Exhibit 1.1
Form of Underwriting Agreement
Shares
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NAVISITE, INC.
Common Stock
UNDERWRITING AGREEMENT
, 2007
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CIBC World Markets Corp.
Xxxxxx Xxxxxx Partners LLC,
as Underwriters
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The persons listed on Schedule II hereto (the "Selling
Stockholders"), propose, subject to the terms and conditions contained herein,
to sell on a several and not a joint basis to you (the "Underwriters") an
aggregate of __________ shares (the "Firm Shares") of the common stock, $0.01
par value per share (the "Common Stock"), of NaviSite, Inc., a Delaware
corporation (the "Company"). The respective amounts of the Firm Shares to be
purchased by each of the several Underwriters are set forth opposite their names
on Schedule I hereto. In addition, the Selling Stockholders propose to grant to
the Underwriters an option to purchase up to an aggregate of __________
additional shares (the "Option Shares") of Common Stock for the purpose of
covering over-allotments in connection with the sale of the Firm Shares. The
Option Shares will be allocated in accordance with Section 1(b) below. The Firm
Shares and the Option Shares are collectively called the "Shares." The
respective amounts of the Option Shares to be sold by each of the Selling
Stockholders are set forth opposite their names on Schedule II hereto.
The Company has prepared and filed in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a Registration Statement
(as hereinafter defined) on Form S-3 (No. 333-138986), including a preliminary
prospectus relating to the Shares, and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration Statement
(including all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to you. The
term "Preliminary Prospectus" means any preliminary prospectus included at any
time as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(b) of the Rules. The term "Registration Statement"
as used in this Agreement means the initial registration statement (including
all exhibits, financial schedules and all documents and information deemed to be
a part of the Registration Statement through incorporation by reference or
otherwise), as amended at the time and on the date it becomes effective (the
"Effective Date"), including the
information (if any) contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and deemed to be part thereof at
the time of effectiveness pursuant to Rule 430A of the Rules. If the Company has
filed an abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Rules (the "462(b) Registration Statement"),
then any reference herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The term "Prospectus" as used in
this Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to and within the time limits described in Rule 424(b) of
the Rules. Reference made herein to any Preliminary Prospectus, the Statutory
Prospectus (as hereinafter defined) or to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of such Preliminary
Prospectus, the Statutory Prospectus, or the Prospectus, as the case may be, and
any reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any document filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of such Preliminary Prospectus or the Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or the Prospectus, as
the case may be.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Statutory Prospectus and the Prospectus, as soon after the
Effective Date and the date of this Agreement as the Underwriters deem
advisable. The Company and the Selling Stockholders hereby confirm that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each Preliminary Prospectus, and each Issuer Free Writing Prospectus
(as hereinafter defined) and are authorized to distribute the Prospectus (as
from time to time amended or supplemented if the Company furnishes amendments or
supplements thereto to the Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares. On the
basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Selling Stockholders agree to sell severally
and not jointly to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Selling Stockholders, at
a purchase price of $_____ per share (the "Initial Price"), the number of Firm
Shares set forth opposite the name of such Underwriter under the column "Number
of Firm Shares to be Purchased" on Schedule I to this Agreement, subject to
adjustment in accordance with Section 9 hereof. The number of Firm Shares to be
sold by each Selling Stockholder shall be set forth opposite the name of such
Selling Stockholder under the column "Number of Firm Shares to be Sold" on
Schedule II to this Agreement.
(b) Atlantic Investors, LLC, Hewlett-Packard
Financial Services Company, SPCP Group, L.L.C. and SPCP Group III LLC
(collectively, the "Option Stockholders"), hereby grant to the several
Underwriters an option to purchase, severally and not jointly, all or any part
of the Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by the
Underwriters to eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as
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such Underwriter is purchasing of the Firm Shares. If the option is exercised by
the Underwriters in part but not in whole, the number of Option Shares to be
sold by the Option Stockholders shall be the same percentage of the maximum
number of Option Shares, as set forth in Schedule II, that would have been sold
by such stockholders if the option had been exercised in full. Such option may
be exercised only to cover over-allotments in the sales of the Firm Shares by
the Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below), and from time to time thereafter within
30 days after the date of this Agreement, in each case upon written, facsimile
or telegraphic notice, or verbal or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Underwriters to the Company no later
than 12:00 noon, New York City time, on the business day before the Firm Shares
Closing Date or at least two business days before the Option Shares Closing Date
(as defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of CIBC World
Markets Corp., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New
York City time, on the third business day following the date of this Agreement
or at such time on such other date, not later than ten (10) business days after
the date of this Agreement, as shall be agreed upon by the Company and the
Underwriters (such time and date of delivery and payment are called the "Firm
Shares Closing Date"). In addition, in the event that any or all of the Option
Shares are purchased by the Underwriters, payment of the purchase price, and
delivery of the certificates, for such Option Shares shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Underwriters and the Company, on each date of delivery as specified in the
notice from the Underwriters to the Company (such time and date of delivery and
payment are called the "Option Shares Closing Date"). The Firm Shares Closing
Date and any Option Shares Closing Date are called, individually, a "Closing
Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Selling Stockholders by wire
transfer of immediately available funds or by certified or official bank check
or checks payable in New York Clearing House (same day) funds drawn to the order
of the Selling Stockholders, against delivery of the respective certificates to
the Underwriters for the respective accounts of the Underwriters of certificates
for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Underwriters shall request
at least two full business days prior to the Firm Shares Closing Date or, in the
case of Option Shares, on the day of notice of exercise of the option as
described in Section 1(b) and shall be delivered by or on behalf of the Company
to the Underwriters through the facilities of the Depository Trust Company
("DTC") for the account of such Underwriter.
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
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(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any post-effective
amendment to the Registration Statement becomes effective, the date any
amendment or supplement to the Prospectus is filed with the Commission and each
Closing Date, the Registration Statement, the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with the
requirements of the Securities Act and the Rules and the Exchange Act and the
rules and regulations of the Commission thereunder. The Registration Statement
did not, as of the Effective Date, contain any untrue statement of a material
fact or 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; and on the Effective Date and the
other dates referred to above neither the Registration Statement nor the
Prospectus, nor any amendment thereof or supplement thereto, will contain any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. When any related Preliminary Prospectus was first filed
with the Commission (whether filed as part of the Registration Statement or any
amendment thereto or pursuant to Rule 424(b) of the Rules) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and the Rules and
did not contain any untrue statement of a material fact or 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. If applicable, each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
Notwithstanding the foregoing, none of the representations and warranties in
this paragraph 2(a) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon, and in
conformity with, information herein or otherwise furnished in writing by the
Underwriters for use in the Registration Statement or the Prospectus. With
respect to the preceding sentence, the Company acknowledges that the only
information furnished in writing by the Underwriters for use in the Registration
Statement or the Prospectus are the names of the Underwriters and the fourth
paragraph under the caption "Underwriting" in the Prospectus (collectively, the
"Underwriter Information").
(b) As of the Applicable Time (as hereinafter defined below),
neither (i) the Issuer Free Writing Prospectuses (as defined below), if any,
issued at or prior to the Applicable Time, and the Statutory Prospectus (as
defined below) all considered together (collectively, the "General Disclosure
Package"), nor (ii) any individual Issuer Free Writing Prospectus when
considered together with the General Disclosure Package, included any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to statements in
or omissions from any prospectus included in the General Disclosure Package made
in reliance upon and in conformity with the Underwriter Information.
Each Issuer Free Writing Prospectus, including any electronic road show
(including without limitation any "bona fide electronic road show" as defined in
Rule 433(h)(5) under the Securities Act) (each, a "Road Show") (i) is identified
in Schedule IV hereto and (ii) complied when issued,
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and complies, in all material respects with the requirements of the Securities
Act and the Rules and the Exchange Act and the rules and regulations of the
Commission thereunder.
As used in this Section and elsewhere in this Agreement:
"Applicable Time" means ___:00 [a/p]m (Eastern time) on the date of
this Underwriting Agreement.
"Statutory Prospectus" as of any time means the Preliminary Prospectus
relating to the Shares that is included in the Registration Statement
immediately prior to the Applicable Time , including any document incorporated
by reference therein.
"Issuer Free Writing Prospectus" means each "free writing prospectus"
(as defined in Rule 405 of the Rules) prepared by or on behalf of the Company or
used or referred to by the Company in connection with the offering of the
Shares, including, without limitation, each Road Show.
(c) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of
the Registration Statement or suspending or preventing the use of any
Preliminary Prospectus, the Prospectus or any "free writing prospectus", as
defined in Rule 405 under the Rules, has been issued by the Commission and no
proceedings for that purpose have been instituted or are threatened under the
Securities Act. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b). Any material required to be
filed by the Company pursuant to Rule 433(d) or Rule 163(b)(2) of the Rules has
been or will be made in the manner and within the time period required by such
Rules.
(d) The documents incorporated by reference into the
Registration Statement and the Prospectus, at the time they became effective or
were filed (or, in the case of any amendment with respect to such document, when
such amendment became effective or was filed) with the Commission, as the case
may be, complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, and none of such incorporated documents, at the
time such document became effective or was filed (or, in the case of any
amendment with respect to such document was filed, when such amendment became
effective or was filed) with the Commission, contained an 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, in the light of the
circumstances under which they were made, not misleading, and any further
documents so filed and incorporated by reference into the Registration Statement
and the Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and, will not, when they
become effective or are filed, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
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and in conformity with information furnished in writing to the Company by an
Underwriter expressly for use therein.
(e) Each Issuer Free Writing Prospectus, as of its issue date
and at all subsequent times through the completion of the public offer and sale
of the Shares or until any earlier date that the Company notified or notifies
the Underwriters as described in the next sentence, did not, does not and will
not include any information that conflicted, conflicts or will conflict with the
information contained in, or incorporated by reference into, the Registration
Statement, including any document incorporated by reference therein that has not
been superseded or modified, the Statutory Prospectus or the Prospectus.
If at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in, or incorporated by reference into, the Registration Statement, the Statutory
Prospectus or the Prospectus or included or would include an untrue statement of
a material fact or omitted or would omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances prevailing at the subsequent time, not misleading,
the Company has promptly notified or will promptly notify the Underwriters and
has promptly amended or will promptly amend or supplement, at its own expense,
such Issuer Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission.
(f) The financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference into the
Registration Statement, the Statutory Prospectus and Prospectus present fairly
the financial position of the Company and its consolidated subsidiaries at the
dates indicated and the statement of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; and such financial statements and related schedules and notes
thereto, and the unaudited financial information filed with the Commission as
part of the Registration Statement, have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved. The summary and selected financial data included in the
Statutory Prospectus and Prospectus present fairly the information shown therein
as at the respective dates and for the respective periods specified and have
been presented on a basis consistent with the consolidated financial statements
set forth in the Prospectus and other financial information.
(g) KPMG LLP (the "Auditor") whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the periods
covered by their reports, were independent public accountants as required by the
Securities Act and the Rules.
(h) The Company and each of its material subsidiaries,
including each entity (corporation, partnership, joint venture, association or
other business organization) controlled directly or indirectly by the Company,
is duly organized, validly existing and in good standing (or equivalent status)
under the laws of their respective jurisdictions of incorporation or
organization. The Company and each of its subsidiaries is duly qualified to do
business and is in good standing (or equivalent status) as a foreign corporation
in each jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it requires
such qualification, except for such jurisdictions where the failure to so
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qualify individually or in the aggregate would not have a material adverse
effect on the assets, properties, condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of the Company and
its subsidiaries considered as a whole (a "Material Adverse Effect"); and to the
Company's knowledge, no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(i) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity (collectively,
the "Permits"), to own, lease and license its assets and properties and conduct
its business, all of which are valid and in full force and effect, except where
the lack of such Permits, individually or in the aggregate, would not have a
Material Adverse Effect. The Company and each of its subsidiaries has fulfilled
and performed in all material respects all of its material obligations with
respect to such Permits and no event has occurred that allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the Company thereunder. Except as
may be required under the Securities Act and state and foreign Blue Sky laws, no
other Permits are required to enter into, deliver and perform this Agreement and
to issue and sell the Shares.
(j) (i) At the time of filing the Registration Statement, and
(ii) at the date hereof, the Company was not and is not an "ineligible issuer,"
as defined in Rule 405 of the Rules, including (but not limited to) the Company
or any other subsidiary in the preceding three years not having been convicted
of a felony or misdemeanor or having been made the subject of a judicial or
administrative decree or order as described in Rule 405 of the Rules.
