Exhibit 1.1
4,000,000 SHARES
NETRATINGS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
____________, 1999
▇▇▇▇▇▇ BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
▇.▇. ▇▇▇▇▇▇▇▇▇, TOWBIN
FIDELITY CAPITAL MARKETS
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
NetRatings, Inc., a Delaware corporation (the "Company"), proposes to
sell 4,000,000 shares (the "Firm Stock") of the Company's common stock, par
value $0.001 per share. In addition, the Company proposes to grant to the
Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 600,000 shares of the Common Stock on the terms
and for the purposes set forth in Section 3 (the "Option Stock"). The Firm
Stock and the Option Stock, if purchased, are hereinafter collectively called
the "Stock." This is to confirm the agreement concerning the purchase of the
Stock from the Company by the Underwriters named in Schedule 1 hereto (the
"Underwriters").
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company
represents, warrants and agrees that:
A registration statement on Form S-1, and amendments thereto, with respect
to the Stock has (i) been prepared by the Company in conformity with the
requirements of the United States Securities Act of 1933 (the "Securities Act")
and the rules and regulations (the "Rule and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder and (ii) been
filed with the Commission under the Securities Act. Copies of such registration
statement and the amendments thereto have been delivered by the Company to you
as the representatives (the "Representatives") of the Underwriters. As used in
this Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including all information contained
in the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance
with Section 1 hereof and deemed to be a part of the registration statement
as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules
and Regulations; and "Prospectus" means such final prospectus, as first filed
with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus.
The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective date (as
to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
thereto contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary not misleading;
PROVIDED that no representation or warranty is made as to information contained
in or omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein.
The Company and each of its subsidiaries (as defined in Section 18) have
been incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as foreign corporations in
each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective properties and
to conduct the business in which they are engaged; and none of the subsidiaries
of the Company is a "significant subsidiary", as such term is defined in Rule
405 of the Rules and Regulations.
The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus; and all of
the issued shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued and are fully paid and non-assessable and
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
The shares of the Stock to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable; and the Stock will conform to the
description thereof contained in the Prospectus.
This Agreement has been duly authorized, executed and delivered by the
Company.
Except as accurately described in the Prospectus, the execution, delivery
and performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
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agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions of
the charter or by-laws of the Company or any of its subsidiaries or any
statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or
any of their properties or assets; and except for the registration of the
registrations of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in connection
with the purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
There are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.
Except as described in the Prospectus, the Company has not sold or issued
any shares of Common Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or
S of, the Securities Act.
Neither the Company nor any of its subsidiaries has sustained, since the
date of the latest audited financial statements included in the Prospectus, any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus.
The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement or included in the
Prospectus present fairly the financial condition and results of operations of
the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as otherwise stated therein.
Ernst & Young LLP, who have certified financial statements of the Company,
whose report appears in the Prospectus and who have delivered the initial letter
referred to in Section 9(g) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
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The Company and each of its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries; and all real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
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 businesses in similar
industries.
The Company and each of it subsidiaries own or possess adequate rights to
use all material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations, copyrights and
licenses necessary for the conduct of their respective businesses and have no
knowledge that the conduct of their respective businesses will conflict with,
and have not received any notice of any claim of conflict with, any such rights
of others.
There are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined adversely
to the Company or any of its subsidiaries, might have a material adverse effect
on the consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries; and to
the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration Statement
or incorporated therein by reference as permitted by the Rules and Regulations.
No relationship, direct or indirect, exists between or among the Company on
the one hand, and the directors, officers, stockholders, customers or suppliers
of the Company on the other hand, which is required to be described in the
Prospectus which is not so described.
No labor disturbance by the employees of the Company exists or, to the
knowledge of the Company, is imminent which might be expected to have a material
adverse effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries.
The Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as
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defined in ERISA) has occurred with respect to any "pension plan" (as defined
in ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
The Company has filed all federal, state and local income and franchise tax
returns required to be filed through the date hereof and has paid all taxes due
thereon, and no tax deficiency has been determined adversely to the Company or
any of its subsidiaries which has had (nor does the Company have any knowledge
of any tax deficiency which, if determined adversely to the Company or any of
its subsidiaries, might have) a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries.
Since the date as of which information is given in the Prospectus through
the date hereof, and except as may otherwise be disclosed in the Prospectus, the
Company has not (i) issued or granted any securities, (ii) incurred any
liability or obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business, (iii)
entered into any transaction not in the ordinary course of business or (iv)
declared or paid any dividend on its capital stock.
