase, and the Company shall sell, all or less than all of
the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. Such Optional Securities shall be purchased from the Company
for the account of each Underwriter in the same proportion as the number of Firm
Securities set forth opposite such Underwriter's name bears to the total number
of Firm Securities (subject to adjustment by CSFBC to eliminate fractions) and
may be purchased by the Underwriters only for the purpose of covering over-
allotments made in connection with the sale of the Firm Securities. No Optional
Securities shall be sold or delivered unless the Firm Securities previously have
been, or simultaneously are, sold and delivered. The right to purchase the
Optional Securities or any portion thereof may be exercised from time to time
and to the extent not previously exercised may be surrendered and
9
terminated at any time upon notice by CSFBC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company and the Custodian
will deliver the Optional Securities being purchased on each Optional Closing
Date to the Representatives for the accounts of the several Underwriters, at the
office of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, High Street Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, against payment of the purchase price therefor in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to CSFBC. The certificates for the Optional
Securities being purchased on each Optional Closing Date will be in definitive
form, in such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at a reasonable time in advance of such Optional
Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholder. Each of
the Company and, with respect to clauses (i), (j), (k) and (m) below only, the
Selling Stockholder, agree with the several Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to Rule
424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as
of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b)
on or prior to 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later date
as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial or any additional registration statement as filed or
the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent; and the
Company will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(c) The Company will comply with the Act, the Exchange Act and the Rules
and Regulations so as to permit the completion of the distribution of the
Offered Securities as contemplated in this
10
Agreement, each Registration Statement and the Prospectus. If, at any time
when a prospectus relating to the Offered Securities is required to be
delivered under the Act in connection with sales by any Underwriter or
dealer, any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Act, the Company will promptly notify CSFBC of such event
and will promptly prepare and file with the Commission, at its own expense,
an amendment or supplement which will correct such statement or omission or
an amendment which will effect such compliance. Neither CSFBC's consent to,
nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date (as
defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement, each related preliminary prospectus, and, so long
as a prospectus relating to the Offered Securities is required to be
delivered under the Act in connection with sales by any Underwriter or
dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFBC requests. The
Prospectus and all other such documents shall be so furnished as soon as
available. The Company and the Selling Stockholder will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution.
(g) During the period of three years hereafter, upon request, the
Company will furnish to the Representatives and, upon request, to each of
the other Underwriters, as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and the
Company will furnish to the Representatives (i) as soon as available, a
copy of each report and any definitive proxy statement of the Company filed
with the Commission under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or mailed to stockholders, and (ii) from time to time,
such other information concerning the Company as CSFBC may reasonably
request.
(h) For a period of 90 days after the date on which shares of Securities
are first sold by the Underwriters to the public pursuant to a Registration
Statement, the Company will not, without the prior written consent of
CSFBC: (i) offer, sell, contract to sell, pledge, transfer, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise dispose of, directly or
indirectly, any shares of Securities or securities convertible into or
exchangeable or exercisable for any shares of Securities (including,
without limitation, any shares of Securities which the undersigned may be
deemed to beneficially own in accordance with the rules and regulations
promulgated under the Exchange Act); (ii) enter into any swap or any other
agreement or transaction that transfers, in whole or in part, directly or
indirectly, any of the economic consequences of ownership of shares of
Securities or any securities convertible
11
into, or exercisable or exchangeable for, shares of Securities; (iii)
publicly disclose the intention to make any such offer, sale, pledge,
transfer or disposition of any security described in (i) or (ii) above; or
(iv) engage in any hedging transaction with respect to the Securities that
may have an impact on the market price of the Securities. Notwithstanding
the preceding sentence, the Company may issue up to 1,000,000 Securities in
the aggregate in connection with any acquisition or series of acquisitions
(including options and warrants assumed by the Company in connection with
any acquisition), make grants of employee stock options pursuant to the
terms of a plan in effect on the date hereof or issuances of Securities
pursuant to the exercise of such options or the exercise of any other
employee stock options outstanding on the date hereof.
