_________ Shares of Common Stock
DATA RETURN CORPORATION
UNDERWRITING AGREEMENT
----------------------
[Date]
BEAR, XXXXXXX & CO. INC.
CIBC WORLD MARKETS CORP.
WIT CAPITAL CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
Data Return Corporation, a corporation organized and existing under the
laws of Texas (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of ________ shares (the "Firm Shares")
of its common stock, par value $0.001 per share (the "Common Stock") and, for
the sole purpose of covering over-allotments in connection with the sale of the
Firm Shares, at the option of the Underwriters, up to an additional ______
shares (the "Additional Shares") of Common Stock. The Firm Shares and any
Additional Shares purchased by the Underwriters are referred to herein as the
"Shares". The Shares are more fully described in the Registration Statement
referred to below.
1. Representations and Warranties of the Company. The Company represents and
---------------------------------------------
warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, and may have filed an amendment or
amendments thereto, on Form S-1 (No. 333-84011), for the registration of the
Shares under the Securities Act of 1933,
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as amended (the "Act"). Such registration statement, including the prospectus,
financial statements and schedules, exhibits and all other documents filed as a
part thereof, as amended at the time of effectiveness of the registration
statement, including any information deemed to be a part thereof as of the time
of effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of the Rules
and Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement" and the prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations or filed as part
of the Registration Statement at the time of effectiveness if no Rule 424(b) or
Rule 434 filing is required, is herein called the "Prospectus". The term
"preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration Statement or the
effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any, (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations and does not or will not
contain an untrue statement of a material fact and does not or will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the circumstances
under which they were made, not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of the
registration statement for the registration of the Shares or any amendment
thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through you as herein stated
expressly for use in connection with the preparation thereof. With respect to
the preceding sentence, the Company acknowledges that the only information
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus are the
____ paragraphs contained under the caption "Underwriting" in the Prospectus.
If Rule 434 is used, the Company will comply with the requirements of Rule 434.
(c) Ernst & Young LLP, who have certified the financial statements and
supporting schedules included in the Registration Statement, are independent
public accountants as required by the Act and the Regulations.
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(d) Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has been no material adverse
change, or any development involving a prospective material adverse change in
the business, prospects, properties, assets, operations, condition (financial or
other) or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, and since the date of the
latest balance sheet presented in the Registration Statement and the Prospectus,
the Company has not incurred nor undertaken any liabilities or obligations,
direct or contingent, which are material to the Company except for liabilities
or obligations which are reflected in the Registration Statement and the
Prospectus.
(e) This Agreement and the transactions contemplated herein have been duly and
validly authorized by the Company and this Agreement has been duly and validly
executed and delivered by the Company.
(f) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, require approval or consent under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, the terms of (A) any agreement,
instrument, contract, indenture, mortgage, lease, license, arrangement or
understanding to which the Company is a party, or to which any of its properties
or assets are subject (collectively, "Material Contracts") or (B) any franchise,
license, permit heretofore issued to the Company, or (ii) violate or conflict
with any provision of the certificate of incorporation or bylaws of the Company
or any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its properties or assets is
required for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, including the issuance,
sale and delivery of the Shares to be issued, sold and delivered by the Company
hereunder, except the registration under the Act of the Shares and such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters.
(g) All of the outstanding shares of Common Stock are duly and validly
authorized and issued, fully paid and non-assessable and were not issued and are
not now in violation of or subject to any preemptive rights. The Shares, when
issued, delivered and sold in accordance with this Agreement will be duly and
validly issued and outstanding, fully paid and non-assessable, and will not have
been issued in violation of or be subject to any preemptive or similar rights;
and, except as described in or expressly contemplated by the Prospectus, there
are no outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interests in the Company, or
any contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company. The Company had,
at ___________, 1999, an authorized and
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outstanding capitalization as set forth in the Registration Statement and the
Prospectus. The Common Stock, the Firm Shares and the Additional Shares conform
to the descriptions thereof contained in the Registration Statement and the
Prospectus.
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Texas. The Company
is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned, leased
or licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing
which, individually or in the aggregate, would not have or reasonably be
expected to have any material adverse effect, or result in any development
involving a prospective material adverse effect, in the business, prospects,
properties, assets, operations, condition (financial or other) or results of
operations of the Company. The Company has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus, and no such consent, approval, authorization,
order, registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration Statement
and the Prospectus. There are no contracts or other documents applicable to the
Company that are required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement that are not
described or filed as required.