(k) The Company and each of its subsidiaries owns or possesses
legally enforceable rights to use all patents, patent rights, inventions,
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for the conduct of
its business, except where the lack of such ownership or rights, individually or
in the aggregate, would not have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries has received any written notice of, or is not aware
of, any infringement of or conflict with asserted rights of others with respect
to any Intangibles.
(l) The Company and each of its subsidiaries has good and
marketable title in fee simple to all real property, and good and marketable
title to all other property owned by it, in each case free and clear of all
liens, encumbrances, claims, security interests and defects, except such as do
not materially affect the value of such property and do not materially interfere
with the use made or proposed to be made of such property by the Company and its
subsidiaries, taken as a whole. All property held under lease by the Company and
its subsidiaries is held by them under valid, existing and enforceable leases,
free and clear of all liens, encumbrances, claims, security interests and
defects, except such as are not material and do not materially interfere with
the use made or proposed to be made of such property by the Company and its
subsidiaries, taken as a whole. Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
has not been any Material Adverse Effect; (ii) neither the Company nor any of
its subsidiaries has sustained any loss or
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interference with its assets, businesses or properties (whether owned or leased)
from fire, explosion, earthquake, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree which would have a Material Adverse
Effect; and (iii) since the date of the latest balance sheet included or
incorporated by reference into the Registration Statement and the Prospectus,
neither the Company nor its subsidiaries has (A) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course of
business, (B) entered into any transaction not in the ordinary course of
business or (C) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.
(m) There is no document, contract or other agreement required
to be described in the Registration Statement, the Statutory Prospectus or the
Prospectus or to be filed as an exhibit to the Registration Statement which is
not described or filed as required by the Securities Act or Rules. Each
description of a contract, document or other agreement in the Registration
Statement, the Statutory Prospectus or the Prospectus accurately reflects in all
material respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in the
Registration Statement, the Statutory Prospectus or the Prospectus or listed in
the Exhibits to the Registration Statement or incorporated by reference is in
full force and effect and is valid and enforceable by and against the Company or
its subsidiary, as the case may be, in accordance with its terms. Neither the
Company nor any of its subsidiaries, if a subsidiary is a party, nor to the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiary, if a subsidiary
is a party thereto, of any other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or its properties or
business or a subsidiary or its properties or business may be bound or affected
which default or event, individually or in the aggregate, would have a Material
Adverse Effect.
(n) The statistical and market related data included in the
Registration Statement, the Statutory Prospectus or the Prospectus are based on
or derived from sources that the Company believes to be reliable and accurate.
(o) Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.
(p) This Agreement has been duly authorized, executed and
delivered by the Company.
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(q) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of any
term or provision of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or require any consent
or waiver under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or its subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which either the Company or its subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its subsidiaries or violate any provision of the charter or by-laws of the
Company or any of its subsidiaries, except for such consents or waivers which
have already been obtained and are in full force and effect.
(r) As of September 30, 2006, the capital stock of the Company
consists of 395,000,000 authorized shares of Common Stock, of which, as of such
date, 25,059,977 shares are issued and outstanding, and 5,000,000 authorized
shares of Preferred Stock, none of which is issued and outstanding. On January
2, 2007 the Company issued 1,374,950 shares of Common Stock to Atlantic
Investors, LLC upon conversion of a promissory note issued pursuant to the
Amended and Restated Loan Agreement, dated April 11, 2006, by and between the
Company and Atlantic Investors, LLC. The certificates evidencing the Shares are
in due and proper legal form. All of the issued and outstanding shares of Common
Stock have been duly and validly issued and are fully paid and nonassessable.
There are no statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of its
subsidiaries or any such rights pursuant to its Certificate of Incorporation or
By-laws or any agreement or instrument to or by which the Company or any of its
subsidiaries is a party or bound. The Shares are duly and validly issued, fully
paid and nonassessable and none of them were issued in violation of any
preemptive or other similar right. Except as disclosed in the Registration
Statement, the Statutory Prospectus and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of stock of the Company or
any of its subsidiaries or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in all
material respects to all statements in relation thereto contained in, or
incorporated by reference into, the Registration Statement and the Statutory
Prospectus and the Prospectus. All outstanding shares of capital stock of each
of the Company's subsidiaries have been duly authorized and validly issued, and
are fully paid and nonassessable and are owned directly by the Company or by
another wholly-owned subsidiary of the Company free and clear of any security
interests, liens, encumbrances, equities or claims, other than those described
in the Statutory Prospectus and the Prospectus.
(s) No holder of any security of the Company has any right,
which has not been waived, to have any security owned by such holder included in
the Registration Statement or to demand registration of any security owned by
such holder for a period of 180 days after the date of this Agreement.
(t) Each director and executive officer of the Company has
delivered to the Underwriters his enforceable written
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lock-up agreement in the form attached to this Agreement as Exhibit A hereto
and each Selling Stockholder listed on Schedule III hereto has delivered to the
Underwriters his enforceable written lock-up agreement in the form agreed to
between such Selling Stockholder and the Underwriters (together with the
agreements referred to in the preceding clause, the "Lock-up Agreements").
(u) 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
of the Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries could individually or in the
aggregate have a Material Adverse Effect; and, to the knowledge of the Company,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Agreement.
(w) Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would have a Material Adverse Effect. 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 a
Material Adverse Effect. The Company is not aware of any threatened or pending
litigation between the Company or its subsidiaries and any of its executive
officers which, if adversely determined, could have a Material Adverse Effect
and has no reason to believe that such officers will not remain in the
employment of the Company.
(x) No transaction has occurred between or among the Company
and any of its officers or directors, shareholders or any affiliate or
affiliates of any such officer or director or shareholder that is required to be
described in and is not described in the Registration Statement, the Statutory
Prospectus and the Prospectus.
(y) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock or any security of the Company to facilitate the sale or resale of
any of the Shares.
(z) The Company and each of its subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to be filed
through the date hereof, which returns are true and correct in all material
respects or has received timely extensions thereof, and has paid all taxes shown
on such returns and all assessments received by it to the extent that the same
are material and have become due. There are no tax audits or investigations
pending, which if adversely determined would have a Material Adverse Effect; nor
are there any material proposed additional tax assessments against the Company
or any of its subsidiaries.
(aa) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
Capital Market.
(bb) The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or the
10
quotation of the Common Stock on the Nasdaq Capital Market, nor has the Company
received any notification that the Commission or the Nasdaq Capital Market is
contemplating terminating such registration or quotation.
(cc) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in all material respects, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(dd) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act), which: (i) are designed to ensure that material information
relating to the Company is made known to the Company's principal executive
officer and its principal financial officer by others within the Company,
particularly during the periods in which the periodic reports required under the
Exchange Act are required to be prepared; (ii) provide for the periodic
evaluation of the effectiveness of such disclosure controls and procedures at
the end of the periods in which the periodic reports are required to be
prepared; and (iii) are effective in all material respects to perform the
functions for which they were established.
(ee) Based on the evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or not
material, that involves management or other employees who have a role in the
Company's internal controls.
(ff) Except as described in the Statutory Prospectus and the
Prospectus and as preapproved in accordance with the requirements set forth in
Section 10A of the Exchange Act, the Auditor has not been engaged by the Company
to perform any "prohibited activities" (as defined in Section 10A of the
Exchange Act).
(gg) Except as described in the Statutory Prospectus and the
Prospectus, there are no material off-balance sheet arrangements (as defined in
Item 303 of Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company's financial condition, revenues
or expenses, changes in financial condition, results of operations, liquidity,
capital expenditures or capital resources.
(hh) The Company's Board of Directors has validly appointed an
audit committee whose composition satisfies the requirements of Rule 4350(d)(2)
of the Rules of the National Association of Securities Dealers (the "NASD
Rules") and the Board of Directors
11
and/or the audit committee has adopted a charter that satisfies the requirements
of Rule 4350(d)(1) of the NASD Rules. The audit committee has reviewed the
adequacy of its charter within the past twelve months.
(ii) The Company is in compliance with all other applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002, any related rules and regulations
promulgated by the Commission and corporate governance requirements under the
NASD Rules upon the effectiveness of such provisions and has no reason to
believe that it will not be able to comply with such provisions at the time of
effectiveness.
(jj) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged or propose
to engage after giving effect to the transactions described in the Statutory
Prospectus and the Prospectus; all policies of insurance and fidelity or surety
bonds insuring the Company or any of its subsidiaries or the Company's or its
subsidiaries' respective businesses, assets, employees, officers and directors
are in full force and effect; the Company and each of its subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that is
not materially greater than the current cost. Neither the Company nor any of its
subsidiaries has been denied any insurance coverage which it has sought or for
which it has applied, except as would not have, individually or in the
aggregate, a Material Adverse Effect.
(kk) Each approval, consent, order, authorization,
designation, declaration or filing of, by or with any regulatory, administrative
or other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by the
Company (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or may be necessary to
qualify the Shares for public offering by the Underwriters under the state
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(ll) 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
Underwriters.
(mm) (i) Each of the Company and each of its subsidiaries is
in compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances and
protection of health or the environment ("Environmental Law") which are
applicable to its business; (ii) neither the Company nor its subsidiaries has
received any notice from any governmental authority or third party of an
asserted claim under Environmental Laws; (iii) each of the Company and each of
its subsidiaries 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
12
of any such permit, license or approval; (iv) to the Company's knowledge, no
facts currently exist that will require the Company or any of its subsidiaries
to make future material capital expenditures to comply with Environmental Laws;
and (v) no property which is or has been owned, or to the Company's knowledge,
leased or occupied by the Company or its subsidiaries 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. Neither the Company nor any of its subsidiaries has been named as a
"potentially responsible party" under the CERCLA of 1980.
(nn) The Company has reasonably concluded that the effect of
any Environmental Laws on the business, operations and properties of the Company
and its subsidiaries and the associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws, or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties) would not, singly or in the aggregate,
have a Material Adverse Effect.
(oo) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof as
described in the Statutory Prospectus and the Prospectus, will not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act").
(pp) The Company or any other person associated with or acting
on behalf of the Company including, without limitation, any director, officer,
agent or employee of the Company or its subsidiaries, has not, directly or
indirectly, while acting on behalf of the Company or its subsidiaries (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.
(qq) The operations of the Company and its subsidiaries are
and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the "Money Laundering Laws") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of it
subsidiaries with respect to the Money Laundering Laws is pending, or to the
best knowledge of the Company, threatened.
(rr) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department ("OFAC"); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
13
available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(ss) Except as described in the Statutory Prospectus and the
Prospectus or in the documents incorporated by reference into 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, other
than shares issued pursuant to employee benefit plans, qualified stock options
plans or other employee compensation plans or pursuant to outstanding options,
rights or warrants.
(tt) The Company has fulfilled its obligations, if any, under
the minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in Section
3(3) of ERISA and such regulations and published interpretations in which its
employees are eligible to participate and each such plan is in compliance in all
material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. No "Reportable Event" (as defined in
12 ERISA) has occurred with respect to any "Pension Plan" (as defined in ERISA)
for which the Company could have any liability.
(uu) None of the Company, its directors or its officers has
distributed nor will distribute prior to the later of (i) the Firm Shares
Closing Date, or the Option Shares Closing Date, and (ii) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials, if any, permitted by
the Securities Act and consistent with Section 4(d) below.
3. Representations and Warranties of the Selling Stockholders. Each of
the Selling Stockholders severally and not jointly, hereby represents and
warrants, as to itself, to each Underwriter as of the date hereof and as of the
Firm Shares Closing Date and, if the Selling Stockholders are selling Option
Shares, as of each such Option Shares Closing Date (if any), as follows:
(a) Such Selling Stockholder has caused certificates for the
number of Shares to be sold by such Selling Stockholder hereunder to be
delivered to Computershare Trust Company (the "Custodian"), endorsed in blank or
with blank stock powers duly executed, with a signature appropriately
guaranteed, such certificates to be held in custody by the Custodian for
delivery, pursuant to the provisions of this Agreement and an agreement dated
__________, 2007 among the Custodian and such Selling Stockholder substantially
in the form attached hereto as Exhibit B (the "Custody Agreement").
(b) This Agreement, the Custody Agreement, the irrevocable
power of attorney substantially in the form attached hereto as Exhibit C (the
"Power of Attorney"), if applicable, and the Lock-up Agreement have each been
duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and, assuming due authorization, execution and
14
delivery by the other parties thereto, constitutes the valid and legally binding
agreement of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms.