(i) The Company and the Selling Stockholder agree with the several
Underwriters that the Company and the Selling Stockholder will pay all
expenses incident to the performance of the obligations of the Company and
the Selling Stockholder, as the case may be, under this Agreement
including, without limitation, (i) any filing fees and other expenses
(including fees and disbursements of counsel) in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, (ii) the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review
by the NASD of the Offered Securities, (iii) any travel expenses of the
Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers
of the Offered Securities, (iv) any transfer taxes on the sale by the
Selling Stockholder of the Offered Securities to the Underwriters and (v)
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
(j) The Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(k) The Selling Stockholder agrees, for a period of 90 days after the
date on which shares of Securities are first sold by the Underwriters to
the public pursuant to a Registration Statement, that it will not, without
the prior written consent of CSFBC and except for sales to the Company to
satisfy the obligation to sell shares of Securities to the Company upon
exercise of options granted under the Company's 1995 Stock Option Plan: (i)
offer, sell, contract to sell, pledge, transfer, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise dispose of, directly or
indirectly, any shares of Securities or securities convertible into or
exchangeable or exercisable for any shares of Securities (including,
without limitation, any shares of Securities which the undersigned may be
deemed to beneficially own in accordance with the rules and regulations
promulgated under the Exchange Act); (ii) enter into any swap or any other
agreement or transaction that transfers, in whole or in part, directly or
indirectly, any of the economic consequences of ownership of shares of
Securities or any securities convertible into, or exercisable or
exchangeable for, shares of Securities; (iii) publicly disclose the
intention to make any such offer, sale, pledge, transfer or disposition of
any security described in (i) or (ii) above; or (iv) engage in any hedging
transaction with respect to the Securities that may have an impact on the
market price of the Securities. Notwithstanding the foregoing, the Selling
Stockholder may transfer Securities in connection with bona fide gifts,
provided that any transferee agrees in writing as a condition precedent to
such transfer to be bound by the terms set forth herein.
(l) The Company shall apply the net proceeds of its sale of the Offered
Securities as set forth in the Prospectus.
12
(m) The Company and the Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
(n) If at any time during the 25-day period after a Registration
Statement becomes effective or during the period prior to any Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in the Representatives' reasonable judgment the
market price of the Securities 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 notice from the Representatives advising the Company to the
effect set forth above, forthwith prepare, consult with the Representatives
concerning the substance of, and disseminate a press release or other
public statement reasonably satisfactory to the Representatives, responding
to or commenting on such rumor, publication or event.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholder herein, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company and the Selling Stockholder of their
obligations hereunder and to the following additional conditions precedent:
(a) The Representatives shall have received from each of KPMG Peat
Marwick LLP and Coopers & ▇▇▇▇▇▇▇ L.L.P. a letter or letters dated,
respectively, the date hereof and each Closing Date, in form and substance
satisfactory to the Representatives, together with signed or reproduced
copies of such letter for each of the Underwriters containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain information contained in each Registration Statement and the
Prospectus.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (i) such letters shall be accompanied
by a written explanation of the Company as to the significance thereof,
unless the Representatives deem such explanation unnecessary, and (ii) such
changes, decreases or increases to not, in the sole judgment of the
Representatives, make it impractical or inadvisable to proceed with the
purchase and delivery of the Offered Securities as contemplated by such
Registration Statement, as amended as of the date hereof.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to any Underwriter, or shall have occurred at
such later date as shall have been consented to by CSFBC. If the Effective
Time of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of
this Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company, the Selling Stockholder or the Representatives,
shall be contemplated by the Commission.