(i) Except as described in the Registration Statement and Prospectus, there is
no litigation, arbitration, proceeding, investigation, claim or governmental
proceeding to which the Company is a party or to which any property or assets of
the Company is subject or which is pending or, to the knowledge of the Company,
contemplated against the Company which might result in any material adverse
change or any development involving a material adverse change in the business,
prospects, assets, properties, operations, condition (financial or other) or,
results of operations of the Company or which is required to be disclosed in the
Registration Statement and the Prospectus.
(j) The Company has not taken and will not take, directly or indirectly, any
action designed to cause or result in, or which constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares or a violation of Regulation M under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(k) The financial statements, including the notes thereto, and supporting
schedules included in the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the dates indicated and the
results of its operations for the periods specified; except as otherwise stated
in the Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. The
selected financial data and the summary financial data included in the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the financial statements included in the
Registration Statement. No other
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financial statements are required by Form S-1 or otherwise to be included in the
Registration Statement or the Prospectus other than those included therein.
(l) Except as described in the Prospectus, no holder of securities of the
Company has any rights to the registration of securities of the Company because
of the filing of the Registration Statement or otherwise in connection with the
sale of the Shares contemplated hereby.
(m) The Company is not, and upon consummation of the transactions contemplated
hereby will not be, subject to registration as an "investment company" under the
Investment Company Act of 1940.
(n) The Company does not have any subsidiaries and does not own or control,
directly or indirectly, any interest in any other corporation, association or
other business entity.
(o) 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 by the Act to be
described in the Registration Statement and the Prospectus which is not so
described. There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.
(p) The Company is in compliance with all environmental, safety or similar
laws or regulations applicable to them or their business or property relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants and the disposal of hazardous
or toxic substances, wastes, pollutants and contaminants ("Environmental Laws"),
except those which, individually or in the aggregate, would not have or
reasonably be expected to have any any material adverse effect, or result in any
development involving a prospective material adverse effect, in the business,
prospects, properties, assets, operations, condition (financial or other) or
results of operations of the Company. The Company has not received any notice
from any governmental authority or third party of an asserted claim under
Environmental Laws. The Company has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such permit,
license or approval. To the Company's knowledge, no facts currently exist that
will require the Company to make future material capital expenditures to comply
with Environmental Laws. No property which is or has been owned, leased or
occupied by the Company has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq.) or otherwise designated as a
contaminated site under applicable state or local law.
(q) The Company is not in violation or breach of, or in default under (nor has
an event occurred that with notice, lapse of time or both, would constitute a
default under), any Material Contract, and each Material Contract is in full
force and effect, and is the legal, valid and binding obligation of the Company,
and (subject to (i) applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or similar laws affecting the enforceability of
creditors' rights
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generally and (ii) general principles of equity, including without limitation,
standards of materiality, good faith, fair dealing and reasonableness and limits
on the availability of equitable remedies) is enforceable as to the Company in
accordance with its terms.
(r) The Company maintains systems of internal accounting controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) the access to the respective assets of the Company is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) There are no existing or, to the knowledge of the Company, threatened
labor disputes with the employees of the Company which are likely, individually
or in the aggregate, to have or may reasonably be expected to have a any
material adverse effect, or result in any development involving a prospective
material adverse effect, in the business, prospects, properties, assets,
operations, condition (financial or other) or results of operations of the
Company. The Company is not aware of any existing or imminent labor disturbance
by the employees of any of its principal suppliers or contractors, which would
have any material adverse effect, or result in any development involving a
prospective material adverse effect, in the business, prospects, properties,
assets, operations, condition (financial or other) or results of operations of
the Company. The Company is not aware of any threatened or pending litigation
between the Company and any of its executive officers which, if adversely
determined, could have any material adverse effect, or result in any development
involving a prospective material adverse effect, in the business, prospects,
properties, assets, operations, condition (financial or other) or results of
operations of the Company, and has no reason to believe that such officers will
not remain in the employment of the Company..
(t) Each employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is
maintained, administered or contributed to by the Company for employees or
former employees of the Company has been maintained in compliance with its terms
and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended ("Code"). No prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975 of the Code has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or administrative
exemption. For each such plan which is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA no "accumulated funding deficiency" as
defined in Section 412 of the Code has incurred, whether or not waived, and the
fair market value of the assets of each such plan (excluding for these purposes
accrued but unpaid contributions) exceeded the present value of all benefits
accrued under such plan determined using reasonable actuarial assumptions.