(c) The execution and delivery by such Selling Stockholder of
this Agreement and the performance by such Selling Stockholder of its
obligations under this Agreement, including the sale and delivery of the Shares
to be sold by such Selling Stockholder and the consummation of the transactions
contemplated herein and compliance by such Selling Stockholder with its
obligations hereunder, do not and will not, whether with our without the giving
of notice or the passage of time or both, (i) violate or contravene any
provision of the charter or bylaws or other organizational instrument of such
Selling Stockholder, if applicable, or any applicable law, statute, regulation,
or filing or any agreement or other instrument binding upon such Selling
Stockholder or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Stockholder, (ii) conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the shares to be sold by
such Selling Stockholder or any property or assets of such Selling Stockholder
pursuant to the terms of any agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder may be bound or to
which any of the property or assets of such Selling Stockholder is subject or
(iii) require any consent, approval, authorization or order of or registration
or filing with any court or governmental agency or body having jurisdiction over
it, except such as may be required by the Blue Sky laws of the various states in
connection with the offer and sale of the Shares which have been or will be
effected in accordance with this Agreement.
(d) Such Selling Stockholder has, and on the Firm Shares
Closing Date and the Option Shares Closing Date, if applicable, will have, valid
and marketable title to the Shares to be sold by such Selling Stockholder free
and clear of any lien, claim, security interest or other encumbrance, including,
without limitation, any restriction on transfer, except as otherwise described
in the Registration Statement and Prospectus.
(e) Such Selling Stockholder has, and on the Firm Shares
Closing Date and the Option Shares Closing Date, if applicable, will have, full
power and authority, and any approval required by law, to sell, assign, transfer
and deliver the Shares to be sold by such Selling Stockholder in the manner
provided by this Agreement.
(f) Upon delivery of and payment for the Shares to be sold by
such Selling Stockholder pursuant to this Agreement, assuming each Underwriter
has no notice of any adverse claim, the several Underwriters will receive valid
and marketable title to such Shares free and clear of any lien, claim, mortgage,
pledge, security interest or other encumbrance.
(g) All information relating to such Selling Stockholder
furnished in writing by such Selling Stockholder expressly for use in the
Registration Statement and, Prospectus and any Issuer Free Writing Prospectus
is, and on each Closing Date will be, true, correct, and complete, and does not,
and on each Closing Date will not, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
15
(h) Such Selling Stockholder has reviewed the Registration
Statement, Prospectus and any Issuer Free Writing Prospectus furnished to such
Selling Stockholder, although such Selling Stockholder has not independently
verified the accuracy or completeness of all the information contained therein,
and nothing has come to the attention of such Selling Stockholder that would
lead such Selling Stockholder to believe that with respect to any information
contained therein relating to such Selling Stockholder (i) on the Effective
Date, the Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein in
order to make the statements made therein not misleading, (ii) on the Effective
Date the Prospectus contained and, on each Closing Date contains, any untrue
statement of a material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. and (iii) as of the
Applicable Time, neither the General Disclosure Package furnished to such
Selling Stockholder, nor any individual Issuer Free Writing Prospectus furnished
to such Selling Stockholder, when considered together with the General
Disclosure Package, included 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, in the light of the circumstances under which they
were made, not misleading.
(i) The sale of Shares by such Selling Stockholder pursuant to
this Agreement is not prompted by such Selling Stockholder's actual knowledge of
any material information concerning the Company or any of its subsidiaries which
is not set forth or incorporated by reference in the Prospectus.
(j) Such Selling Stockholder has not taken and such Selling
Stockholder will not take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(k) Such Selling Stockholder has no actual knowledge that any
representation or warranty of the Company set forth in Section 2 above is untrue
or inaccurate in any material respect.
(l) Such Selling Stockholder has not prepared used or referred
to, nor will it prepare, use or refer to, any "free writing prospectus" (as
defined in Rule 405 of the Rules).
(m) The representations and warranties of such Selling
Stockholder in the Custody Agreement are and on each Closing Date will be, true
and correct.
4. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Underwriters and the Prospectus shall
have been timely filed with the Commission in accordance with Section 5(a) of
this Agreement and any material
16
required to be filed by the Company pursuant to Rule 433(d) of the Rules shall
have been timely filed with the Commission in accordance with such rule.
(b) No order preventing or suspending the use of any
Preliminary Prospectus, the Prospectus or any "free writing prospectus", as
defined in Rule 405 of the Rules, shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for such purpose shall be pending before or threatened
by the Commission, and any requests for additional information on the part of
the Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the satisfaction of the
Commission and the Underwriters. If the Company has elected to rely upon Rule
430A, Rule 430A information previously omitted from the effective Registration
Statement pursuant to Rule 430A shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) within the prescribed time period and the
Company shall have provided evidence satisfactory to the Underwriters of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirements of Rule 430A.
(c) The representations and warranties of the Company and the
Selling Stockholders contained in this Agreement and in the certificates
delivered pursuant to Sections 4(d) and (e) shall be true and correct when made
and on and as of each Closing Date as if made on such date. The Company and the
Selling Stockholders shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by them at or before such Closing Date.
(d) The Underwriters shall have received on each Closing Date
a certificate, addressed to the Underwriters and dated such Closing Date, of the
chief executive or chief operating officer and the chief financial officer or
chief accounting officer of the Company to the effect that: (i) the
representations, warranties and agreements of the Company in this Agreement were
true and correct when made and are true and correct as of such Closing Date;
(ii) the Company has performed all covenants and agreements and satisfied all
conditions contained herein; (iii) they have carefully examined the Registration
Statement, the Prospectus, the General Disclosure Package, and any individual
Issuer Free Writing Prospectus and, in their opinion (A) as of the Effective
Date the Registration Statement and Prospectus did not include, and as of the
Applicable Time, neither (i) the General Disclosure Package, nor (ii) any
individual Issuer Free Writing Prospectus, when considered together with the
General Disclosure Package, included, 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, in light of the circumstances under
which they were made, not misleading, and (B) since the Effective Date no event
has occurred which should have been set forth in a supplement or otherwise
required an amendment to the Registration Statement, the Statutory Prospectus or
the Prospectus; and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to their knowledge, no proceedings
for that purpose have been instituted or are pending under the Securities Act.
(e) The Underwriters shall have received on each Closing Date
a certificate addressed to the Underwriters and dated such Closing Date, of each
Selling Stockholder, to the effect that: (i) the representations, warranties and
agreements of such Selling
17
Stockholder in this Agreement were true and correct when made and are true and
correct as of such Closing Date; (ii) such Selling Stockholder has performed all
covenants and agreements and satisfied all conditions contained herein; and
(iii) such Selling Stockholder has carefully examined the Registration
Statement, the Prospectus, the General Disclosure Package furnished to such
Selling Stockholder, and any individual Issuer Free Writing Prospectus furnished
to such Selling Stockholder, and, in the opinion of such Selling Stockholder,
(A) with respect to the information relating to such Selling Stockholder, as of
the Effective Date, the Registration Statement and Prospectus did not include,
and as of the Applicable Time, neither (i) the General Disclosure Package
furnished to such Selling Stockholder, nor (ii) any individual Issuer Free
Writing Prospectus furnished to such Selling Stockholder, when considered
together with the General Disclosure Package furnished to such Selling
Stockholder, included 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, in light of the circumstances under which they were made,
not misleading, and (B) since the Effective Date no event has occurred with
respect to such Selling Stockholder which should have been set forth in a
supplement or otherwise required an amendment to the Registration Statement or
the Prospectus.
(f) The Underwriters shall have received, (i) simultaneously
with the execution of this Agreement a signed letter from the Auditor addressed
to the Underwriters and dated the date of this Agreement, in form and substance
reasonably satisfactory to the Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in, or incorporated by reference into, the Registration
Statement and the Statutory Prospectus, and (ii) on each Closing Date, a signed
letter from the Auditor addressed to the Underwriters and dated the date of such
Closing Date, in form and substance reasonably satisfactory to the Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in, or incorporated by
reference into, the Registration Statement and the Prospectus
(g) The Underwriters shall have received on each Closing Date
from BRL Law Group LLC, counsel for the Company, an opinion, addressed to the
Underwriters and dated such Closing Date, and stating in effect that:
(i) Each of the Company and its Subsidiaries is duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. Each of the
Company and its Subsidiaries is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties or the
nature of its business makes such qualification necessary, except where
the failure to so qualify or to be in good standing, individually or in
the aggregate, would not have a Material Adverse Effect.
(ii) Each of the Company and its Subsidiaries has
all requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as now being conducted and
as described in the Registration Statement, the
18
Statutory Prospectus and the Prospectus and with respect to the Company
to enter into and perform its obligations under this Agreement.
(iii) As of September 30, 2006, the capital stock
of the Company consists of 395,000,000 authorized shares of Common
Stock, of which, as of such date, 29,059,977 shares are issued and
outstanding, and 5,000,000 authorized shares of Preferred Stock, none
of which is issued and outstanding, and, since such dates, there has
been no change in the capital stock of the Company except for 1,374,950
shares of Common Stock that were issued to Atlantic Investors, LLC on
January 2, 2007 upon conversion by Atlantic Investors, LLC of a
promissory note held by it pursuant to the Amended and Restated Loan
Agreement, dated April 11, 2006, by and between the Company and
Atlantic Investors, LLC, and other subsequent issuances, if any,
pursuant to reservations, agreements or employee benefit plans referred
to in the Statutory Prospectus and the Prospectus or pursuant to the
exercise of convertible securities or options referred to in the
Statutory Prospectus and the Prospectus; all of the outstanding shares
of capital stock of the Company have been duly and validly authorized
and issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. To such
counsel's knowledge, except as disclosed in the Registration Statement,
the Statutory Prospectus and the Prospectus, there are no preemptive or
other rights to subscribe for or to purchase or any restriction upon
the voting or transfer of any securities of the Company pursuant to the
Company's Certificate of Incorporation or By-laws or other governing
documents or any agreements or other instruments to which the Company
is a party or by which it is bound. The Shares, at the time of their
issuance by the Company to the Selling Stockholders, were duly and
validly authorized and issued and were fully paid and nonassessable.
The sale of the Shares by the Selling Stockholders is not subject to
any preemptive or other similar rights of any security holders of the
company. To such counsel's knowledge, except as disclosed in the
Registration Statement, the Statutory Prospectus and the Prospectus,
there is no outstanding option, warrant or other right calling for the
issuance of, and no commitment, plan or arrangement to issue, any share
of stock of the Company or any security convertible into, exercisable
for, or exchangeable for stock of the Company. The Common Stock and the
Shares conform in all material respects to the descriptions thereof
contained in, or incorporated by reference into, the Registration
Statement, the Statutory Prospectus and the Prospectus. The form of
certificate used to evidence the Common Stock complies in all material
respects with all applicable statutory requirements, with any
applicable requirements of the Certificate of Incorporation or By-laws
of the Company and the requirements of the Nasdaq Capital Market. To
such counsel's knowledge, there are no persons with registration rights
or other similar rights, that have not been waived, to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act.
(iv) All necessary corporate action has been duly
and validly taken by the Company to authorize the execution, delivery
and performance of this Agreement. This Agreement has been duly and
validly authorized, executed and delivered by the Company and this
Agreement constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency,
19
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(v) Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation of
any of the transactions contemplated hereby, nor the execution,
delivery or performance of any other agreement or instrument entered
into or to be entered into by the Company in connection with the
transactions contemplated by the Registration Statement, the Statutory
Prospectus and the Prospectus, will give rise to a right to terminate
or accelerate the due date of any payment due under, or conflict with
or result in the breach of any term or provision of, or constitute a
default (or any event which with notice or lapse of time, or both,
would constitute a default) under, or require consent or waiver under,
or result in the execution or imposition of any lien, charge, claim,
security interest or encumbrance upon any properties or assets of the
Company or any Subsidiary pursuant to the terms of, any indenture,
mortgage, deed trust, note or other agreement or instrument of which
such counsel is aware and to which the Company or any Subsidiary is a
party or by which either the Company or any Subsidiary or any of their
assets or properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, domestic
or foreign, of which such counsel is aware or violate any provision of
the charter or by-laws of the Company or any Subsidiary, except for
such consents or waivers which have already been obtained and are in
full force and effect and except where the failure to obtain such
consents or waivers would not have a Material Adverse Effect on the
Company's ability to perform its obligations under this Agreement.