The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable assurance that
(A) transactions are executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing assets at
reasonable intervals.
Neither the Company nor any of its subsidiaries (i) is in violation of its
charter or by-laws, (ii) except as accurately described in the Prospectus, is in
default in any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business.
Neither the Company nor any of its subsidiaries, nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any of its subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
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or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
There has been no storage, disposal, generation, manufacture, refinement,
transportation, handling or treatment of toxic wastes, medical wastes, hazardous
wastes or hazardous substances by the Company or any of its subsidiaries (or, to
the knowledge of the Company, any of their predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the Company or its
subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have, or
could not be reasonably likely to have, singularly or in the aggregate with all
such violations and remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; there has been no material
spill, discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries or with
respect to which the Company or any of it subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a material adverse effect
on the general affairs, management, financial position, stockholders' equity or
results of operations of the Company and it subsidiaries; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes"
shall have the meanings specified in any applicable local, state, federal and
foreign laws or regulations with respect to environmental protection.
Neither the Company nor any subsidiary is an "investment company" within
the meaning of such term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.
[RESERVED.]
PURCHASE OF THE STOCK BY THE UNDERWRITERS. On the bases of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 4,000,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as ▇▇▇▇▇▇ Brothers
Inc. may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 600,000 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 5 hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set opposite the name of such Underwriters in
Schedule 1 hereto. The respective purchase obligations of each Underwriters
with respect to the Option
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Stock shall be adjusted by ▇▇▇▇▇▇ Brothers Inc. so that no
Underwriter shall be obligated to purchase Option Stock other than in 100 share
amounts. The price of both the Firm Stock and any Option Stock shall be
$________ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), as the case may be,
except upon payment for all the Stock to be purchased on such Delivery Date
as provided herein.
OFFERING OF STOCK BY THE UNDERWRITERS.
Upon authorization by ▇▇▇▇▇▇ Brothers Inc. of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment
for the Firm Stock shall be made at the office of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 7:00 A.M.,
Pacific Standard Time, on the [fourth] full business day following the date
of this Agreement or at such other date or place as shall be determined by
agreement between the Representatives and the Company. This date and time are
sometimes referred to as the "First Delivery Date". On the First Delivery
Date, the Company shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the
purchase price by wire transfer in immediately available funds. Time shall be
of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names
and in such denominations as the Representatives shall request in writing not
less than two full business days prior to the First Delivery Date. For the
purpose of expediting the checking and packaging of the certificates for the
Firm Stock, the Company shall make the certificates representing the Firm
Stock available for inspection by the Representatives in New York, New York,
not later than 2:00 P.M., New York City time, on the business day prior to
the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by ▇▇▇▇▇▇ Brothers Inc. Such notice
shall set forth the aggregate number of shares of Option Stock as to which
the option is being exercised, the names in which the shares of Option Stock
are to be registered, the denominations in which the shares of Option Stock
are to be issued and the date and time, as determined by ▇▇▇▇▇▇ Brothers
Inc., when the shares of Option Stock are to be delivered; PROVIDED, HOWEVER,
that this date and time shall not be earlier than the First Delivery Date nor
earlier than the second business day after the date on which the option shall
have been exercised nor later than the fifth business day after the date on
which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as a "Second Delivery
Date" and the First Delivery Date and any Second Delivery Date are sometimes
each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or
at such other place as shall be determined by agreement between the
Representatives and the Company) at 7:00 A.M., Pacific Standard Time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to
the Representatives for the account of each Underwriter against payment to or
upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of
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the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names
and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make
the certificates representing the Option Stock available for inspection by
the Representatives in New York, New York, not later than 2:00 P.M., New York
City time, on the business day prior to such Second Delivery Date.
FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
To prepare the Prospectus in a form approved by the Representatives and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities Act; to make no further
amendment or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of the
Stock for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal.
To furnish promptly to the Representatives and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
To deliver promptly to the Representatives such number of the following
documents as the Representatives shall reasonably request: (i) conformed copies
of the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than this Agreement and
the computation of per share earnings) and, (ii) each Preliminary Prospectus,
the Prospectus and any amended or supplemented Prospectus and, if the delivery
of a prospectus is required at any time after the Effective Time in connection
with the offering or sale of the Stock or any other securities relating thereto
and if at such time any events shall have occurred 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 in order to make
the statement therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary to amend or supplement the Prospectus in order to
comply with the Securities Act, to notify the Representatives and, upon their
request, to prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will correct
such statement or omission or effect such compliance.