(u) The Company has filed all foreign, federal, state and local tax returns
that are required to be filed or has requested extensions therefor (except in
any case in which the failure to so file would not have or reasonably be
expected to have, individually or in the aggregate, any material adverse effect,
or result in any development involving a prospective material adverse effect, in
the
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business, prospects, properties, assets, operations, condition (financial or
other) or results of operations of the Company) and the Company 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.
(v) Except as described in the Registration Statement and as shall be
described in the Prospectus, the Company has (i) good and marketable title to
all real and personal properties owned by it, free and clear of all liens,
security interests, pledges, charges, encumbrances and mortgages, and (ii)
valid, subsisting and enforceable leases for all real and personal properties
leased by it, in either case (i) or (ii) above, subject to such exceptions as,
individually or in the aggregate, would not have or reasonably be expected to
have any material adverse effect, or result in any development involving a
prospective material adverse effect, in the business, prospects, properties,
assets, operations, condition (financial or other) or results of operations of
the Company. No real property owned, leased, licensed or used by the Company
lies in an area that is, or, to the best knowledge of the Company, will be,
subject to zoning, use or building code restrictions that would prohibit
ownership, leasing, licensing or use of such real property in the business of
the Company as presently conducted or as the Prospectus indicates are
contemplated to be conducted, subject to such exceptions as, individually or in
the aggregate, would not have or reasonably be expected to have any material
adverse effect, or result in any development involving a prospective material
adverse effect, in the business, prospects, properties, assets, operations,
condition (financial or other) or results of operations of the Company. No
state of facts relating to the actions or inaction of another person or entity
or his, her or its ownership, leasing, licensing or use of any real property
owned, leased, licensed or used by Company would have or reasonably be expected
to have any material adverse effect, or result in any development involving a
prospective material adverse effect, in the business, prospects, properties,
assets, operations, condition (financial or other) or results of operations of
the Company.
(w) The Company is not in violation of any provision of its certificate of
incorporation or of its by-laws or in breach of, or in default under (nor has
any event occurred that with notice, lapse of time, or both, would constitute a
breach of, or default under), except where such breach or default would not have
any material adverse effect, or result in any development involving a
prospective material adverse effect, in the business, prospects, properties,
assets, operations, condition (financial or other) or results of operations of
the Company, any provision of any agreement, instrument, franchise, license or
permit to which the Company is a party or by which any of its properties or
assets may be bound or affected or any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its properties or assets.
(x) Except as described in the Registration Statement and the Prospectus and
except for rights that have been effectively waived in writing (complete and
accurate copies of which have been provided to the Underwriters prior to the
date of this Agreement), which waivers are in full force and effect, no holder
of securities of the Company has any rights to cause the Company to issue to it,
or register pursuant to the Act, any securities of the Company because of the
filing of the Registration Statement, in connection with the sale of the Shares
contemplated hereby or otherwise, nor does any
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holder of securities of the Company have preemptive rights or other rights to
purchase any of the Shares. No holder of any security of the Company has the
right to have any security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such holder during
the period ending 180 days after the date of this Agreement. Each stockholder
who owns more than 1% of the Company's outstanding capital stock and each
director and executive officer of the Company has delivered to the
Representatives an enforceable written lock-up agreement in the form attached to
this Agreement ("Lock-Up Agreement").
(y) The Common Stock of the Company, including the Shares, has been approved
for quotation on the Nasdaq National Market.
(z) Except as described in the Registration Statement and the Prospectus, the
Company owns or possesses valid and enforceable licenses or other rights to use
all inventions, patents, patent applications, trademarks, service marks, trade
names, copyrights, technology, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), proprietary techniques (including processes and substances) and
other intellectual property rights necessary to conduct the business now
conducted or presently contemplated to be conducted by the Company as described
in the Registration Statement and the Prospectus ("Intellectual Property"),
subject to such exceptions as would not have any material adverse effect, or
result in any development involving a prospective material adverse effect, in
the business, prospects, properties, assets, operations, condition (financial or
other) or results of operations of the Company; other than as described in the
Registration Statement and the Prospectus: (i) there are no third parties who
have any rights in the Intellectual Property that could preclude the Company
from conducting its business as currently conducted or as presently contemplated
to be conducted as described in the Registration Statement and the Prospectus;
(ii) there are no pending or, to the Company's knowledge, threatened actions,
suits, proceedings, investigations or claims by others challenging the rights of
the Company, or (if the Intellectual Property is licensed) the licensor thereof
in any Intellectual Property owned or licensed to the Company; (iii) the Company
and (if the Intellectual Property is licensed) to the Company's knowledge the
licensor thereof has not infringed, or received any notice of infringement of or
conflict with, any rights of others with respect to the Intellectual Property;
and (iv) there is no dispute between it or any licensor with respect to any
Intellectual Property, subject, with respect to any of (i), (ii), (iii) or (iv),
to such exceptions, individually or in the aggregate, as would not have any
material adverse effect, or result in any development involving a prospective
material adverse effect, in the business, prospects, properties, assets,
operations, condition (financial or other) or results of operations of the
Company. True and correct copies of all material licenses and other material
agreements between the Company and any third party relating to the Intellectual
Property, and all amendments and supplements thereto, have been provided to the
Underwriters.