13
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development in the
condition (financial or other), business, properties or results of
operations of the Company or its subsidiaries which, in the judgment of a
majority in interest of the Underwriters, including the Representatives, is
material and adverse and makes it impractical or inadvisable to proceed
with completion of the public offering or the sale of and payment for the
Offered Securities; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance
or review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally including,
without limitation, the Offered Securities, on the Nasdaq National Market,
or any setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange or
in the over-the-counter market; (iv) any banking moratorium declared by
U.S. Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration
of war by Congress or any other substantial national or international
calamity or emergency if, in the judgment of a majority in interest of the
Underwriters including the Representatives, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A Professional Corporation,
counsel for the Company, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus;
and the Company is duly qualified to do business as a foreign
corporation in good standing in California, Massachusetts and
Pennsylvania;
(ii) The Offered Securities delivered on such Closing Date
and all other outstanding shares of the Securities of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in
the Prospectus; the Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the
Prospectus as of the date specified therein; the certificates for
the Offered Securities, assuming they are in the form filed with
the Commission, are in due and proper form; and no stockholder of
the Company has any preemptive rights with respect to the
Securities pursuant to any statute, the Company's Certificate of
Incorporation, By-laws, or to such counsel's knowledge, any
agreement with the Company;
(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no
outstanding securities of the Company convertible or exchangeable
into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company and there are no outstanding
or authorized options, warrants or other securities obligating the
Company to issue any shares of its capital stock or any securities
convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such capital stock;
(iv) There are no contracts, agreements or understandings
known to such counsel between the Company and any person granting
such person the right to cause any securities
14
of the Company owned or to be owned by such person to be registered
pursuant to the Registration Statement filed by the Company under
the Act covering the Offered Securities which have not been fully
satisfied or waived;
(v) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required to be obtained or made by the Company for the consummation
of the transactions contemplated by this Agreement, in connection
with the sale of the Offered Securities, except such as have been
obtained and made under the Act and such as may be required under
state securities laws;
(vi) The execution, delivery and performance of this
Agreement, the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary of the Company or
any of their properties, or any agreement or instrument to which
the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or the
charter or bylaws of the Company or any such subsidiary;
(vii) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed
and became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule
424(b) specified in such opinion on the date specified therein or
was included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of a Registration Statement or any part thereof has
been issued and no proceedings for that purpose have been
instituted or are pending under the Act, and each Registration
Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates, complied
as to form in all material respects with the requirements of the
Act and the Rules and Regulations; such counsel has no reason to
believe that any part of a Registration Statement or any amendment
thereto, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein
not misleading; or that the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing
Date, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; the descriptions in the
Registration Statement and Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are
accurate and fairly present in all material respects the
information required to be shown; it being understood that such
counsel need express no opinion as to the financial statements or
other financial or statistical data contained in the Registration
Statement or the Prospectus;
(viii) This Agreement, the Power of Attorney and the
Custody Agreement have been duly authorized, executed and delivered
by the Company;
(ix) All of the Offered Securities have been duly
authorized and accepted for quotation on the Nasdaq National
Market, subject to official notice of issuance;
15
(x) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of
the proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940, as amended; and
(xi) Such counsel does not know of any legal or
governmental proceedings or investigations pending or threatened to
which the Company or any of its subsidiaries is a party or to which
the property of the Company or any of its subsidiaries is subject
that are required to be described in any Registration Statement or
the Prospectus and are not described therein or any statutes,
regulations, contracts or other documents that are required to be
described in any Registration Statement or the Prospectus or to be
filed as exhibits to any Registration Statement that are not
described therein or filed as required.
(e) The Representatives shall have received the opinion
contemplated in the Power of Attorney executed and delivered by the Selling
Stockholder and an opinion, dated such Closing Date, of ▇▇▇▇▇▇ & Dodge LLP,
counsel for the Selling Stockholder, to the effect that:
(i) The Selling Stockholder had valid and unencumbered
title to the Offered Securities delivered by the Selling
Stockholder on such Closing Date and had full right, power and
authority to sell, assign, transfer and deliver the Offered
Securities delivered by the Selling Stockholder on such Closing
Date hereunder; and the several Underwriters have acquired valid
and unencumbered title to the Offered Securities purchased by them
from the Selling Stockholder on such Closing Date hereunder;
(ii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required to be obtained or made by the Selling Stockholder for the
consummation of the transactions contemplated the Custody Agreement
or this Agreement in connection with the sale of the Offered
Securities sold by the Selling Stockholder, except such as have
been obtained and made under the Act and such as may be required
under state securities laws;
(iii) The execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement and the
consummation of the transactions therein and herein contemplated
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any
court having jurisdiction over the Selling Stockholder or any of
its properties or any agreement or instrument to which the Selling
Stockholder is a party or by which the Selling Stockholder is bound
or to which any of the properties of the Selling Stockholder is
subject, or the charter or by-laws of the Selling Stockholder which
is a corporation;
(iv) The Power of Attorney and the Custody Agreement with
respect to the Selling Stockholder have been duly authorized,
executed and delivered by the Selling Stockholder and constitute
valid and legally binding obligations of the Selling Stockholder
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(v) This Agreement has been duly authorized, executed and
delivered by the Selling Stockholder.
