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Form of
THE MANAGEMENT NETWORK GROUP, INC.
_________ SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
November __, 0000
XXXXXXXXX & XXXXX LLC
BANCBOSTON XXXXXXXXX XXXXXXXX INC.
XXXXXXX XXXXX XXXXXX INC
XXXXXXXXX & COMPANY INC.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
The Management Network Group, Inc., a Delaware corporation (herein
called the COMPANY), proposes to issue and sell ______ shares of its authorized
but unissued Common Stock, $0.001 par value per share (herein called the COMMON
STOCK) (said ______ shares of Common Stock being herein called the UNDERWRITTEN
STOCK). Xxxxxxx Capital II L.P., Strategic Entrepreneur Fund II, L.P., Xxxxxxx
X. Xxxxxxx and Xxxxx X. Xxxx, each a stockholder of the Company (herein called
the STOCKHOLDERS), propose to grant to the Underwriters (as hereinafter defined)
an option to purchase up to ______ additional shares of Common Stock (herein
called the OPTION STOCK and with the Underwritten Stock herein collectively
called the STOCK). The Common Stock is more fully described in the Registration
Statement and the Prospectus hereinafter mentioned.
The Company hereby confirms the agreements made with respect to the
purchase of the Stock by the several underwriters, for whom you are acting,
named in Schedule I hereto (herein collectively called the UNDERWRITERS, which
term shall also include any underwriter purchasing Stock pursuant to Section
3(b) hereof). You represent and warrant that you have been authorized by each of
the other Underwriters to enter into this Agreement on its behalf and to act for
it in the manner herein provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the COMMISSION) a registration statement on
Form S-1 (No. 333-87383), including the related preliminary prospectus, for the
registration under the
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(1) Plus an option to purchase from the Stockholders up to ______ additional
shares to cover over-allotments.
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Securities Act of 1933, as amended (herein called the SECURITIES ACT) of the
Stock. Copies of such registration statement and of each amendment thereto, if
any, including the related preliminary prospectus (meeting the requirements of
Rule 430A of the rules and regulations of the Commission (herein called the
RULES AND REGULATIONS)) heretofore filed by the Company with the Commission have
been delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations with respect to the Stock (herein called a RULE 462(b) REGISTRATION
STATEMENT), and, in the event of any amendment thereto after the effective date
of such registration statement (herein called the EFFECTIVE DATE), shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any Rule 462(b) registration statement). The
term Prospectus as used in this Agreement shall mean the prospectus relating to
the Stock first filed with the Commission pursuant to Rule 424(b) and Rule 430A
(or if no such filing is required, as included in the Registration Statement)
and, in the event of any supplement or amendment to such prospectus after the
Effective Date, shall also mean (from and after the filing with the Commission
of such supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.
(a) The Company hereby represents and warrants as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement and the
Prospectus and as being conducted, and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the
character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary except where the failure
to be so qualified would not have a material adverse effect on the
business, properties, earnings, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole (herein
called a MATERIAL ADVERSE EFFECT).
(ii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not occurred
any Materially Adverse Effect or any development involving a prospective
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, and there has
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not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or any
of its subsidiaries, other than transactions in the ordinary course of
business and as set forth in the Registration Statement and the
Prospectus. Neither the Company nor any of its subsidiaries has material
contingent obligations which are not disclosed or provided for in the
Company's financial statements that are included in the Registration
Statement
(iii) The Registration Statement and the Prospectus comply, and
on the Closing Date (as hereinafter defined) and any later date on which
Option Stock is to be purchased (herein called an OPTION CLOSING DATE),
the Prospectus will comply, in all material respects, with the
provisions of the Securities Act and the Securities Exchange Act of
1934, as amended (herein called the EXCHANGE ACT), and the Rules and
Regulations; on the Effective Date, the Registration Statement did not,
and on each of the Closing Date and the Option Closing Date, will not
contain any untrue statement of a material fact and did not omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on the
Effective Date the Prospectus did not, and on each of the Closing Date
and the Option Closing Date, will not contain any untrue statement of a
material fact or omit 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; provided, however, that none of
the representations and warranties in this subparagraph (iii) 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 to the Company by or on behalf
of the Underwriters for use in the Registration Statement or the
Prospectus.