(aa) The Company maintains insurance with insurers of recognized financial
responsibility of the types and in the amounts (i) generally deemed adequate for
its business and consistent with insurance coverage maintained by similar
companies in similar businesses and (ii) required under any of the Company's
agreements, licenses or other contracts, all of which insurance is in full force
and effect; the Company has no reason to believe that it will not be able to
renew its existing insurance as and when such coverage expires or to obtain
similar insurance adequate and customary
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for its business and sufficient to satisfy any requirements of its contracts at
a cost that would not have any material adverse effect, or result in any
development involving a prospective material adverse effect, in the business,
prospects, properties, assets, operations, condition (financial or other) or
results of operations of the Company.
(bb) There are no issues related to the Company's preparedness for the Year
2000 that (i) are of a character required to be described or referred to in the
Registration Statement or Prospectus by the Act which have not been accurately
described in the Registration Statement or Prospectus or (ii) might reasonably
be expected to result in any material adverse change in the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company or that might materially affect its properties, assets or rights. All
internal computer systems and each Constituent Component (as defined below) of
those systems and all computer-related products and each Constituent Component
of those products of the Company will, by December 31, 1999, fully comply with
the Year 2000 Qualification Requirements. "Year 2000 Qualification
Requirements" means that the internal computer systems and each Constituent
Component (as defined below) of those systems and all computer-related products
of each Constituent Component (as defined below) of those products of the
Company (i) have been reviewed to confirm that they store, process (including
sorting and performing mathematical operations, calculations and computations),
input and output data containing date and information correctly regardless of
whether the date contains dates and times before, on or after January 1, 2000,
(ii) have been designated to ensure date and time entry recognition and
calculations, and date data interface values that reflect the century, (iii)
accurately manage and manipulate data involving dates and times, including
single century formulas and multi-century formulas, and will not cause an
abnormal ending scenario within the application or generate incorrect values or
invalid results involving such dates, (iv) accurately process any date rollover,
and (v) accept and respond to two-digit year date input in a manner that
resolves any ambiguities as to the century. "Constituent Component" means all
software (including operating systems, programs, packages and utilities),
firmware, hardware, networking components and peripherals provided as part of
the configuration. The Company has inquired of material vendors as to their
preparedness for the Year 2000 and has disclosed in the Registration Statement
or Prospectus any issues that might reasonably be expected to result in any
material adverse change.
(cc) There are no affiliations with the NASD among the Company's officers,
directors or, to the best of the knowledge of the Company, any five percent or
greater stockholder of the Company, except as set forth in the Registration
Statement or otherwise disclosed in writing to the Representatives of the
Underwriters.
(dd Neither the Company nor any person associated with or acting on behalf of
the Company including, without limitation, any director, officer, agent or
employee of the Company has, directly or indirectly, while acting on behalf of
the Company (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any other unlawful payment.