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To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Company or the Representatives, be required by the Securities
Act or requested by the Commission;
Prior to filing with the Commission any amendment to the Registration
Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424
of the Rules and Regulations, to furnish a copy thereof to the Representatives
and counsel for the Underwriters and obtain the consent of the Representatives
to the filing;
As soon as practicable after the Effective Date (it being understood that
the Company shall have until 455 days after the end of the Company's current
fiscal quarter), to make generally available to the Company's security holders
and to deliver to the Representatives an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section 11(a) of the
Securities Act and the Rules and Regulations (including, at the option of the
Company, Rule 158);
For a period of five years following the Effective Date, to furnish to the
Representatives copies of all materials furnished by the Company to its
shareholders and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange upon
which the Common Stock may be listed pursuant to requirements of or agreements
with such exchange or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
Promptly from time to time to take such action as the Representatives may
reasonably request to qualify the Stock for offering and sale under the
securities laws of such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Stock; PROVIDED that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
For a period of 180 days from the date of the Prospectus, not to, directly
or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or
enter into any transaction or device which is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Stock and shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights), or sell or grant options, rights or warrants with respect
to any shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the grant of options pursuant to option plans existing
on the date hereof), or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of ▇▇▇▇▇▇ Brothers Inc.; and to cause each stockholder of the
Company to furnish to the Representatives, prior to the First Delivery Date, a
letter or letters, in form and substance satisfactory to counsel for the
Underwriters, pursuant to which each such
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person shall agree not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which
is designated to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or (2) enter into any swap
or other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case for a period of 180 days from the date of the
Prospectus, without the prior written consent of ▇▇▇▇▇▇ Brothers Inc.;
Prior to the Effective Date, to apply for the inclusion of the Stock on the
Nasdaq National Market System and to use its best efforts to complete that
listing, subject only to official notice of issuance and evidence of
satisfactory distribution, prior to the First Delivery Date;
Prior to filing with the Commission any reports pursuant to Rule 463 of the
Rules and Regulations, to furnish a copy thereof to the counsel for the
Underwriters and receive and consider its comments thereon, and to deliver
promptly to the Representatives a signed copy of each such report filed by it
with the Commission;
[RESERVED.]
EXPENSES. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement and
any other related documents in connection with the offering, purchase, sale and
delivery of the stock; (e) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
sale of the Stock; (f) any applicable listing or other fees; (g) the fees and
expenses of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section 6(h) and of preparing, printing and
distributing a Blue Sky Memorandum; and (h) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement; PROVIDED that, except as provided in this Section 8 and in Section 14
the Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Stock which they may sell
and the expenses of advertising any offering of the Stock made by the
Underwriters.
CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company obligations hereunder, and to each of
the following additional terms and conditions:
The Registration Statement shall have become effective under the Securities
Act on the date of this Agreement; the Prospectus shall have been timely filed
with the Commission in
-10-
accordance with Section 6(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with.
No Underwriter shall have discovered and disclosed to the Company on or
prior to such Delivery Date that the Registration Statement or the Prospectus or
any amendment or supplement thereto contained an untrue statement of a fact
which, in the opinion of O'Melveny & ▇▇▇▇▇ LLP, counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
The Company and each of its subsidiaries have been duly incorporated and
are validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do business and
are in good standing as foreign corporations in the State of California and each
state listed on an Officers' Certificate of the Company listing each
jurisdiction in which the Company or any of its subsidiaries owns or leases
property or conducts business and the failure to be able to own or lease such
property or conduct such business would have a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; and the Company and
each of its subsidiaries have all power and authority necessary to own or hold
their respective properties and conduct the businesses in which they are
engaged;
The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the shares of Stock being delivered on such Delivery Date) have been
or, in the case of the shares of Stock being delivered on such Delivery Date,
upon payment for and delivery of such shares in accordance with this Agreement
will be, duly and validly authorized and issued, fully paid and non-assessable
and conform to the description thereof contained in the Prospectus; the shares
of capital stock of the Company issuable upon conversion of the Preferred Stock
of the Company have been duly and validly authorized and reserved for issuance
upon such conversion, which will occur on the First Delivery Date, and, when
issued and delivered in accordance with the terms of the Certificate of
Incorporation of the Company, will be duly and validly authorized and issued and
fully paid and non-assessable; the ______ shares of capital stock of the Company
to be issued to ▇▇▇▇▇▇▇ Media
-11-
Research, Inc. pursuant to Addendum No. 1 to Second Restated Rights Agreement
among the Company and each of the holders the Series A, Series B, Series C
and Series D Preferred Stock of the Company (the "NMR Agreement"), when
issued and paid for in accordance with the NMR Agreement, will be duly and
validly authorized and issued and fully paid and non-assessable; the
aggregate of 6,553,054 shares of capital stock of the Company to be issued to
▇▇▇▇▇▇▇ Media Research, Inc. upon exercise of the Common Stock Purchase
Warrant expiring December 31, 2001 and the Common Stock Purchase Warrant