(vi) No consent, approval, authorization, license,
registration, qualification or order of any court or governmental
agency or regulatory body is required for the due authorization,
execution, delivery or performance of this Agreement by the Company or
the consummation of the transactions contemplated hereby or thereby,
except such as have been obtained under the Securities Act and such as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the several
Underwriters.
(vii) To such counsel's knowledge, there is no action,
suit, proceeding or other investigation, before any court or before or
by any public body or board pending or threatened against, or involving
the assets, properties or businesses of, the Company which is required
to be disclosed in the Registration Statement, the Statutory Prospectus
and the Prospectus and is not so disclosed or which could reasonably be
expected to have a Material Adverse Effect.
(viii) The statements in the Statutory Prospectus and
the Prospectus under the caption "Material Relationships with the
Registrant" and in the Registration Statement under Item 15 of Part II,
insofar as such statements constitute a summary of documents referred
to therein or matters of law, are accurate in all material respects and
accurately present the information with respect to such documents and
matters. Accurate copies of all contracts and other documents required
to be filed as exhibits to, or described in, the Registration Statement
have been so filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
20
(ix) The Registration Statement, all Preliminary
Prospectuses (including the Statutory Prospectus) and the Prospectus
and each amendment thereof or supplement thereto (except for the
financial statements and schedules and other financial data included
therein, as to which such counsel expresses no opinion) comply as to
form in all material respects with the requirements of the Securities
Act and the Rules and the documents incorporated by reference into the
Registration Statement, all Preliminary Prospectuses (including the
Statutory Prospectus) and the Prospectuses and any further amendment or
supplement to any such incorporated document made by the Company
(except for the financial statements and schedules and other financial
data included therein, as to which such counsel expresses no opinion)
when they became effective or were filed with the Commission, as the
case may be, complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder.
(x) The Registration Statement is effective under
the Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
threatened, pending or contemplated. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period
required by such Rule 424(b).
(xi) The Shares have been approved for quotation on
the Nasdaq Capital Market.
(xii) The capital stock of the Company conforms in
all material respects to the description thereof contained in the
Company's registration statement on Form 8-A under the Exchange Act.
(xiii) The Company is not an "investment company" or
an entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, such counsel
may rely as to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel satisfactory
to the Underwriters as to matters which are governed by laws other than the laws
of the Commonwealth of Massachusetts, the General Corporation Law of the State
of Delaware and the Federal laws of the United States; provided that such
counsel shall state that in their opinion the Underwriters and they are
justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Underwriters and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Underwriters and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement, the Prospectus and Issuer Free
Writing Prospectuses and related matters were discussed and, although such
counsel has not independently verified, and accordingly is not confirming and
assumes no responsibility
21
for the accuracy, completeness or fairness of the statements contained in, or
incorporated by reference into, the Registration Statement, the Prospectus
(except as specified in the foregoing opinion), and any Issuer Represented
General Free Writing Prospectus on the basis of the foregoing, no facts have
come to the attention of such counsel which lead such counsel to believe that
(i) the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus as amended or supplemented (except with respect to the
financial statements, notes and schedules thereto and other financial data, as
to which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (ii) any document
incorporated by reference into the Statutory Prospectus and the Prospectus or
any further amendment or supplement to any such incorporated document made by
the Company, when they became effective or were filed with the Commission, as
the case may be, contained, in the case of a registration statement which became
effective under the Securities Act, 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, in the case of other
documents which were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted 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, and (iii) the Statutory Prospectus, when
considered together with the price to the public and the number of shares as set
forth on the cover page of the Prospectus, as of the Applicable Time, contained
any untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) The Underwriters shall have received on each Closing Date
from counsel for each of the Selling Stockholders an opinion, addressed to the
Underwriters and dated such Closing Date stating the opinions set forth on
Schedule V hereto, and with respect to Hewlett-Packard Financial Services
Company, an opinion, addressed to the Underwriters and dated such Closing Date
stating the opinions set forth on Schedule VI hereto.
(i) All proceedings taken in connection with the sale of the
Firm Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Underwriters, and their counsel and
the Underwriters shall have received from Xxxxxxxx & Xxxxxxxx LLP a favorable
opinion, addressed to the Underwriters and dated such Closing Date, with respect
to the Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Underwriters may reasonably request, and the Company
shall have furnished to Xxxxxxxx & Xxxxxxxx LLP such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(j) The Underwriters shall have received copies of the Lock-up
Agreements executed by each entity or person listed on Schedule III hereto.
22
(k) The Shares shall have been approved for quotation on the
Nasdaq Capital Market.
(l) The Company and each Selling Stockholder shall have
furnished or caused to be furnished to the Underwriters such further
certificates or documents as the Underwriters shall have reasonably requested.
(m) The Underwriters shall be reasonably satisfied that since
the respective dates as of which information is given in the Registration
Statement, the Statutory Prospectus, the General Disclosure Package and the
Prospectus, (i) there shall not have been any material change in the capital
stock of the Company or any material change in the indebtedness (other than in
the ordinary course of business) of the Company, (ii) except as set forth or
contemplated by the Registration Statement, the Statutory Prospectus, the
General Disclosure Package or the Prospectus, no material oral or written
agreement or other transaction shall have been entered into by the Company that
is not in the ordinary course of business or that could reasonably be expected
to result in a material reduction in the future earnings of the Company, (iii)
no loss or damage (whether or not insured) to the property of the Company shall
have been sustained that had or could reasonably be expected to have a Material
Adverse Effect, (iv) no legal or governmental action, suit or proceeding
affecting the Company or any of its properties that is material to the Company
or that affects or could reasonably be expected to affect the transactions
contemplated by this Agreement shall have been instituted or threatened and (v)
there shall not have been any material adverse change in the condition
(financial or otherwise), business, management, results of operations or
prospects of the Company or its subsidiaries taken as a whole that makes it
impractical or inadvisable in the Underwriters' judgment to proceed with the
purchase or Public Offering of the Shares as contemplated hereby.
5. Covenants and other Agreements of the Company, the Selling
Stockholders and the Underwriters.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to
cause the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto, to become
effective as promptly as possible. The Company shall prepare the
Prospectus in a form approved by the Underwriters and file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the 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 the Rules. The
Company will file with the Commission all Issuer Free Writing
Prospectuses in the time and manner required under Rules 433(d) or
163(b)(2), as the case may be.
(ii) The Company shall promptly advise the
Underwriters in writing (A) when any post-effective amendment to the
Registration Statement shall have become effective or any supplement to
the Prospectus shall have been filed, (B) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order
23
preventing or suspending the use of any preliminary prospectus or any
"free writing prospectus", as defined in Rule 405 of the Rules, or the
institution or threatening of any proceeding for that purpose and (D)
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
such purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference into the Registration Statement or any Issuer
Free Writing Prospectus unless the Company has furnished the
Underwriters a copy for its review prior to filing and shall not file
any such proposed amendment or supplement to which the Underwriters
reasonably object. The Company shall use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(iii) If, at any time when a prospectus
relating to the Shares (or, in lieu thereof, the notice referred to in
Rule 173(a) of the Rules) is required to be delivered under the
Securities Act, any event occurs as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the
Rules, the Company promptly shall prepare and file with the Commission,
subject to the second sentence of paragraph (ii) of this Section 5(a),
an amendment or supplement which shall correct such statement or
omission or an amendment which shall effect such compliance.
(iv) If at any time following issuance of an
Issuer Free Writing Prospectus there occurs an event or development as
a result of which such Issuer Free Writing Prospectus would conflict
with the information contained in the Registration Statement or would
include an untrue statement of a material fact or would omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading, the Company will
promptly notify the Underwriters and will promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or
correct such conflict, untrue statement or omission.
(v) The Company shall make generally
available to its security holders and to the Underwriters as soon as
practicable, but not later than 45 days after the end of the 12-month
period beginning at the end of the fiscal quarter of the Company during
which the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement (which
need not be audited) of the Company, covering such 12-month period,
which shall satisfy the provisions of Section 11(a) of the Securities
Act or Rule 158 of the Rules.
(vi) The Company shall furnish to the
Underwriters and counsel for the Underwriters, without charge, signed
copies of the Registration Statement (including all exhibits thereto
and amendments thereof) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and all amendments
thereof and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by
24
the Securities Act or the Rules, as many copies of any Preliminary
Prospectus, any Issuer Free Writing Prospectus and the Prospectus and
any amendments thereof and supplements thereto as the Underwriters may
reasonably request. If applicable, the copies of the Registration
Statement, preliminary prospectus, any Issuer Free Writing Prospectus
and Prospectus and each amendment thereof and supplement thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(vii) The Company shall cooperate with the
Underwriters and their counsel in endeavoring to qualify the Shares for
offer and sale in connection with the offering under the laws of such
jurisdictions as the Underwriters may designate and shall maintain such
qualifications in effect so long as required for the distribution of
the Shares; provided, however, that the Company shall not be required
in connection therewith, or as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(viii) The Company, during the period when
the Prospectus (or in lieu thereof, the notice referred to in Rule
173(a) of the Rules) is required to be delivered under the Securities
Act and the Rules or the Exchange Act, will file all reports and other
documents required to be filed with the Commission pursuant to Section
13, 14 or 15 of the Exchange Act within the time periods required by
the Exchange Act and the regulations promulgated thereunder.
(ix) Without the prior written consent of
CIBC World Markets Corp., for a period of 90 days after the date of
this Agreement, the Company and each of its individual directors and
executive officers shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or
otherwise dispose of, directly or indirectly, any equity securities of
the Company (or any securities convertible into, exercisable for or
exchangeable for equity securities of the Company), except for the
issuance of shares pursuant to the Company's existing stock option plan
or bonus plan as described in the Registration Statement and the
Prospectus. In the event that during this period, (A) any shares are
issued pursuant to the Company's existing stock option plan or bonus
plan that are exercisable during such 90 day period or (B) any
registration is effected on Form S-8 or on any successor form relating
to shares that are exercisable during such 90 day period, the Company
shall obtain the written agreement of such grantee or purchaser or
holder of such registered securities that, for a period of 90 days
after the date of this Agreement, such person will not, without the
prior written consent of the Underwriters, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities convertible
into, exercisable for, or exchangeable for any shares of Common Stock)
owned by such person. Notwithstanding the foregoing, (i) the Company
represents and warrants that each such grantee or purchaser or holder
of such registered securities shall be subject to similar lockup
restrictions as set forth on Exhibit A-1 attached hereto and the
Company shall enforce such rights and impose stop-transfer restrictions
on any such sale or other transfer or
25
disposition of such shares until the end of the applicable period and
(ii) if (x) during the last 17 days of the 90 day period described in
this Section 5(a)(ix) the Company issues an earnings release or
material news or a material event relating to the Company occurs; or
(y) prior to the expiration of such 90 day period, the Company
announces that it will release earnings results during the 16 day
period beginning on the last day of the 90 day period; the restrictions
imposed during this Section 5(a)(ix) shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event; provided, however, that this sentence shall not apply if the
research published or distributed on the Company is compliant under
Rule 139 of the Securities Act and the Company's securities are
actively traded as defined in Rule 101(c)(1) of Regulation M of the
Exchange Act.
(x) On or before completion of this
offering, the Company shall make all filings required under applicable
securities laws and by the Nasdaq Capital Market.
(xi) Prior to the Closing Date, the Company
will issue no press release or other communications directly or
indirectly and hold no press conference with respect to the Company,
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of any of them, or the offering of the
Shares without the prior written consent of the Underwriters unless in
the judgment of the Company and its counsel, and after notification to
the Underwriters, such press release or communication is required by
law.
(xii) The Company will apply the net
proceeds from the exercise of any warrants by Selling Stockholders in
connection with the offering in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) (i) The Company agrees to pay, or reimburse if paid by the
Underwriters, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (A) the preparation
and delivery of certificates for the Shares to the Underwriters; (B) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
5(a)(vii), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (C) the filing fees of the NASD in connection
with its review of the terms of the public offering and reasonable fees and
disbursements of counsel for the Underwriters in connection with such review;
(D) inclusion of the Shares for quotation on the Nasdaq Capital Market; and (v)
all transfer taxes, if any, with respect to the sale and delivery of the Shares
by the Company to the Underwriters.