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2. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriters and the Underwriters, severally and
not jointly, agree to purchase from the Company, at a purchase price per share
of $_______, the number of Firm Shares set forth opposite the respective names
of the Underwriters in Schedule I hereto plus any additional number of Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates for, the
Shares shall be made at the offices of Xxxxxxxx & Xxxxxx L.L.P., 0000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, or at such other place as shall be
agreed upon by the Representatives and the Company, at 10:00 A.M. EDT on the
third or fourth business day (as permitted under Rule 15c6-1 under the Exchange
Act) (unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Regulations, the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
after the determination of the initial public offering price of the Shares), or
such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called the "Closing Date"). Payment shall be
made to the Company by wire transfer in same day funds, against delivery to the
Underwriters for their respective accounts, of certificates for the Shares to be
purchased by them. Certificates for the Shares shall be registered in such name
or names and in such authorized denominations as the Representatives may request
in writing at least two full business days prior to the Closing Date. The
Company will permit the Representatives to examine and package such certificates
for delivery at least one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the option to
purchase up to ______ Additional Shares at the same purchase price per share to
be paid by the Underwriters to the Company for the Firm Shares as set forth in
this Section 2, for the sole purpose of covering over-allotments in the sale of
Firm Shares by the Underwriters. This option may be exercised at any time, in
whole or in part, on or before the thirtieth day following the date of the
Prospectus, by written notice by the Representatives to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time, as reasonably determined by the
Representatives, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
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the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be registered
in such name or names and in such authorized denominations as the
Representatives may request in writing at least two full business days prior to
the Additional Closing Date. The Company will permit the Representatives to
examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.
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The number of Additional Shares to be sold to each Underwriter shall be the
number which bears the same ratio to the aggregate number of Additional Shares
being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the number of Firm Shares being purchased from the
Company, subject, however, to such adjustments to eliminate any fractional
shares as the Representatives in their sole discretion shall make.
Payment for the Additional Shares shall be made by wire transfer in same
day funds at the offices of Xxxxxxxx & Knight L.L.P., 0000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxx 00000, or such other location as may be mutually acceptable, upon
delivery of the certificates for the Additional Shares to the Representatives
for the respective accounts of the Underwriters.
3. Offering. Upon the Representatives' authorization of the release of the
--------
Firm Shares, the Underwriters propose to offer the Shares for sale to the public
upon the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with the
------------------------
Underwriters that:
(a) If the Registration Statement has not yet been declared effective the
Company will use its best efforts to cause the Registration Statement and any
amendments thereto to become effective as promptly as possible, and if Rule 430A
is used or the filing of the Prospectus is otherwise required under Rule 424(b)
or Rule 434, the Company will file the Prospectus (properly completed if Rule
430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed
time period and will provide evidence satisfactory to the Representatives of
such timely filing. If the Company elects to rely on Rule 434, the Company will
prepare and file a term sheet that complies with the requirements of Rule 434.
The Company will notify the Representatives immediately (and, if requested
by the Representatives, will confirm such notice in writing) (i) when the
Registration Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
mailing or the delivery to the Commission for filing of any amendment of or
supplement to the Registration Statement or the Prospectus, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, (v) of the receipt
of any comments from the Commission, and (vi) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for that purpose. If the Commission shall propose or enter a stop
order at any time, the Company will make every reasonable effort to prevent the
issuance of any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed pursuant to Rule 424(b)or Rule
434) that differs from the prospectus on file at the time of the effectiveness
of the Registration Statement
-11-
before or after the effective date of the Registration Statement to which the
Representatives shall reasonably object in writing after being timely furnished
in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is required to be
delivered under the Act any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would, in the judgment of the
Underwriters or the Company include an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement to comply with the Act or
the Regulations, the Company will notify the Representatives promptly and
prepare and file with the Commission an appropriate amendment or supplement (in
form and substance satisfactory to the Representatives) which will correct such
statement or omission and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to the Representatives two signed copies
of the Registration Statement, including exhibits and all amendments thereto,
and the Company will promptly deliver to each of the Underwriters such number of
copies of any preliminary prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, and
as the Underwriters may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with the
Representatives, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the securities laws
relating to the offering or sale of the Shares of such jurisdictions as the
Representatives may designate and to maintain such qualification in effect for
so long as required for the distribution thereof; except that in no event shall
the Company be obligated in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process.
(e) The Company will make generally available (within the meaning of Section
11(a) of the Act) to its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus, the Company
will not, without the prior written consent of Bear, Xxxxxxx & Co. Inc., issue,
sell, offer or agree to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock), and the
Company will obtain the undertaking of each of its officers and directors and
such of its shareholders as have been heretofore designated by Bear, Xxxxxxx &
Co. Inc. and listed on Schedule II attached hereto not to engage in any of the
aforementioned transactions on their own behalf, other than the Company's sale
of Shares hereunder and the Company's issuance of Common Stock upon the exercise
of presently outstanding stock options.
-12-
(g) During a period of three years from the effective date of the Registration
Statement, the Company will furnish to the Underwriters copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares as set
forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be listed for
inclusion in the NASDAQ National Market.