expiring December 31, 2004 (collectively, the "Common Stock Purchase
Warrants"), when issued and paid for in accordance with the Common Stock
Purchase Warrants, will be duly and validly authorized and issued and fully
paid and non-assessable; and all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and
issued and are fully paid, non-assessable, and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
Other than as accurately described in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other instrument known to such
counsel;
To the best of such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, might have a material
adverse effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; and, to the best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
The Registration Statement was declared effective under the Securities Act
as of the date and time specified in such opinion, the Prospectus was filed with
the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date specified therein and no stop
order suspending the effectiveness of the Registration Statement has been issued
and, to the knowledge of such counsel, no proceeding for that purpose is pending
or threatened by the Commission;
The Registration Statement and the Prospectus and any further amendments or
supplements thereto made by the Company prior to such Delivery Date (other than
the financial statements and related schedules and other financial data included
therein, as to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Securities Act and the Rules
and Regulations; and (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they were filed
with the Commission complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder;
To the best of such counsel's knowledge, there are no contracts or other
documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits
-12-
to the Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
This Agreement has been duly authorized, executed and delivered by the
Company;
(i) The issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company and the compliance
by the Company with all of the provisions of this Agreement and
the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company
or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject,
other than that certain letter agreement, dated May 28, 1999,
between PaineWebber Incorporated and the Company, as to which such
counsel need express no opinion, nor will such actions result in
any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any statute or any order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties or assets;
and, except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby; and
(ii) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company
to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities
in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the
Securities Act.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of
America, the laws of the State of California and the General
Corporation Law of the State of Delaware and that such counsel is not
admitted in the State of Delaware. Such counsel shall also have
furnished to the Representatives a written statement, addressed to the
Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Representatives, to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis since
_____, 1999 and has acted as counsel to the Company in connection with
the preparation of the Registration Statement, and (y) based on the
foregoing, no facts have come to the
-13-
attention of such counsel which lead it to believe that the
Registration Statement (other than the financial statements and
related schedules and other financial data included therein, as to
which such counsel need express no opinion or belief), as of the
Effective Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or
that the Prospectus (other than the financial statements and related
schedules and other financial data included therein, as to which
such counsel need express no opinion or belief) contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, on the
date of the Prospectus or on the date of the opinion. The foregoing
opinion and statement may be qualified by a statement to the effect
that such counsel has not undertaken to independently verify and
does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement
or the Prospectus except for the statements made in the Prospectus
under the captions "Management - Stock Plans", "Management
Indemnification of Directors and Executive Officers and Limitation
of Liability", "Related Party Transactions" and "Description of
Capital Stock", insofar as such statements relate to the Stock and
concern legal matters.
[Reserved]
The Representatives shall have received from O'Melveny & ▇▇▇▇▇ LLP, counsel
for the Underwriters, such opinion or opinions, dated such Delivery Date, with
respect to the issuance and sale of the Stock, the Registration Statement, the
Prospectus and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
At the time of execution of this Agreement, the Representatives shall have
received from Ernst & Young LLP a letter, in form and substance satisfactory to
the Representatives, addressed to the Underwriters and dated the date hereof (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings.
With respect to the letter of Ernst & Young LLP referred to in the
preceding paragraph and delivered to the Representatives concurrently with the
execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of
-14-
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered
by the initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
The Company shall have furnished to the Representatives a certificate,
dated such Delivery Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that:
The representations, warranties, and agreements of the Company in Section 1
are true and correct as of such Delivery Date; the Company has complied with all
its agreements contained herein; and the conditions set forth in Sections 9(a)
and 9(j) have been fulfilled; and
(iii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of
the Effective Date, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and
(B) since the Effective Date no event has occurred which should
have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(i) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii) since such date
there shall not have been any change in the capital stock or long-term debt
of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Representatives,
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
Subsequent to the execution and delivery of this Agreement there shall not
have occurred any of the following: (i) trading in securities generally on the
New York Stock Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material
-15-
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United
States shall be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or inadvisable to proceed
with the public offering or delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
The Nasdaq National Market System shall have approved the Stock for
inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution.