(ii) Subject to the provisions of Section 8,
the Underwriters agree: (A) to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated,
all costs and expenses incident to the performance of the obligations
of the Underwriters under this Agreement not payable by the Company
pursuant to Section 5(b)(i)
26
above, including, without limitation, the fees and disbursements of
counsel for the Underwriters and (B) to reimburse the Company for all
printing and road show costs and expenses including (1) the
preparation, printing, reproduction and distribution of the
Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus, all
amendments thereof and supplements thereto and any document
incorporated by reference therein, and the printing and distribution of
this Agreement and (2) the furnishing (including costs of shipping and
mailing) to the Underwriters of copies of each Preliminary Prospectus,
the Prospectus and all amendments or supplements to the Prospectus, any
Issuer Free Writing Prospectus, and of the several documents required
by this Section to be so furnished, as may be reasonably requested for
use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold. Prior to and as
a condition of reimbursement of any expenses referred to in clause (2),
the Company must submit to the Underwriters such documentation relating
to such expenses as the Underwriters may reasonably request.
(c) The Selling Stockholders will each pay their respective
expenses incident to the performance of their respective obligations
under, and the consummation of the transactions contemplated by, this
Agreement, including (i) any stamp duties, capital duties and stock
transfer taxes, if any, payable upon the sale of the Shares to the
Underwriters, and (ii) the fees and disbursements of their respective
counsel and accountants, except that the Company agrees to pay the fees
and disbursements of Xxxxxxx Procter, LLP, in its capacity as counsel
to the Selling Stockholders.
(d) The Company and each Selling Stockholder acknowledges and
agrees that each of the Underwriters has acted and is acting solely in
the capacity of a principal in an arm's length transaction between the
Company and the Selling Stockholder, on the one hand, and the
Underwriters, on the other hand, with respect to the offering of Shares
contemplated hereby (including in connection with determining the terms
of the offering) and not as a financial advisor, agent or fiduciary to
the Company, the Selling Stockholders or any other person.
Additionally, the Company and each Selling Stockholders acknowledges
and agrees that the Underwriters have not and will not advise the
Company, the Selling Stockholders or any other person as to any legal,
tax, investment, accounting or regulatory matters in any jurisdiction.
The Company and each Selling Stockholder has consulted with its own
advisors concerning such matters and shall be responsible for making
its own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no responsibility
or liability to the Company, the Selling Stockholders or any other
person with respect thereto, whether arising prior to or after the date
hereof. Any review by the Underwriters of the Company, the transactions
contemplated hereby or other matters relating to such transactions have
been and will be performed solely for the benefit of the Underwriters
and shall not be on behalf of the Company or the Selling Stockholders.
The Company and each Selling Stockholder agrees that it will not claim
that the Underwriters, or any of them, has rendered advisory services
of any nature or respect, or owes a fiduciary duty to the Company, any
Selling Stockholder or any other person in connection with any such
transaction or the process leading thereto.
(e) The Company represents and agrees that, unless it obtains
the prior consent of each Underwriter, and each Underwriter represents
and agrees that, unless it obtains
27
the prior consent of the Company and the other Underwriter, it has not
made and will not make any offer relating to the Shares that would
constitute an "issuer free writing prospectus," as defined in Rule 433,
or that would otherwise constitute a "free writing prospectus," as
defined in Rule 405, required to be filed with the Commission. The
Company has complied and will comply with the requirements of Rule 433
under the Act applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission where required, legending
and record keeping. The Company represents that it has satisfied and
agrees that it will satisfy the conditions set forth in Rule 433 of the
Rules to avoid a requirement to file with the Commission any Road Show.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless
the Selling Stockholders, each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages and liabilities, joint or several (including
any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted), to which they, or any of them,
may become subject under the Securities Act, the Exchange Act or other
Federal or state law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement, the Statutory Prospectus, the Prospectus, any Issuer Free
Writing Prospectus or any "issuer-information" filed or required to be
filed pursuant to Rule 433(d) of the Rules, any amendment thereof or
supplement thereto, or in any Blue Sky application or other information
or other documents executed by the Company filed in any state or other
jurisdiction to qualify any or all of the Shares under the securities
laws thereof (any such application, document or information being
hereinafter referred to as a "Blue Sky Application") or arise out of or
are based upon any 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 such
indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) or Selling Stockholder on account
of any losses, claims, damages or liabilities arising from the sale of
the Shares to any person by such Underwriter or Selling Stockholder if
such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration
Statement, the Prospectus, the Statutory Prospectus, any Issuer Free
Writing Prospectus or such amendment thereof or supplement thereto, or
in any Blue Sky Application in reliance upon and in conformity with the
Underwriter Information or information furnished in writing by the
Selling Stockholder for use therein. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Selling Stockholder agrees severally
and not jointly, to indemnify and hold harmless the Company and each
Underwriter and each person, if any, who controls the Company or any
Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims,
damages and liabilities (including any reasonable investigation, legal
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or claim asserted), to
which they, or any of them, may become subject, under the Securities
Act, the Exchange Act, or other
28
Federal or state law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement, the Statutory Prospectus, the
Prospectus, any Issuer Free Writing Prospectus or any
"issuer-information" filed or required to be filed pursuant to Rule
433(d) of the Rules, 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 such untrue statement or
alleged untrue statement or omission or alleged omission was made in
any preliminary prospectus, the Registration Statement, the Statutory
Prospectus, the Prospectus, any Issuer Free Writing Prospectus or any
"issuer-information" filed or required to be filed pursuant to Rule
433(d) of the Rules, any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing
by such Selling Stockholder to the Company expressly for use therein.
Notwithstanding the foregoing, the liability of each Selling
Stockholder pursuant to the provisions of this Section 6(b) shall be
limited to an amount equal to the aggregate net proceeds received by
such Selling Stockholder from the sale of the Shares sold by such
Selling Stockholder in the offering contemplated hereby. This indemnity
agreement will be in addition to any liability which the Selling
Stockholders may otherwise have.
(c) Each Underwriter agrees to indemnify and
hold harmless the Company, the Selling Stockholders and each person, if
any, who controls the Company or the Selling Stockholders within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company or any Selling Stockholder,
and each officer of the Company who signs the Registration Statement,
against any losses, claims, damages or liabilities to which such party
may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus, or 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 such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus,
the Registration Statement, the Statutory Prospectus or the Prospectus
or any such amendment or supplement in reliance upon and in conformity
with the Underwriter Information; provided, however, that the
obligation of each Underwriter to indemnify the Company or the Selling
Stockholders (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by any such
Selling Stockholder from such Underwriter. This indemnity agreement
will be in addition to any liability which an Underwriter may otherwise
have.
(d) Any party that proposes to assert the right
to be indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against an indemnifying
party or parties under this Section, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing
a copy of all papers served. No indemnification provided for in Section
6(a), 6(b) or 6(c) shall be available to any party who shall fail to
give
29
notice as provided in this Section 6(d) if the party to whom notice was
not given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action, suit
or proceeding shall not relieve it from any liability that it may have
to any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel (not to be
unreasonably delayed or withheld), the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and
expenses of such counsel to the indemnified party shall be at the
expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have been
advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those
available to the indemnifying party (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 (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action
within a reasonable time after notice of the commencement thereof, in
each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. An indemnifying party shall not be
liable for any settlement of any action, suit, and proceeding or claim
effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in Section 6(a), 6(b) or 6(c) is due in accordance with its terms but
for any reason is unavailable to or insufficient to hold harmless an
indemnified party in respect to any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate losses, liabilities, claims, damages
and expenses (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled
hereunder to contribution from any person who may be liable for
contribution) incurred by such indemnified party, as incurred, in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other hand from the offering of the Shares pursuant
to this Agreement or, if such allocation is not permitted by applicable
law, 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 Selling Stockholders on the one hand and the
Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages
or expenses, as well as any other relevant equitable considerations.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for
30
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 7, (i) no
Underwriter (except as may be provided in the Agreement Among
Underwriters) 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 damages which such underwriter has otherwise been required to
pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission; and (ii) no Selling Stockholder shall be
required to contribute any amount in excess of the aggregate net
proceeds of the sale of Shares received by such Selling Stockholder. 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. For purposes of this Section 7, each person, if any,
who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the
Company including any person who, with his or her consent, is named in
the Registration Statement as about to become a director of the
Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company or any
Selling Stockholder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company or any Selling Stockholder, as the case may
be. 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 under this Section 7, notify such party or
parties from whom contribution may be sought, but the omission so to
notify such party or parties from whom contribution may be sought shall
not relieve the party or parties from whom contribution may be sought
from any other obligation it or they may have hereunder or otherwise
than under this Section 7. No party shall be liable for contribution
with respect to any action, suit, proceeding or claim settled without
its written consent. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to their
respective underwriting commitments and not joint. The provisions of
this Section 7 shall not affect any agreement among the Company and the
Selling Stockholders with respect to contribution.
8. Termination.
(a) This Agreement may be terminated with
respect to the Shares to be purchased on a Closing Date by the
Underwriters by notifying the Company and the Selling Stockholders at
any time at or before a Closing Date in the absolute discretion of the
Underwriters if: (i) there has occurred any material adverse change in
the securities markets or any event, act or occurrence that has
materially disrupted, or in the opinion of the Underwriters, will in
the future materially disrupt, the securities markets or there shall be
such a material adverse change in general financial, political or
economic conditions or the effect of international conditions on the
financial markets in the United States is such as to make it, in the
judgment of the Underwriters, inadvisable or impracticable to market
the Shares or enforce contracts for the
31
sale of the Shares; (ii) there has occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of
which on the financial markets of the United States is such as to make
it, in the judgment of the Underwriters, inadvisable or impracticable
to market the Shares or enforce contracts for the sale of the Shares;
(iii) trading in the Shares or any securities of the Company has been
suspended or materially limited by the Commission or trading generally
on the New York Stock Exchange, Inc., the American Stock Exchange, Inc.
or the Nasdaq Capital Market has been suspended or materially limited,
or minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been required,
by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc., or
any other governmental or regulatory authority; or (iv) a banking
moratorium has been declared by any state or Federal authority; or (v)
in the judgment of the Underwriters, there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in
the assets, properties, condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of the
Company and its subsidiaries considered as a whole, whether or not
arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to
any of its provisions, neither the Company nor the Selling Stockholders
shall be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company or any Selling Stockholder,
except that (y) if this Agreement is terminated by the Underwriters
because of any failure, refusal or inability on the part of the Company
or any Selling Stockholders to comply with the terms or to fulfill any
of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable
fees and disbursements of their counsel) incurred by them in connection
with the proposed purchase and sale of the Shares or in contemplation
of performing their obligations hereunder and (z) no Underwriter who
shall have failed or refused to purchase the Shares agreed to be
purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination of its obligations
under this Agreement, shall be relieved of liability to the Company,
the Selling Stockholders or to the other Underwriter for damages
occasioned by its failure or refusal.
9. Substitution of Underwriters. If any Underwriter shall
default in its obligation to purchase on any Closing Date the Shares
agreed to be purchased hereunder on such Closing Date, the Underwriters
shall have the right, within 36 hours thereafter, to make arrangements
for the non-defaulting Underwriter to purchase such Shares on the terms
contained herein. If, however, the Underwriters shall not have
completed such arrangements within such 36-hour period, then the
Company shall be entitled to a further period of 36 hours within which
to procure another party or other parties satisfactory to the
Underwriters to purchase such Shares on such terms. If, after giving
effect to any arrangements for the purchase of the Shares of the
defaulting Underwriter by the non-defaulting Underwriter and the
Company as provided above, the aggregate number of Shares which remains
unpurchased on such Closing Date does not exceed one-tenth of the
aggregate number of all the Shares that all the Underwriters are
obligated to purchase on such date, then the Company shall have the
right to require the non-defaulting Underwriter to purchase the number
of Shares which such Underwriter agreed to purchase hereunder at such
date and, in addition, to require the non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such
defaulting Underwriter for which such arrangements have not
32
been made; but nothing herein shall relieve a defaulting Underwriter
from liability for its default. In any such case, either the
Underwriters or the Company and the Selling Stockholders shall have the
right to postpone the applicable Closing Date for a period of not more
than seven days in order to effect any necessary changes and
arrangements (including any necessary amendments to the Registration
Statement or Prospectus or any other documents), and the Company agrees
to file promptly any amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of the Company and the
Underwriters and their counsel may thereby be made necessary.