(j) The Company will file with the Commission such reports on Form SR as may
be required pursuant to Rule 463 of the Regulations.
5. Payment of Expenses. Whether or not the transactions contemplated in this
-------------------
Agreement are consummated or this Agreement is terminated, the Company hereby
agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement and the Agreement Among Underwriters) and all other documents related
to the public offering of the Shares (including those supplied to the
Underwriters in quantities as hereinabove stated), (ii) the issuance, transfer
and delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws, including the costs of printing and mailing
a preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters and such counsel's disbursements in relation thereto, (iv)
quotation of the Shares on the NASDAQ National Market, (v) filing fees of the
Commission and the National Association of Securities Dealers, Inc.; (vi) the
cost of printing certificates representing the Shares and (vii) the cost and
charges of any transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Pillsbury Madison & Sutro
LLP ("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later than [if
pricing pursuant to Rule 430A 5:30 P.M., New York time, on the date of this
Agreement] [if pricing pursuant to a pricing amendment -- 12:00 P.M., New York
time on the date an amendment to the Registration
-13-
Statement containing the public offering price has been filed with the
Commission], or at such later time and date as shall have been consented to in
writing by you; if the Company shall have elected to rely upon Rule 430A or Rule
434 of the Regulations, the Prospectus shall have been filed with the Commission
in a timely fashion in accordance with Section 4(a) hereof; and, at or prior to
the Closing Date no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued and no
proceedings therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date you shall have received the opinion of Xxxxxxxx &
Xxxxxx L.L.P., counsel for the Company, dated the Closing Date addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel, to
the effect that:
(i) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or location
of its properties (owned, leased or licensed) or the nature or conduct of
its business makes such qualification necessary, except for those failures
to be so qualified or in good standing which will not in the aggregate have
a material adverse effect on the Company. The Company has all requisite
corporate authority to own, lease and license its properties and conduct
its business as now being conducted and as described in the Registration
Statement and the Prospectus. The Company does not have any subsidiaries.
(ii) The Company has an authorized and outstanding capitalization as
set forth in the Registration Statement and the Prospectus. All of the
outstanding shares of Common Stock are duly and validly authorized and
issued, are fully paid and nonassessable and were not issued in violation
of or subject to any preemptive rights. The Shares to be delivered on the
Closing Date have been duly and validly authorized and, when delivered by
the Company in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive rights. The Common Stock, the
Firm Shares and the Additional Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(iii) The Common Stock currently outstanding is listed, and the
Shares to be sold under this Agreement to the Underwriters are duly
authorized for quotation on the NASDAQ National Market.
(iv) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(v) There is no litigation or governmental or other action, suit,
proceeding or investigation before any court or before or by any public,
regulatory or governmental agency or body pending or to the best of such
counsel's knowledge, threatened against, or involving the properties or
business of the Company, which is
-14-
of a character required to be disclosed in the Registration Statement and
the Prospectus which has not been properly disclosed therein.
(vi) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the Company do
not and will not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, any agreement,
instrument, franchise, license or permit known to such counsel to which the
Company is a party or by which its properties or assets may be bound or (B)
violate or conflict with any provision of the certificate of incorporation
or bylaws of the Company, or, to the best knowledge of such counsel, any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its properties or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental, or regulatory
agency or body having jurisdiction over the Company or any of its
properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for (1) such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters (as to which such counsel
need express no opinion) and (2) such as have been made or obtained under
the Act.
(vii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and other financial data included or incorporated
by reference therein, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the Act and the
Regulations.
(viii) The Registration Statement is effective under the Act, and, to
the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission and all filings required by Rule 424(b) of the
Regulations have been made.
(ix) In addition, such opinion shall also contain a statement that
such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents and
the Prospectus and related matters were discussed and, no facts have come
to the attention of such counsel which would lead such counsel to believe
that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement
at the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if
-15-
applicable), or any amendment thereof made prior to the Closing Date as of
the date of such amendment, contained an 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 as of its date (or any amendment thereof or supplement thereto
made prior to the Closing Date as of the date of such amendment or
supplement) and as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits 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
(it being understood that such counsel need express no belief or opinion
with respect to the financial statements and schedules and other financial
data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion of such
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(c) All proceedings taken in connection with the sale of the Firm Shares
and the Additional Shares as herein contemplated shall be satisfactory in form
and substance to the Representatives and to Underwriters' Counsel, and the
Underwriters shall have received from said Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as the Representatives may reasonably require, and the Company shall
have furnished to Underwriters' Counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) At the Closing Date, the Representatives shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated the Closing Date to the effect that (i) the condition set forth
in subsection (a) of this Section 6 has been satisfied, (ii) as of the date
hereof and as of the Closing Date the representations and warranties of the
Company set forth in Section 1 hereof are accurate, (iii) as of the Closing Date
the obligations of the Company to be performed hereunder on or prior thereto
have been duly performed and (iv) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not sustained any material loss or interference with its business or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a material adverse change, in the business prospects,
-16-
properties, operations, condition (financial or otherwise), or results of
operations of the Company, except in each case as described in or contemplated
by the Prospectus.