(iv) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; the Stock to be issued and sold by the Company has
been duly authorized and, when issued and delivered to the Underwriters
against payment therefore as provided by this Agreement, will be validly
issued, fully paid and non-assessable; and no preemptive, co-sale,
registration right, right of first refusal or other similar rights of
stockholders exist with respect to any of the Stock or the issue and
sale thereof, except as set forth in the Registration Statement. No
further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of
the Stock as contemplated herein. Neither the filing of the Registration
Statement nor the offering or sale of the Stock as contemplated by this
Agreement gives rise to any rights, other than those which have been
waived or satisfied, for or relating to the registration of any shares
of capital stock.
(v) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
granted or issued by the Company or any of its subsidiaries relating to
or entitling any person to purchase or otherwise to acquire any
securities of, or other ownership interest in, the Company or any of its
subsidiaries, except as otherwise disclosed in the Registration
Statement.
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(vi) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct in all material
respects. The authorized capital stock of the Company, and of each of
the Company's subsidiaries, conforms as to legal matters to the
description thereof contained in the Prospectus. The form of
certificates for the Stock conforms to the legal requirements of the
state of Delaware.
(vii) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering
of the Stock, nor, to the best knowledge of the Company, instituted
proceedings for that purpose.
(viii) Neither the Company nor any of its subsidiaries is, nor
with the giving of notice or lapse of time or both will be, in violation
of or in default under its certificate of incorporation or bylaws or
under any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it, or any of its
properties, is bound and which default would have a Material Adverse
Effect. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment
of the terms hereof will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party, or of the
respective certificate of incorporation or bylaws of the Company or the
subsidiary, which conflict, breach or default could have a Material
Adverse Effect.
(ix) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and
delivery by the Company and the Stockholders of this Agreement and the
consummation of the transactions herein contemplated has been obtained
or made and is in full force and effect. The execution, delivery and
performance of this Agreement by the Company and the Stockholders, the
compliance by the Company and the Stockholders with all the provisions
hereof and the consummation of the transactions contemplated hereby will
not (i) require any other consent, approval, authorization or other
order of, or qualification with, any court or governmental body or
agency (except such as may be required under the securities or Blue Sky
laws of the various states), (ii) violate or conflict with any
applicable law or any rule, regulation, judgment, order, injunction or
decree of any court or any governmental body or agency having
jurisdiction over the Stockholders or the Company or any of its
subsidiaries or their respective property, or (iii) result in the
suspension, termination or revocation of any Authorization (as defined
below) of the Company or any of its subsidiaries or any other impairment
of the rights of the holder of any such Authorization.
(x) The Company and each of its subsidiaries has good and
marketable title to all of its respective properties and assets
reflected in the financial statements (or as described in the
Registration Statement) filed with the Commission as part of the
Registration Statement, free and clear of any lien, mortgage, pledge,
charge or encumbrance of any kind except those reflected in such
financial statements (or as described in the Registration Statement).
All leases to which the Company or any of its
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subsidiaries is a party are valid and binding obligations of the Company
or the subsidiary, as the case may be, and no default by the Company or
such subsidiary has occurred or is continuing thereunder which could
reasonably be expected to result in a Material Adverse Effect, and the
Company and each of its subsidiaries, as the case may be, enjoys
peaceful and undisturbed possession under all such leases to which it is
a party as lessee.
(xi) Except as disclosed in the Registration Statement, there is
no action, suit, claim or proceeding pending, or, to the knowledge of
the Company, threatened against the Company, any of its subsidiaries or
any of their respective officers or properties, before any court or
administrative agency or otherwise, which if determined adversely to the
Company could reasonably be expected to result in any Material Adverse
Effect or prevent the consummation of the transactions contemplated
hereby; and there are no agreements, contracts, leases or documents of
the Company or any of its subsidiaries of a character required to be
described or referred to in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement by the
Securities Act or the Rules and Regulations which have not been
accurately described in all material respects or referred to in the
Registration Statement or Prospectus or filed as exhibits to the
Registration Statement. The contracts so described in the Registration
Statement and Prospectus are in full force and effect on the date
hereof, and neither the Company nor, to the best of the Company's
knowledge, any other party, is in breach of or default under any of such
contracts where such breach or default would have a Material Adverse
Effect.
(xii) The Company and each of its subsidiaries has timely filed
all federal, state, local and foreign income tax returns which have been
required to be filed and have paid all taxes indicted by said returns
and all assessments received by them or any of them to the extent that
such taxes have become due and are not being contested in good faith
except where the failure to file such returns and pay such taxes would
not have a Material Adverse Effect. All tax liabilities (including those
being contested in good faith) for the periods covered by the financial
statements of the Company that are included in the Registration
Statement have been adequately provided for in such financial
statements.