The Company shall have duly issued, and ▇▇▇▇▇▇▇ Media Research, Inc. shall
have paid for: (1) ________ shares of common stock of the Company pursuant to
the NMR Agreement, and (2) 6,553,054 shares of common stock of the Company
pursuant to the Common Stock Purchase Warrants.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
[RESERVED.]
INDEMNIFICATION AND CONTRIBUTION.
The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (PROVIDED that the Company shall not be
liable under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter and each
such officer, employee or controlling person promptly upon demand for any legal
or other expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Underwriter or to any
officer, employee or controlling person of that Underwriter.
-16-
Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, its officers and employees, each of its directors
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company), and each person, if
any, who controls the Company within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
Promptly after receipt by an indemnified party under this Section 11 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 11, notify the indemnifying party in writing of the
claim or the commencement of that action; PROVIDED, HOWEVER, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 11 except to the extent it has been materially
prejudiced by such failure and, PROVIDED FURTHER, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 11. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 11 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 11 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. No
-17-
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent
of the indemnifying party or if there be a final judgment of the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment.
If the indemnification provided for in this Section 11 shall for any reason
be unavailable to or insufficient to hold harmless an indemnified party under
Section 11(a) or 11(c) in respect of any loss, claim, damage or liability, or
any action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the Stock 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 on the one hand and the Underwriters on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Stock purchased under this Agreement (before deducting expenses) received by the
Company, on the one hand, and the total underwriting discounts and commissions
received by the Underwriters with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the shares of the Stock under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 11(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 11(e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of
-18-
any damages which such Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 11(e) are several in proportion to their respective underwriting
obligations and not joint.
The Underwriters severally confirm and the Company acknowledges that the
statements with respect to the public offering of the Stock by the Underwriters
set forth on the cover page of, the legend concerning over-allotments on the
inside front cover page of and the concession and reallowance figures appearing
under the caption "Underwriting" in, the Prospectus are correct and constitute
the only information concerning such Underwriters furnished in writing to the
Company by or on behalf of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
DEFAULTING UNDERWRITERS.
If, on either Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Stock which the defaulting Underwriter agreed
but failed to purchase on such Delivery Date in the respective proportions which
the number of shares of the Firm Stock set opposite the name of each remaining
non-defaulting Underwriter in Schedule 1 hereto bears to the total number of
shares of the Firm Stock set opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Stock on such Delivery Date if the total number of shares of the Stock which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of shares of the Stock to be purchased on
such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 3.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Sections 8
and 14. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 12, purchases Firm
Stock which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the
-19-
Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement,
the Prospectus or in any other document or arrangement.
TERMINATION. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 9(j) or 9(k), shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Company shall fail to
tender the Stock for delivery to the Underwriters by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
the Company will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 12 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
NOTICES, ETC. All statements, requests, notices and agreements hereunder
shall be in writing, and:
if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World Financial Center,
New York, New York 10285, Attention: Syndicate Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇),
with a copy, in the case of any notice pursuant to Section 11(d), to the
Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: ▇▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 11(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers Inc.
PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to
the benefit of and be binding upon the Underwriters, the Company, and their
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if
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any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 11(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 16, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SURVIVAL. The respective indemnities, representations, warranties and
agreements of the Company and the Underwriters contained in this Agreement or
made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Stock and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For purposes of
this Agreement, (a) "business day" means each Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and Regulations.
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
COUNTERPARTS. This Agreement may be executed in one or more counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
NETRATINGS, INC.
By _______________________
Name:
Title:
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
▇.▇. ▇▇▇▇▇▇▇▇▇, TOWBIN
FIDELITY CAPITAL MARKETS
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By: ▇▇▇▇▇▇ Brothers Inc.
By ________________________________
AUTHORIZED REPRESENTATIVE
For itself and as Representatives
of the several Underwriters named
in Schedule 1 hereto
-22-
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS CORP.
▇.▇. ▇▇▇▇▇▇▇▇▇, TOWBIN
FIDELITY CAPITAL MARKETS
As Representatives of the several
Underwriters
c/▇ ▇▇▇▇▇▇ BROTHERS INC.
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $_______ per share (the "Common Stock"), of
NetRatings, Inc. (the "Company") and that the Underwriters propose to reoffer
the Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., the undersigned will not, directly or indirectly, (1) offer for
sale, sell, pledge, or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Stock owned by the undersigned on
the date of execution of this Lock-Up Letter Agreement or on the date of the
completion of the Offering, or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, for a period 180 days
after the date of the final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
__________________________
By ______________________
Name:
Title:
Dated: ____________________