(e) At the time this Agreement is executed and at the Closing Date, the
Representatives shall have received a letter, from Ernst & Young LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the Underwriters
and in form and substance satisfactory to the Representatives, to the effect
that: (i) they are independent certified public accountants with respect to the
Company within the meaning of the Act and the Regulations and stating that the
answer to Item 10 of the Registration Statement is correct insofar as it relates
to them; (ii) stating that, in their opinion, the financial statements and
schedules of the Company included in the Registration Statement and the
Prospectus and covered by their opinion therein comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations of the Commission thereunder; (iii)
on the basis of procedures consisting of a reading of the latest available
unaudited interim consolidated financial statements of the Company a reading of
the minutes of meetings and consents of the shareholders and board of directors
of the Company and the committees of such board subsequent to [insert the date
of the most recent audited consolidated balance sheet of the Company included or
incorporated by reference in the Registration Statement and the Prospectus],
inquiries of officers and other employees of the Company who have responsibility
for financial and accounting matters of the Company with respect to transactions
and events subsequent to [insert the date of the most recent audited
consolidated balance sheet of the Company included or incorporated by reference
in the Registration Statement and the Prospectus] and other specified procedures
and inquiries to a date not more than five days prior to the date of such
letter, nothing has come to their attention that would cause them to believe
that: (A) the unaudited consolidated financial statements and schedules of the
Company presented in the Registration Statement and the Prospectus do not comply
as to form in all material respects with the applicable accounting requirements
of the Act and, if applicable, the Exchange Act and the applicable published
rules and regulations of the Commission thereunder or that such unaudited
consolidated financial statements are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements included
in the Registration Statement and the Prospectus; (B) with respect to the period
subsequent to [insert the date of the most recent consolidated balance sheet of
the Company included or incorporated by reference in the Registration Statement
and the Prospectus] there were, as of the date of the most recent available
monthly consolidated financial statements of the Company, if any, and as of a
specified date not more than five days prior to the date of such letter, any
changes in the capital stock or long-term indebtedness of the Company or any
decrease in the net current assets or shareholders' equity of the Company, in
each case as compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for changes
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter or (C) that during
the period from [insert the date following the date of the most recent
consolidated balance sheet of the Company included or incorporated by reference
in the Registration Statement and the Prospectus to the date of the most recent
available monthly consolidated financial statements of the Company, if any, and
to a specified date not more than five days prior to the date of such letter,
there was any decrease, as compared with the corresponding period in the prior
fiscal year, in total revenues, or total or per share net income, except for
decreases
-17-
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter; and (iv) stating that they have
compared specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the Registration Statement and the Prospectus, which have been specified by the
Representatives prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages, and information may be derived from the general
accounting and financial records of the Company or from schedules furnished by
the Company, and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries, and other appropriate procedures specified by the Representatives set
forth in such letter, and found them to be in agreement.
(f) Prior to the Closing Date the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(g) The Representatives shall have received from each person who is a
director or officer of the Company or such shareholder as have been heretofore
designated by the Representatives and listed on Schedule II hereto an agreement
to the effect that such person will not, directly or indirectly, without the
prior written consent of Bear, Xxxxxxx & Co., Inc., offer, sell, offer or agree
to sell, grant any option to purchase or otherwise dispose (or announce any
offer, sale, grant of an option to purchase or other disposition) of any shares
of Common Stock (or any securities convertible into, exercisable for or
exchangeable or exercisable for shares of Common Stock) for a period of 180 days
after the date of the Prospectus.