(xiii) The Company and its subsidiaries are operating
substantially in compliance with all statutes, laws, regulations,
ordinances or court decrees applicable to their respective businesses
and operations. Neither the Company nor any of its subsidiaries has
violated any provisions of the Foreign Corrupt Practices Act or the
rules and regulations promulgated thereunder, or any foreign, federal,
state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (herein called ENVIRONMENTAL LAWS),
or relating to discrimination in the hiring, promotion or pay of, or to
the wages and hours of, employees. No labor disturbance by the employees
of the Company exists nor, to the best of the Company's knowledge, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, value
added resellers, authorized dealers or distributors that might be
expected to result in a Material Adverse Effect. No collective
bargaining
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agreement exists with any of the Company's employees and, to the best of
the Company's knowledge, no such agreement is imminent.
(xiv) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each herein called an AUTHORIZATION) of, and has made all
filings with and notices to, all governmental or regulatory authorities
and self-regulatory organizations and all courts and other tribunals,
including, without limitation, under any applicable Environmental Laws,
as are necessary to own, lease, license and operate its respective
properties and to conduct its business and as contemplated by the
Prospectus. Each such Authorization is valid and in full force and
effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing
body) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such Authorization
or results or, after notice or lapse of time or both, would result in
any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries.
(xv) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization, any related
constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a Material
Adverse Effect.
(xvi) The Company and its subsidiaries own or possess adequate
rights to use all inventions, designs, computer programs, computer code,
communications protocols, security devices, trade secrets, know-how,
trademarks, service marks, trade names, copyright works or other
information (herein collectively called INTELLECTUAL PROPERTY) which are
necessary to conduct their respective businesses as described in the
Registration Statement and the Prospectus; neither the Company nor any
of its subsidiaries has received any notice of, and has no knowledge of,
any infringement of or conflict with any rights of the Company or any of
its subsidiaries, as the case may be, by others with respect to any
Intellectual Property which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect; neither the Company nor any of its subsidiaries has
received any notice of, and have no knowledge of, any infringement of or
conflict with any rights of others with respect to any Intellectual
Property which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect; to the Company's best knowledge, none of the Intellectual
Property licensed to or by the Company or any of its subsidiaries are
unenforceable or invalid; and the Company is not aware of the granting
of any patent rights to third parties or the filing of any patent
applications by third parties or any other rights of third parties to
any Intellectual Property owned by the Company or any of its
subsidiaries.
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(xvii) There are no legal or governmental proceedings pending
relating to patent rights, trade secrets, trademarks, service marks or
other proprietary information or materials of the Company or any of its
subsidiaries, and no such proceedings are threatened or, to the best of
the Company's knowledge, contemplated by governmental authorities or
others.
(xviii) There are no contracts or other documents, relating to
governmental regulation affecting the Company or any of its
subsidiaries, or the Company's or any such subsidiary's patents, trade
secrets, trademarks, service marks or other proprietary information or
materials, of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus that are not filed or described as required.
(xix) Neither the Company nor any of its subsidiaries is
infringing or otherwise violating any patents, trade secrets,
trademarks, service marks or other proprietary information or materials,
of others, and there are no infringements by others of any of the
Company's or any of its subsidiaries' patents, trade secrets,
trademarks, service marks or other proprietary information or materials
which could affect materially the use thereof by the Company or any of
its subsidiaries.
(xx) The Company and its subsidiaries hold all material
licenses, certificates and permits from governmental authorities
necessary to conduct the business now being or proposed to be conducted
by the Company or its subsidiaries, as the case may be, as contemplated
by the Prospectus.
(xxi) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the
Company.
(xxii) Deloitte & Touche LLP are independent public accountants
with respect to the Company and its subsidiaries as required by the
Securities Act and the Rules and Regulations.
(xxiii) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes, present
fairly the consolidated financial position, results of operations, cash
flows and changes in financial position of the Company and its
subsidiaries on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, and all adjustments necessary for a fair presentation
of results for such periods have been made; the supporting schedules, if
any, included in the Registration Statement present fairly in accordance
with generally accepted accounting principles the information required
to be stated therein; and the other financial and statistical
information and data set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of
the Company.
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(xxiv) The statements in the Prospectus under the heading
"Certain Transactions" set forth all existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company, on the one
hand, and any officer, director or stockholder of the Company, or with
any partner, affiliate or associate of any of the foregoing persons or
entities, on the other hand, required to be set forth or described
thereunder.
(xxv) The Company and its subsidiaries carry, or are covered by,
insurance with insurers of nationally recognized reputability in such
amounts and covering such risks as the Company believes is customary for
companies engaged in similar industries.