If, after giving effect to any arrangements for the purchase
of the Shares of the defaulting Underwriter by the non-defaulting
Underwriting and the Company as provided above, the aggregate number of
such Shares which remains unpurchased exceeds 10% of the aggregate
number of all the Shares to be purchased at such date, then this
Agreement, or, with respect to a Closing Date which occurs after the
First Closing Date, the obligations of the Underwriters to purchase and
of the Selling Stockholders to sell the Option Shares to be purchased
and sold on such date, shall terminate, without liability on the part
of the non-defaulting Underwriter to the Selling Stockholders, and
without liability on the part of the Selling Stockholders, except as
provided in Sections 5(b), 6, 7 and 8. The provisions of this Section 9
shall not in any way affect the liability of the defaulting Underwriter
to the Company or the nondefaulting Underwriter arising out of such
default. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section 9 with like effect as if such
person had originally been a party to this Agreement with respect to
such Shares.
10. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company, the
Selling Stockholders and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them pursuant to this Agreement,
shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of
any Underwriter, the Company or the Selling Stockholders or any of
their respective officers, directors or controlling persons referred to
in Sections 6 and 7 hereof, and shall survive delivery of and payment
for the Shares. In addition, the provisions of Sections 5(b), 6, 7 and
8 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholders and their
respective successors and assigns, and, to the extent expressed herein,
for the benefit of persons controlling any of the Underwriters, or the
Company, and directors and officers of the Company, and their
respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser of Shares from
any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently
confirmed in writing, (a) if to the Underwriters, c/o CIBC World
Markets Corp., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
________, with a copy to Xxxxxxxx & Xxxxxxxx LLP, 1290 Avenue of the
Americas, New York, New York 10104-0050, Attn: Xxxx X. Xxxxxx, Esq. (b)
if to the Company, to its agent for service as such agent's address
appears on the cover page of the
33
Registration Statement with a copy to BRL Law Group LLC, 00 Xx. Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Xxxxxx X.
Rosedale, Esq. and (c) if to the Selling Stockholders to Xxxxxx X.
Xxxxxx with a copy to Xxxxxxx Procter, LLP, Exchange Place, 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Xxxxx Xxxxx, Esq.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
34
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
NAVISITE, INC.
By:
-----------------------------------------
Name:
Title:
SELLING STOCKHOLDERS:
--------------------------------------------
Xxxxxx X. Xxxxxx, as Attorney-in-Fact for
the Selling Stockholders named in Schedule
II annexed hereto.
ATLANTIC INVESTORS, LLC
By:
-----------------------------------------
Name:
Title:
HEWLETT-PACKARD FINANCIAL SERVICES COMPANY
By:
-----------------------------------------
Name:
Title:
WAYTHERE, INC.
By:
-----------------------------------------
Name:
Title:
35
SPCP GROUP, L.L.C.
By:
-----------------------------------------
Name:
Title:
SPCP GROUP III LLC
By:
-----------------------------------------
Name:
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
XXXXXX XXXXXX PARTNERS LLC
By: CIBC WORLD MARKETS CORP.
By:
----------------------------
Name:
Title:
By: XXXXXX XXXXXX PARTNERS LLC
By:
----------------------------
Name:
Title:
36
SCHEDULE I
Number of
Firm Shares to
Name be Purchased
---- ---------------
CIBC World Markets Corp........................
Xxxxxx Xxxxxx Partners LLC.....................
---------------
Total..........................................
Sch I - 1
SCHEDULE II
Number of Maximum
Firm Shares Number of
to Option Shares
Name of Selling Stockholders be Sold to be Sold
-------------------------------------------------------------------------------------- ------------ -------------
Hewlett-Packard Financial Services Company............................................
Atlantic Investors, LLC...............................................................
SPCP Group, L.L.C.....................................................................
SPCP Group III LLC....................................................................
Xxx X. Xxxx........................................................................... -
Xxxx Xxxxxx........................................................................... -
Waythere, Inc......................................................................... -
----------- ---------------
Total.................................................................................
Name of Selling Stockholders Signing Power of Attorney
--------------------------------------------------------
Xxx X. Xxxx.............................................
Xxxx Xxxxxx.............................................
Sch II - 1
SCHEDULE III
Lock-up Signatories
Hewlett-Packard Financial Services Company
Atlantic Investors, LLC
SPCP Group, L.L.C.
SPCP Group III LLC
Xxx X. Xxxx
Xxxx Xxxxxx
Waythere, Inc.
SCHEDULE IV
Issuer Free Writing Prospectuses
SCHEDULE V
Selling Stockholder Counsels Opinions
(i) This Agreement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder.
(ii) Each of the Custody Agreement, the Power of
Attorney and the Lock-up Agreement has been duly authorized, executed
and delivered by each Selling Stockholder.
(iii) The Custody Agreement and the Power of Attorney
each constitute the legal, valid and binding obligation of each Selling
Stockholder enforceable against each Selling Stockholder in accordance
with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws of general application affecting the
rights and remedies of creditors and to general principles of equity.
(iv) As of the Applicable Time and as of each Closing
Date, each Selling Stockholder had the power and authority to enter
into this Agreement and to sell, transfer and deliver in the manner
provided in this Agreement, the Shares to be sold by such Selling
Stockholder hereunder.
(v) The sale of the Shares and the execution,
delivery and performance of this Agreement, the Power of Attorney and
the Custody Agreement by each Selling Stockholder do not: (a) require
any consent, approval, license or exemption by, order or authorization
of, or filing, recording or registration by such Selling Stockholder
with, any
New York or federal governmental authority, except such as
have been made or obtained under the Securities Act, (b) violate the
provisions of the organizational documents of such Selling Stockholder
identified on a Schedule to such opinion or the Delaware General
Corporation Law, or any
New York or federal statute, rule or
regulation, and (c) with respect to each Selling Stockholder, will not
result in a breach of, or constitute a default under, any of the
agreements listed on such Schedule to the opinion to which such Selling
Stockholder is a party.
(vi) To be delivered for Shares that are book-entry:
Upon payment by the Underwriters for the Shares in accordance with the
terms of the
Underwriting Agreement, delivery of the Shares pursuant to
the direction of the Underwriters as contemplated by this Agreement to
Cede & Co., registration of the Shares in the name of Cede & Co. and
the crediting of the Shares to the Underwriters' accounts with The
Depositary Trust Company ("DTC"), (A) DTC will be a "protected
purchaser" of the Shares within the meaning of Section 8-303(a) of the
Uniform Commercial Code as in effect in the State of New York (the "New
York UCC") if it has no notice of any adverse claim with respect to the
Shares (within the meaning of Section 8-105 of the New York UCC), (B)
under 8-501 of the New York UCC, the respective Underwriters will
acquire a security entitlement in respect of the Shares and (C) no
action
based on an "adverse claim" (within the meaning of Section 8-102 of the
New York UCC) to such security entitlement may be asserted against the
Underwriters if, at such time, the Underwriters do not have notice of
such adverse claim within the meaning of New York UCC Section 8-105.
For purposes of this opinion, such counsel may assume that the relevant
"securities intermediary's jurisdiction" for purposes of New York UCC
Section 8-110 is the State of New York.
(vii) To be delivered for shares that are
certificated: If the certificates for the Selling Stockholders to be
sold by the Selling Stockholders were delivered to the Underwriters in
the State of New York and assuming the Underwriters purchase the Shares
in good faith without "notice of adverse claim" (as such phrase is used
in Section 8-105 of the New York UCC), upon (A) delivery (as defined in
Section 8-301(a) of the NY UCC) to the Underwriters in the State of New
York of the certificates representing such Shares endorsed in blank by
an effective endorsement (within the meaning of Section 8-107 of the NY
UCC), and (ii) payment therefor in accordance with the terms of the
Underwriting Agreement and the Custody Agreement, the Underwriters
would become "protected purchasers" (as defined in Section 8-803(a) of
the New York UCC) of the Shares, and would acquire such Shares free of
"adverse claims" (as defined in Section 8-102 of the New York UCC,
except for any such adverse claims created by or at the request of the
Underwriters.
(viii) No filing with, consent, approval,
authorization, license, certificate, permit or order of any court,
governmental or regulatory agency, authority or body or financial
institution is required in connection with the performance of this
Agreement, the Custody Agreement, the Power of Attorney or the Lock-up
Agreement by each Selling Stockholder or the consummation of the
transactions contemplated hereby or thereby, including the delivery and
sale of the Shares to be delivered and sold by each Selling
Stockholder, except such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the
Shares by the several Underwriters.
To the extent deemed advisable by such counsel, such counsel
may rely as to matters of fact on certificates of the Selling Stockholders and
on the opinions of other counsel satisfactory to the Underwriters. Copies of
such certificates and other opinions shall be furnished to the Underwriters and
counsel for the Underwriters
SCHEDULE VI
Hewlett Packard Opinions
(i) This Agreement has been duly authorized, executed
and delivered by or on behalf of such Selling Stockholder.
(ii) Each of the Custody Agreement and the Lock-up
Agreement has been duly authorized, executed and delivered by such
Selling Stockholder.
(iii) The Custody Agreement constitutes the legal,
valid and binding obligation of such Selling Stockholder enforceable
against such Selling Stockholder in accordance with its terms except as
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
similar laws of general application affecting the rights and remedies
of creditors to general principles of equity.
(iv) As of the Applicable Time and as of each Closing
Date, such Selling Stockholder had the power and authority to enter
into this Agreement and to sell, transfer and deliver in the manner
provided in this Agreement, the Shares to be sold by such Selling
Stockholder hereunder.
(v) The sale of the Shares and the execution,
delivery and performance of this Agreement and the Custody Agreement by
such Selling Stockholder does not: (a) violate the provisions of the
organizational documents of such Selling Stockholder identified on a
Schedule to such opinion or the Delaware General Corporation Law, or
any New York or federal statute, rule or regulation, and (b) with
respect to such Selling Stockholder, will not result in a breach of, or
constitute a default under, any of the agreements listed on such
Schedule to the opinion to which such Selling Stockholder is a party.
To the extent deemed advisable by such counsel, such counsel
may rely as to matters of fact on certificates of such Selling Stockholder and
on the opinions of other counsel satisfactory to the Underwriters. Copies of
such certificates and other opinions shall be furnished to the Underwriters and
counsel for the Underwriters.
Exhibit A
FORM OF LOCK-UP AGREEMENT FOR
DIRECTORS AND EXECUTIVE OFFICERS
December , 2006
----
CIBC World Markets Corp.
Xxxxxx Xxxxxx Partners LLC
As Underwriters
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Shares of Common Stock of NaviSite, Inc.
Ladies and Gentlemen:
The undersigned, a holder of common stock, par value $0.01 per
share (the "Common Stock"), or rights to acquire Common Stock, of NaviSite, Inc.
(the "Company") understands that you, as Underwriters (the "Underwriters")
propose to enter into an
Underwriting Agreement (the "
Underwriting Agreement")
with the Company and the Selling Stockholders named therein (the "Selling
Stockholders"), providing for the public offering by the several Underwriters
named in Schedule I to the
Underwriting Agreement (the "Underwriters"), of
shares of Common Stock of the Company (the "Securities") to be sold by the
Selling Stockholders. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the
Underwriting Agreement.
In consideration of the Underwriters' agreement to enter into the
Underwriting Agreement and to proceed with the public offering of the
Securities, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees for the benefit of the
Company, you and the other Underwriters that, without the prior written consent
of the Underwriters, the undersigned will not, during the period beginning on
the date hereof and ending 90 days (the "Lock-Up Period") after the date of the
prospectus relating to the public offering (the "Prospectus"), directly or
indirectly (1) offer, pledge, assign, encumber, announce the intention to sell,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, any shares of Common Stock, $0.01 per share
par value, of the Company (the "Common Stock") or any securities convertible
into or exercisable or exchangeable for Common Stock owned either of record or
beneficially (as defined in the Securities Exchange Act of 1934, as amended) by
the undersigned on the date hereof or hereafter acquired or (2) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other
A-1
securities, in cash or otherwise, or publicly announce an intention to do any of
the foregoing. In addition, the undersigned agrees that, without the prior
written consent of CIBC World Markets Corp. on behalf of the Underwriters, it
will not, during the period beginning on the date hereof and ending 90 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. The foregoing
shall not apply to (x) Common Stock to be transferred as a gift or gifts
(provided that any donee thereof agrees in writing to be bound by the terms
hereof), (y) the sale of the Securities to be sold pursuant to the Prospectus
and (y) sales under any 10b-5 plan.