16
(f) The Representatives shall have received from ▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the Company,
the validity of the Offered Securities delivered on such Closing Date, the
Registration Statement, the Prospectus and other related matters as the
Representatives may require, and the Selling Stockholder and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP may rely as to the incorporation
of the Company upon the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A
Professional Corporation.
(g) The Representatives shall have received from the Selling
Stockholder and CMG Information Services, Inc., and each person who is a
director or executive officer of the Company, an agreement ("Lock-up
Agreement") dated on or before the date of this Agreement to the effect
that, for a period of 90 days after the date on which shares of Securities
are first sold by the Underwriters to the public pursuant to a Registration
Statement, such person will not, without the prior written consent of
CSFBC: (i) offer, sell, contract to sell, pledge, transfer, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise dispose of, directly or
indirectly, any shares of Securities or securities convertible into or
exchangeable or exercisable for any shares of Securities (including,
without limitation, any shares of Securities which the undersigned may be
deemed to beneficially own in accordance with the rules and regulations
promulgated under the Exchange Act); (ii) enter into any swap or any other
agreement or transaction that transfers, in whole or in part, directly or
indirectly, any of the economic consequences of ownership of shares of
Securities or any securities convertible into, or exercisable or
exchangeable for, shares of Securities; (iii) publicly disclose the
intention to make any such offer, sale, pledge, transfer or disposition of
any security described in (i) or (ii) above; or (iv) engage in any hedging
transaction with respect to the Securities that may have an impact on the
market price of the Securities. Notwithstanding the foregoing, such person
may transfer any or all of the securities subject to a Lock-up Agreement
("Lock-up Shares") to one or more members of such person's immediate family
or to trusts for the benefit of members of such person's immediate family
or in connection with bona fide gifts, provided that any transferee agrees
in writing as a condition precedent to such transfer to be bound by the
terms such Lock-up Agreement. The transferor shall notify CSFBC in writing
prior to the transfer, and there shall be no further transfer of Lock-up
Shares, except in accordance with such Lock-up Agreement.
(i) The Representatives shall have received a certificate, dated
such Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers shall
state that: the representations and warranties of the Company in this
Agreement are true and correct; the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date; the Initial
Registration Statement has been declared effective by the Commission and no
stop order suspending the effectiveness of any Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission; the Additional Registration Statement (if
any) satisfying the requirements of subparagraphs (1) and (3) of Rule
462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the Act;
prior to the time the Prospectus was printed and distributed to any
Underwriter; and, subsequent to the respective dates of the most recent
financial statements in the Prospectus, there has been no material adverse
change, nor any development in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate; such officer has carefully
examined each Registration Statement and the Prospectus and, in his
opinion, as of the Effective Date of the Initial Registration Statement
(and, if applicable, the Additional Registration Statement), the statements
contained in the Registration
17
Statement and the Prospectus were true and correct, and such Registration
Statement and Prospectus did not omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
since the Effective Date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an
amendment of the Prospectus which has not been so set forth in such
supplement or amendment; and
(j) The Representatives shall have received a letter, dated such
Closing Date, from each of KPMG Peat Marwick LLP and Coopers & ▇▇▇▇▇▇▇
L.L.P. which meets the requirements of subsection (a) of this Section,
except that the specified date referred to in such subsection will be a
date not more than three business days prior to such Closing Date for the
purposes of this subsection.
If any of the conditions hereinabove provided for in this Section 6 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, the
obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company and the Selling Stockholder of such
termination in writing or by telegram at or prior to the First Closing Date and
each Optional Closing Date.