(h) At the Closing Date, the Shares shall have been approved for quotation
on the NASDAQ National Market.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to the Representatives or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to the Representatives
and to Underwriters' Counsel, all obligations of the Underwriters hereunder may
be cancelled by the Representatives at, or at any time prior to, the Closing
Date and the obligations of the Underwriters to purchase the Additional Shares
may be cancelled by the Representatives at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing, or by telephone, telex or telegraph, confirmed in writing.
-18-
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any and all losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
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the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives expressly for use therein. This indemnity agreement will be
in addition to any liability which the Company may otherwise have including
under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), jointly or severally, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives expressly for use therein;
provided, however, that in no case shall any Underwriter be liable or
-------- -------
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter
-19-
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and in the ______ paragraphs under the caption "Underwriting" in the
Prospectus constitute the only information furnished in writing by or on behalf
of any Underwriter expressly for use in the registration statement relating to
the Shares as originally filed or in any amendment thereof, any related
preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7). 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 it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
-------- -------
that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in circumstances in
------------
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the
-20-
Company and the Underwriters from the offering of the Shares or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same proportion
as (x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
8, (i) in no case shall any Underwriter be liable or responsible for any amount
in excess of the underwriting discount applicable to the Shares purchased by
such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 8. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
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withheld.
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9. Default by an Underwriter.
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(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by the Representatives
pursuant to subsection (b) below) exceed in the aggregate 10% of the number of
Firm Shares or Additional Shares, to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to the respective
proportions which the numbers of Firm Shares set forth opposite their respective
names in Schedule I hereto bear to the aggregate number of Firm Shares set forth
opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the Firm
Shares or Additional Shares, as the case may be, the Representatives may in
their discretion arrange for the Representatives or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within 5
calendar days after such a default the Representatives do not arrange for the
purchase of the Firm Shares or Additional Shares, as the case may be, to which
such default relates as provided in this Section 9, this Agreement or, in the
case of a default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Section 5, 7(a) and 8 hereof) or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares to which the
default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, the Representatives or
the Company shall have the right to postpone the Closing Date or Additional
Closing Date, as the case may be for a period, not exceeding five business days,
in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion
of Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and
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11(d) hereof shall survive the termination of this Agreement, including
termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective, upon the later of when (i) the
Representatives and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price
per Share has not been agreed upon prior to 5:00 P.M., New York time, on the
fifth full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying the Representatives or by the Representatives notifying the Company.
Notwithstanding the foregoing, the provisions of this Section 11 and of Sections
1, 5, 7 and 8 hereof shall at all times be in full force and effect.
(b) The Representatives shall have the right to terminate this Agreement at
any time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional Closing Date,
as the case may be, if (A) any domestic or international event or act or
occurrence has materially disrupted, or in the Representatives' opinion will in
the immediate future materially disrupt, the market for the Company's securities
or securities in general; or (B) if trading on the Nasdaq National Market or the
New York or American Stock Exchanges shall have been suspended, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required, on the Nasdaq National Market or New
York or American Stock Exchanges by the New York or American Stock Exchanges or
by order of the Commission or any other governmental authority having
jurisdiction; or (C) if a banking moratorium has been declared by a state or
federal authority or if any new restriction materially adversely affecting the
distribution of the Firm Shares or the Additional Shares, as the case may be,
shall have become effective; or (D) (i) if the United States becomes engaged in
hostilities or there is an escalation of hostilities involving the United States
or there is a declaration of a national emergency or war by the United States or
(ii) if there shall have been such change in political, financial or economic
conditions if the effect of any such event in (i) or (ii) as in the
Representatives' judgment makes it impracticable or inadvisable to proceed with
the offering, sale and delivery of the Firm Shares or the Additional Shares, as
the case may be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the provisions
hereof (otherwise than pursuant to (i) notification by the Representatives as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the
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Representatives, reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel), incurred by the Underwriters
in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, X.X. 00000, Attention: _____________; if sent to the Company, shall be
mailed, delivered, or telegraphed and confirmed in writing to the Company, 000
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx 00000, Attention: Xxxxxxxx X.
Xxxxxxxx.
13. Parties. This Agreement shall insure solely to the benefit of, and
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shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
DATA RETURN CORPORATION
By
Sunny X. Xxxxxxxxxx
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
CIBC World Markets Corp.
Wit Capital Corporation
By
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
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SCHEDULE I
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Number of Firm Shares to
Name of Underwriter be Purchased
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Bear, Xxxxxxx & Co. Inc.
CIBC World Markets Corp.
Wit Capital Corporation
Total
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--------------------------
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SCHEDULE II
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