Notwithstanding the foregoing, if (x) during the last 17 days
of the Lock-Up Period the Company issues an earnings release or material news or
a material event relating to the Company occurs; or (y) prior to the expiration
of the Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the [90]-day
period; the restrictions imposed in this Letter Agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event;
provided, however, that this sentence shall not apply if the research published
or distributed on the Company is compliant under Rule 139 of the Securities Act
and the Company's securities are actively traded as defined in Rule 101(c)(1) of
Regulation M of the Exchange Act.
In furtherance of the foregoing, the Company, and any duly
appointed transfer agent for the registration or transfer of the securities
described herein, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Letter Agreement.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Letter Agreement.
All authority herein conferred or agreed to be conferred and any obligations of
the undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, 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 Common Stock to be sold
thereunder, the undersigned shall be released form all obligations under this
Letter Agreement.
The undersigned, whether or not participating in the Offering,
understands that the Underwriters are entering into the Underwriting Agreement
and proceeding with the Public Offering in reliance upon this Letter Agreement.
A-2
This lock-up agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws principles thereof.
Very truly yours,
[DIRECTOR/EXECUTIVE OFFICER]
By:
----------------------------
Name:
Title:
A-3
Exhibit B
FORM OF CUSTODY AGREEMENT
for sale of shares of common stock,
par value $0.01 per share, of NaviSite, Inc.
Computershare Trust Company (the "Custodian")
[Address]
Attention: [ ]
Ladies and Gentlemen:
There are delivered to you herewith certificate(s)
representing shares of Common Stock, par value $0.01 per share ("Common Stock"),
of NaviSite, Inc., a Delaware corporation (the "Company") as set forth at the
end of this letter on the page entitled "CERTIFICATE(S) DEPOSITED." Each of the
certificates so delivered is accompanied by an executed assignment form duly
endorsed for transfer and is in negotiable form bearing the signature of the
undersigned guaranteed by a commercial bank or trust company having an office or
a correspondent in New York City, New York or by a member firm of the New York,
American or Pacific Stock Exchange. The certificate(s) are to be held by you as
Custodian for the account of the undersigned and are to be disposed of by you in
accordance with this Custody Agreement (this "Custody Agreement").
If the undersigned is (i) acting as trustee or in any
fiduciary or representative capacity, the undersigned has also delivered duly
certified copies of each trust agreement, will, letters testamentary or other
instrument pursuant to which the undersigned is authorized to act as an Selling
Stockholders (as defined herein); (ii) a corporation, the undersigned (other
than Hewlett Packard Financial Services Company) has also delivered duly
certified resolutions of its board of directors authorizing it to enter into
this Custody Agreement, the Underwriting Agreement (as defined herein) and the
Power of Attorney (as defined herein) and duly certified copies of such
corporation's by-laws, certificate of incorporation or other organizational
documents; or (iii) a partnership, the undersigned has also delivered extracts
of any applicable provisions of its partnership agreement (and applicable
provisions of the organizational documents or partnership agreement(s) of the
general partner(s) of such partnership) authorizing such partnership to enter
into this Custody Agreement, the Underwriting Agreement and the Power of
Attorney.
The undersigned agrees to deliver such additional
documentation as you, the Attorney (as defined herein), the Company or the
Underwriters (as defined herein) or any of their respective counsel may
reasonably request to effectuate or confirm compliance with any of the
provisions hereof or of the Power of Attorney or the Underwriting Agreement, all
of the foregoing to be in form and substance satisfactory in all respects to the
party requesting such documentation.
Concurrently with the execution and delivery of this Custody
Agreement, certain of the undersigned have executed a power of attorney (the
"Power of Attorney") irrevocably
B-1
appointing Xxxxxx X. Xxxxxx with full power and authority to act in any matter
thereunder and with full power of substitution, the true and lawful
attorney-in-fact of the undersigned (the "Attorney"), with full power and
authority in the name of, for and on behalf of, the undersigned with respect to
all matters arising in connection with the sale of the Common Stock by the
undersigned including, but not limited to entering into and performing an
underwriting agreement (the "Underwriting Agreement") among the Company, certain
stockholders of the Company including the undersigned (the "Selling
Stockholders"), CIBC World Markets Corp., and Xxxxxx Xxxxxx Partners LLC (the
"Underwriters"). The total number of shares of Common Stock to be sold by the
undersigned to the Underwriters and set forth opposite the name of the
undersigned in Schedule II to the Underwriting Agreement is hereinafter referred
to as the "Shares."
You are authorized and directed to hold the certificate(s)
deposited with you hereunder in your custody and, subject to the instructions of
the Attorney, (i) to take all necessary action to cause the Shares to be
transferred on the books of the Company into such names as the Underwriters
shall have instructed, including surrendering the certificate(s) representing
the Shares to the transfer agent for the Common Stock for cancellation, in
exchange for new certificate(s) for shares of Common Stock registered in such
names and in such denominations as the Underwriters shall have instructed; (ii)
to deliver such new certificate(s) to the Underwriters, against payment for such
Shares at the purchase price per Share specified in the Underwriting Agreement
and to give receipt for such payment; (iii) to deposit the same to your account
as Custodian and draw upon such account to pay such transfer taxes, if any,
payable in connection with the transfer of the Shares to the Underwriters
("Transfer Taxes") as you may be instructed to pay by the Attorney; (iv) to
transmit to the undersigned in the manner set forth under "Manner of Payment"
below, within 24 hours of receiving instructions from the Attorneys to do so,
the excess, if any (the "Net Proceeds"), of the amount received by you as
payment for the Shares over the Transfer Taxes, if any. The amount of such Net
Proceeds is to be paid in the manner requested by the undersigned at the end of
this Custody Agreement or in such manner as you, in accordance with the terms
hereof, shall deem appropriate. Upon receipt of instructions from the Attorney,
you shall also return to the undersigned, new certificate(s) representing the
excess, if any, of the number of shares of Common Stock represented by the
certificate(s) deposited with you hereunder over the number of Shares sold by
the undersigned to the Underwriters.
Under the terms of the Power of Attorney, the authority
conferred thereby is granted and conferred subject to and in consideration of
the interests of the Attorney, the several Underwriters, the Company and the
other Selling Stockholders (as defined in the Underwriting Agreement) and is
irrevocable and not subject to withdrawal or termination by any act of the
undersigned or by operation of law, whether by the death or incapacity of the
undersigned (or either or any of the undersigned) or by the occurrence of any
other event or events (including, without limitation, the termination of any
trust or estate for which the undersigned is acting as fiduciary or fiduciaries,
the death or incapacity of one or more trustees, guardians, executors or
administrators under such trust or estate or the merger, consolidation,
dissolution or liquidation of any corporation or partnership) (any of the
foregoing being hereinafter referred to as an "Event"). Accordingly, the
certificate(s) deposited with you hereunder and this Custody Agreement and your
authority hereunder are subject to and in consideration of the interests of the
several Underwriters, the Company, the Attorney and the other Selling
Stockholders, and this
B-2
Custody Agreement and your authority hereunder are irrevocable and are not
subject to withdrawal or termination by the occurrence of any Event. If an Event
shall occur after the execution hereof but before the delivery of the Shares to
the Underwriters, then certificate(s) representing such Shares will be delivered
by you to the Underwriters on behalf of the undersigned in accordance with the
terms and conditions of the Underwriting Agreement and this Custody Agreement
and any actions taken by you pursuant to this Custody Agreement shall be as
valid as if such Event had not occurred, regardless of whether or not you, the
Attorney, the Underwriters or any one of them, shall have received notice of
such Event.
Until payment of the purchase price for the Shares has been
made to you by or for the account of the several Underwriters, the undersigned
shall remain the owner of all shares of Common Stock represented by the
certificate(s) deposited with you hereunder and shall have the right to vote
such shares and all other securities, if any, represented by such certificate(s)
and to receive all dividends and distributions thereon, except the right to
retain custody and dispose of such shares, which is subject to the rights of the
Custodian under this Custody Agreement, the Attorney under the Power of Attorney
and the Underwriters under the Underwriting Agreement. The Underwriters shall
not acquire the power or the right to direct the investment of the Shares by
virtue of this Custody Agreement until the consideration therefor is paid
pursuant to the Underwriting Agreement.
You shall be entitled to act and rely upon any statement,
request, notice or instruction respecting this Custody Agreement given to you by
the Attorney. The Attorney has the authority to instruct you on irregularities
or discrepancies in the certificates representing shares of Common Stock and any
accompanying documents.
In taking any action requested or directed by the Underwriters
under the terms of this Custody Agreement, you will be entitled to rely upon a
writing signed by a Vice President, Senior Vice President, Managing Director,
Counsel, Assistant General Counsel or General Counsel of CIBC World Markets
Corp.
It is understood that you assume no responsibility or
liability to any person other than to deal with the certificate(s) deposited
with you hereunder and the proceeds from the sale of all or a portion of the
securities represented thereby in accordance with the provisions of this Custody
Agreement. The undersigned agrees to indemnify you for and to hold you free from
and harmless against any and all loss, claim, damage, liability or expense
incurred by you arising out of or in connection with acting as Custodian
hereunder, as well as the cost and expense of defending against any claim of
liability hereunder, which is not due to your own gross negligence or willful
misconduct.
The representations and warranties of the undersigned set
forth in the Underwriting Agreement are hereby incorporated by reference herein
and the undersigned represents and warrants that such representations and
warranties are true and correct on the date hereof as if made on the date
hereof. The representations, warranties and agreements contained herein, as well
as those contained in the Underwriting Agreement, are made for the benefit of,
and may be relied upon by, you, the other Selling Stockholders, the Attorney,
the Company, BRL Law Group, the Underwriters and Xxxxxxxx & Xxxxxxxx and their
representatives, agents and counsel. These representations, warranties and
agreements shall remain operative and in full
B-3
force and effect, and shall survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any of the persons listed in the preceding sentence,
(ii) acceptance of the Shares and payment for them under the Underwriting
Agreement and (iii) termination of this Custody Agreement.
This Custody Agreement shall be binding upon the undersigned
and the heirs, legal representatives, distributees, successors and assigns of
the undersigned.
This Custody Agreement may be signed in counterparts which
together shall constitute one and the same agreement.
This Custody Agreement shall be governed by the laws of the
State of New York without regard to the conflicts of laws principles thereof.
Please acknowledge your acceptance hereof as Custodian, and
receipt of the certificate(s) deposited with you hereunder, by executing and
returning the enclosed copy hereof to the undersigned in care of Xxxxxx X.
Xxxxxx.
Dated: , 200
---------- --
Very truly yours,
By:
--------------------------------
Name:
Title:
B-4
Print Name(s) and Address of Selling
Stockholder(s) and Name and Title of
any Person Signing as Agent or
Fiduciary:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Taxpayer I.D.:
--------------------------
Telephone:
-----------------------------
B-5
Instruction: If you are an individual and are married, your spouse is required
to complete this form:
SPOUSAL CONSENT
I am the spouse of __________________. On behalf of myself, my
heirs and legatees, I hereby join in and consent to the terms of the foregoing
Custody Agreement and agree to the sale of the shares of Common Stock of
_______________, registered in the name of my spouse or otherwise registered,
which my spouse proposes to sell pursuant to the Underwriting Agreement (as
defined therein).
Dated: ,
-------
-------------------------------------
(Signature of Spouse)
B-6
Instruction: Complete each column as to certificate(s) to be deposited with the
Custodian.
CERTIFICATE(S) DEPOSITED
Maximum Number of Shares of Common
Stock Certificate No. Stock To Be Sold from Certificate
TOTAL:
---------------------------------------- --------------------------------------
B-7
Instruction: Indicate how you wish to receive payment for the shares of Common
Stock sold to the Underwriters. Please note that if you are selling shares of
Common Stock registered in the name of a corporation or other association or a
trust, payment will be made only to the corporation or other association or
trust. A wire transfer can be made only to an account standing in exactly the
same name as the person or entity, including the corporation or other
association or trust, that is the registered owner of the Common Stock being
sold.
MANNER OF PAYMENT
I request that payment of the net proceeds from the sale of
the shares of Common Stock of the Company to be sold by me pursuant to the
Underwriting Agreement be made in the following manner (CHECK ONE):
[ ] CHECK made payable to:
to be sent to the following address:
-----------------------------------------------
-----------------------------------------------
Phone: ( )
-----------------------
Please send by (check one):
[ ] First class mail
[ ] Federal Express
Federal Express account number
---------------------------------------------
[ ] or transfer to the following account:
Account No.