The Selling Stockholder and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) Subject to the provisions of
paragraph (f) of this Section 7, the Company and the Selling Stockholder will
jointly and severally indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company and the Selling
Stockholder will not be liable in any such case 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 in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and the Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or the Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case 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 through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and the
18
Selling Stockholder in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished on
behalf of each Underwriter: (i) the last paragraph at the bottom of the cover
page concerning the terms of the offering by the Underwriters, (ii) the legend
concerning over-allotments, stabilizing transactions, syndicate short-covering
transactions, penalty bids, and passive market making on the inside front cover
page, (iii) the concession and reallowance figures appearing in the table under
the caption "Underwriting" and (iv) the information contained in the [fourth]
and [seventh] paragraphs under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholder on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Selling Stockholder on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Stockholder on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Stockholder bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Stockholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation
19
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Selling Stockholder under this
Section shall be in addition to any liability which the Company and the Selling
Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
(f) The aggregate liability of the Selling Stockholder under the indemnity
agreements contained in the provisions of this Section 7 hereof shall be limited
to an amount equal to the lesser of (i) the initial public offering price of the
Offered Securities sold by the Selling Stockholder to the Underwriters and (ii)
that percentage of the total amount of the losses, claims, damages and obtained
by dividing the total number of shares of Offered Securities sold by the Selling
Stockholder hereunder by the total number of shares of Offered Securities sold
by the Selling Stockholder and the Company hereunder. The Underwriters agree
that the Selling Stockholder shall have no liability under Section 7(a) to
indemnify any Underwriter with respect to any amount unless the Underwriters
shall have first requested payment of such amount by the Company and the Company
shall have failed, within fourteen days, to pay the requested amount to the
Underwriters. The Company and the Selling Stockholder may agree, as between
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.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholder for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholder for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter, the Company or the Selling Stockholder, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholder, of the Company or their respective officers and of the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this
20
Agreement is terminated pursuant to Section 8 or if for any reason the purchase
of the Offered Securities by the Underwriters is not consummated, the Company
and the Selling Stockholder shall remain responsible for the expenses to be paid
or reimbursed by them pursuant to Section 5 and the respective obligations of
the Company, the Selling Stockholder, and the Underwriters pursuant to Section 7
shall remain in effect, and if any Offered Securities have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. If the purchase of the Offered
Securities by the Underwriters is not consummated for any reason other than
solely because of the termination of this Agreement pursuant to Section 8 or the
occurrence of any event specified in clause (iii), (iv) or (v) of Section 6(c),
the Company and the Selling Stockholder will, jointly and severally, reimburse
the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and will be
mailed, delivered or telegraphed and confirmed as follows:
To the Underwriters and/or Representatives:
------------------------------------------
c/o Credit Suisse First Boston Corporation
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Investment Banking Department - Transactions Advisory Group
To the Company:
--------------
Lycos, Inc.
▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
With a copy to:
--------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
provided, however, that any notice to an Underwriter pursuant to Section 7 will
be mailed, delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several Underwriters
in connection with the transactions contemplated by this Agreement, and any
action under this Agreement taken by the Representatives jointly or by CSFBC
will be binding upon all of the Underwriters.___________________will act for the
Selling Stockholders in connection with such transactions, and any action under
or in respect of this Agreement taken by__________________________________will
be binding upon the Selling Stockholder.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law and Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflicts of laws.
21
If the foregoing is in accordance with the Representatives' understanding of
our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholder, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
LYCOS, INC.
By.........................................
[Insert title]
CMG@VENTURES I, LLC
By.........................................
[Insert title]
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, A DIVISION OF
▇▇▇▇ ▇▇▇▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, LLC
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SECURITIES, INC.
Acting on behalf of themselves and as the Representatives of the several
Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By.....................................................
[Insert title]
22
SCHEDULE A
NUMBER OF FIRM SECURITIES TOTAL
TO BE SOLD BY NUMBER OF
------------------------------------ FIRM SECURITIES
SELLING TO BE
UNDERWRITER COMPANY STOCKHOLDER PURCHASED
----------- ------- ----------- ---------
Credit Suisse First Boston Corporation........................
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a division of
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities, Inc.
Total............................................... 2,000,000 1,000,000 3,000,000
========= ========= =========
23