Bank See attached wire transfer instructions
------------------------
(name)
-----------------------------
(address)
ABA No.
----------------------
Phone: ( )
----------------
[ ] Other (please specify)
-----------------------------
B-8
CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
Computershare Trust Company, as Custodian, acknowledges
acceptance of the duties of the Custodian under the foregoing Custody Agreement
and receipt of the certificate(s) referred therein.
Dated: , 200
---------- --
COMPUTERSHARE TRUST COMPANY
By:
-------------------------------
Name:
Title:
DO NOT DETACH FROM CUSTODY AGREEMENT
B-9
Exhibit C
SELLING STOCKHOLDER[S]'
IRREVOCABLE POWER OF ATTORNEY
for sale of shares of common stock,
par value $0.01 per share, of NaviSite, Inc.
Xxxxxx X. Xxxxxx
[Address]
Ladies and Gentlemen:
The undersigned stockholder and certain other holders of common stock
of NaviSite, Inc. (the "Company") (such holders and the undersigned being
hereinafter sometimes collectively referred to as the "Selling Stockholders"),
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with the Company, CIBC World Markets Corp., and Xxxxxx Xxxxxx Partners LLC (the
"Underwriters"). The Selling Stockholders propose to sell to the Underwriters
pursuant to the Underwriting Agreement certain authorized and issued shares of
the common stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by them. It is understood that at this time there is no commitment on the
part of the Underwriters to purchase any shares of Common Stock and no assurance
that the Underwriting Agreement will be entered into by the Company or the
Underwriters.
The undersigned hereby irrevocably constitutes and appoints Xxxxxx X.
Xxxxxx with full power and authority to act alone in any matter hereunder and
with full power of substitution, the true and lawful attorney-in-fact of the
undersigned (the "Attorney"), with full power and authority in the name of, for
and on behalf of, the undersigned with respect to all matters arising in
connection with the sale of Common Stock by the undersigned including, but not
limited to, the power and authority on behalf of the undersigned to take any and
all of the following actions:
1. To sell, assign, transfer and deliver to the several Underwriters up
to the number of shares of Common Stock set forth on the signature page hereof
such shares of Common Stock to be represented by certificate(s) deposited by the
undersigned pursuant to the Custody Agreement (the "Custody Agreement") between
the undersigned and Computershare Trust Company, as Custodian (the "Custodian"),
at a purchase price per share, after deducting underwriting discounts and
commissions, to be paid by the Underwriters, as the Attorney, in his sole
discretion, shall determine, but at the same price per share at which all other
Selling Stockholders sell Common Stock to the Underwriters;
2. To determine the number of shares of Common Stock to be sold by the
undersigned to the Underwriters, which numbers shall be no greater but may be
fewer than the corresponding numbers set forth on the signature page hereof
(such total number of shares of Common Stock as is finally determined by the
Attorney and set forth opposite the name of the
C-1
undersigned in Schedule II to the Underwriting Agreement is hereinafter referred
to as the "Shares");
3. To execute, deliver and perform the Underwriting Agreement in
customary form with such customary representations, warranties and covenant as
the Attorney, in his sole discretion, may deem appropriate, with full power to
make such amendments to the Underwriting Agreement as the Attorney, in his sole
discretion, may deem advisable;
4. On behalf of the undersigned, to make the representations and
warranties and enter into the agreements contained in the Underwriting Agreement
(including, without limitation, entering into the "lock-up" agreements);
5. (a) To instruct the Custodian on all matters pertaining to the
sale of the Shares and the delivery of certificates therefor, including: (i) the
transfer of the Shares on the books of the Company in order to effect the sale
of the Shares (including designating the name or names in which new
certificate(s) for Shares are to be issued and the denominations thereof), (ii)
the delivery to or for the account of the Underwriters of the certificate(s) for
the Shares against receipt by the Custodian of the purchase price to be paid
therefor, (iii) the payment, out of the proceeds (net of underwriting discounts
and commissions) from the sale of the Shares by the undersigned to the
Underwriters, of any expense incurred in accordance with paragraph 6 which is
not payable by the Company and any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters ("Transfer Taxes") and (iv) the
transmission to the undersigned of the proceeds, if any, from the sale of the
Shares (after deducting all amounts payable by the undersigned pursuant to
clause (iii) above) and the return to the undersigned, of new certificate(s)
representing the excess, if any, of the number of shares of Common Stock
represented by certificate(s) deposited with the Custodian over the number of
Shares sold to the Underwriters; and (b) to amend the Custody Agreement and any
related documents in such manner as the Attorney may determine to be not
materially adverse to the undersigned.
6. To incur or authorize the incurrence of any necessary or
appropriate expense in connection with the sale of the Shares and to determine
the amount of any Transfer Taxes;
7. To take any and all steps deemed necessary or desirable by the
Attorney in connection with the registration of the Shares under the Securities
Act of 1933, as amended (the "Act"), the Securities Exchange Act of 1934, as
amended, and the securities or "blue sky" laws of various states and
jurisdictions, including, without limitation, the giving, making or filing of
such undertakings, consents to service of process and representations and
agreements and the taking of such other steps as the Attorney may deem necessary
or desirable;
8. To retain legal counsel to represent the undersigned in
connection with any and all matters referred to herein (which counsel may, but
need not be, counsel for the Company);
9. To make, execute, acknowledge and deliver all such other
contracts, stock powers, orders, receipts, notices, instructions, certificates,
letters and other writings, including, without limitation, communications with
the Securities and Exchange Commission state
C-2
securities commissions and the National Association of Securities Dealers, Inc.
("NASD"), and in general to do all things and to take all actions which the
Attorney, in his sole discretion, may consider necessary or desirable in
connection with the sale of Shares to the Underwriters and the public offering
thereof, as fully as could the undersigned if personally present and acting;
11. If necessary, to endorse (in blank or otherwise) on behalf of
the undersigned the certificate(s) representing the Shares, or a stock power or
powers attached to such certificate(s); and
12. To sign such other certificates, documents and agreements and
take any and all other actions as the Attorney may deem necessary or desirable
in connection with the consummation of the transactions contemplated by the
Underwriting Agreement, the Custody Agreement and this Power of Attorney.
The Attorney is hereby empowered to determine in his sole discretion
the time or times when, the purpose for and the manner in which any power herein
conferred upon him shall be exercised, and the conditions, provisions or
covenants of any instrument or document which may be executed by him pursuant
hereto.
The undersigned acknowledges receipt of a copy of the Registration
Statement on Form S-3 as amended (the "Registration Statement") relating to the
offering of the Shares and the other shares of Common Stock (together, the
"Offered Shares") to be sold by the Selling Stockholders and a copy of the draft
form of the Underwriting Agreement dated November __, 2006. The undersigned has
reviewed the Registration Statement and the form of the Underwriting Agreement
and understands the obligations and agreements of the undersigned set forth in
the Underwriting Agreement. All representations and warranties of the Selling
Stockholders in the Underwriting Agreement with respect to the undersigned will
be as of the date of the execution of the Underwriting Agreement, the Closing
Dates (as determined in accordance with the Underwriting Agreement), true and
correct. All such representations and warranties will, as provided in the
Underwriting Agreement, survive the termination of the Underwriting Agreement
and the delivery of and payment for the Shares.
Upon the execution and delivery of the Underwriting Agreement by the
Attorney on behalf of the Selling Stockholders, the undersigned agrees to be
bound by and to perform each and every covenant and agreement contained therein
of the undersigned as a Selling Stockholders.
The undersigned agrees, if so requested, to provide an opinion of
counsel, addressed to BRL Law Group, which opinion shall expressly permit
reliance thereon by BRL Law Group, setting forth such matters as BRL Law Group
may reasonably request in rendering its opinion pursuant to the Underwriting
Agreement and such other documentation as the Attorney, the Company, the
Underwriters or any of their respective counsel may request to effectuate any of
the provisions hereof or of the Underwriting Agreement, all of the foregoing to
be in form and substance satisfactory in all respects to the party requesting
such documentation.
This Power of Attorney and all authority conferred hereby are granted
and conferred subject to and in consideration of the interests of the Attorney,
the several
C-3
Underwriters, the Company and the other Selling Stockholders who may become
parties to the Underwriting Agreement, and for the purposes of completing the
transactions contemplated by the Underwriting Agreement and this Power of
Attorney.
This Power of Attorney is an agency coupled with an interest and all
authority conferred hereby shall be irrevocable, and shall not be withdrawn or
terminated by any act of the undersigned or by operation of law, whether by the
death or incapacity of the undersigned (or either or any of the undersigned) or
by the occurrence of any other event or events (including, without limitation,
the termination of any trust or estate for which the undersigned is acting as a
fiduciary or fiduciaries, the death or incapacity of one or more trustees,
guardians, executors or administrators under such trust or estate or the merger,
consolidation, dissolution or liquidation of any corporation or partnership)
(any of the foregoing being hereinafter referred to as an "Event"). If an Event
shall occur after the execution hereof but before completion of the transactions
contemplated by the Underwriting Agreement or this Power of Attorney, then
certificate(s) representing the Shares will be delivered to the Underwriters by
or on behalf of the undersigned in accordance with the terms and conditions of
the Underwriting Agreement and the Custody Agreement and any actions taken
hereunder by the Attorney shall be as valid as if such Event had not occurred
regardless of whether or not the Custodian, the Attorney, the Underwriters, or
any one of them, shall have received notice of such Event.
Notwithstanding any of the foregoing provisions, if the Underwriting
Agreement shall not have been executed and delivered prior to May __, 2007 then,
upon the written notice of the undersigned on or after that date to the
Attorney, this Power of Attorney shall terminate subject, however, to all lawful
action done or performed pursuant hereto prior to the receipt of actual notice.
It is understood that the Attorney assumes no responsibility or
liability to any person other than to deal with the certificate(s) for shares of
Common Stock deposited with the Custodian pursuant to the Custody Agreement and
the proceeds from the sale of the Shares in accordance with the provisions
hereof. The Attorney makes no representations with respect to and shall have no
responsibility for the Registration Statement or the Prospectus nor, except as
herein expressly provided, for any aspect of the offering of Common Stock, and
the Attorney, in such capacity, shall not be liable for any error of judgment or
for any act done or omitted or for any mistake of fact or law except for the
Attorney's own gross negligence or willful misconduct. The undersigned agrees to
indemnify the Attorney for and to hold the Attorney free from and harmless
against any and all loss, claim, damage, liability or expense incurred by or on
behalf of the Attorney arising out of or in connection with acting as Attorney
under this Power of Attorney, as well as the cost and expense of defending
against any claim of liability hereunder, which is not due to the Attorney's own
gross negligence or willful misconduct. The undersigned agrees that the Attorney
may consult with counsel of his choice (which may but need not be counsel for
the Company) and the Attorney shall have full and complete authorization and
protection for any action taken or suffered by the Attorney in good faith and in
accordance with the opinion of such counsel.
It is understood that the purchase price per share of Common Stock to
be paid in connection with the offering contemplated by the Prospectus and the
Underwriting Agreement could be higher or lower than the price per share of
Common Stock as of the date hereof.
C-4
It is understood that the Attorney shall serve entirely without
compensation.
This Power of Attorney shall be binding upon the undersigned and the
heirs, legal representatives, distributees, successors and assigns of the
undersigned.
This Power of Attorney shall be governed by the laws of the State of
New York without regard to the conflicts of laws principles thereof.
C-5
Witness the due execution of the foregoing Power of Attorney as of the date
written below.
Maximum Number of Shares of
Common Stock to be Sold by Selling
Stockholders(s):
--------------------
Very truly yours,
By:
---------------------------
Name:
Title:
DATED: ,
------------------------ -------
Print Name and Address of Selling
Stockholder(s) and Name and Title of any
Person Signing as Agent or Fiduciary:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telephone: ( )
----------------------
Facsimile: ( )
----------------------
C-6
ACKNOWLEDGMENT
State of )
) ss.
County of )
On this the _____ day of ________ ______ before me personally appeared
_____________________________ who acknowledged the signing of the foregoing
instrument and that the same is the free act and deed of such person (and if
such person is signing on behalf of a corporation, partnership or trust that the
same is the free act and deed of such corporation, partnership or trust and that
such person is duly authorized to sign the foregoing instrument).
WITNESS my hand and official seal.
---------------------------------
Notary's Signature
C-7