(xxvi) The Stock has been approved for listing on the Nasdaq
National Stock Market.
(xxvii) There are no issues related to the Company's
preparedness for the Year 2000 that (i) are of a character required to
be described or referred to in the Registration Statement or Prospectus
by the Securities Act or the Rules and Regulations which have not been
accurately described in the Registration Statement or Prospectus or (ii)
might reasonably be expected to result in any Material Adverse Effect.
All internal computer systems and each Constituent Component (as defined
below) of those systems and all computer-related products and each
Constituent Component of those products of the Company fully comply with
the Year 2000 Qualification Requirements. "Year 2000 Qualification
Requirements" means that the internal computer systems and each
Constituent Component of those systems and all computer-related products
and each Constituent Component of those products of the Company (i) have
been reviewed to confirm that they store, process (including sorting and
performing mathematical operations, calculations and computations),
input and output data containing date and information correctly
regardless of whether the date contains dates and times before, on or
after January 1, 2000, (ii) have been designated to ensure date and time
entry recognition, calculations that accommodate same century and
multi-century formulas and date values, leap year recognition and
calculations, and date data interface values that reflect the century,
(iii) accurately manage and manipulate data involving dates and times,
including single century formulas and multi-century formulas, and will
not cause an abnormal ending scenario within the application or generate
incorrect values or invalid results involving such dates, (iv)
accurately process any date rollover and (v) accept and respond to
two-digit year date input in a manner that resolves any ambiguities as
to the century. "Constituent Component" means all software (including
operating systems, programs, packages and utilities), firmware,
hardware, networking components, and peripherals provided as part of the
configuration.
(xxviii) Neither the Company nor any of its subsidiaries has at
any time since its inception (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any U.S.
federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any
jurisdiction thereof.
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(xxix) The Company and its subsidiaries are in compliance in all
material respects with all currently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder (herein called
ERISA); no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the
Company or any of its subsidiaries would have any liability; neither the
Company nor any of its subsidiaries has incurred and do not expect to
incur liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971
of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretation thereunder (herein called the
CODE); and each "pension plan" for which the Company or any of its
subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to
act, that would cause the loss of such qualification.
(xxx) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(xxxi) The Company has not distributed and will not distribute
prior to the later of (i) the Closing Date, or any date on which Option
Stock is to be purchased, as the case may be, and (ii) completion of the
distribution of the Stock, any offering material in connection with the
offering and sale of the Stock other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
(xxxii) The Company is not and, after giving effect to the
offering and sale of the Stock and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company" or a company "controlled" by and "investment company" as such
term is defined in the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission thereunder.
(xxxiii) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Stock registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Securities Act.
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(xxxiv) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters shall
be deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(b) Each of the Stockholders, severally and not jointly, hereby
represents and warrants as follows:
(i) Such Stockholder has not distributed and will not distribute
prior to the later of (i) any date on which Option Stock is to be
purchased, and (ii) completion of the distribution of the Stock, any
offering material in connection with the offering and sale of the Stock
other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the
Securities Act.
(ii) Each certificate signed by such Stockholder or any officer
of such Stockholder and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by the
Stockholder to the Underwriters as to the matters covered thereby.
(iii) Such Stockholder has reviewed the Registration Statement
and Prospectus and on the Effective Date, the Registration Statement did
not, and on each of the Closing Date and the Option Closing Date, will
not contain any untrue statement of a material fact and did not omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on the
Effective Date the Prospectus did not, and on each of the Closing Date
and the Option Closing Date, will not contain any untrue statement of a
material fact or omit 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; provided, however, that none of
the representations and warranties in this subparagraph (iii) 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 to the Company by or on behalf
of the Underwriters for use in the Registration Statement or the
Prospectus.
(iv) This Agreement has been duly authorized, executed and
delivered by the Stockholder and is a valid and binding obligation of
the Stockholder.
(v) Such Stockholder has good and marketable title to all the
shares of Option Stock to be sold by such Stockholder hereunder, free
and clear of all liens, encumbrances, equities, security interests and
claims whatsoever, with full right and authority to deliver the same
hereunder, and that upon delivery of and payment for such shares of the
Option Stock hereunder, the several Underwriters will receive good and
marketable title thereto, free and clear of all liens, encumbrances,
equities, security interests and claims whatsoever.
(vi) To the best of such Stockholder's knowledge, the
representations and warranties of the Company set forth in Section 2(a)
above are true and correct.
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3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
________ shares of the Underwritten Stock to the several Underwriters and each
of the Underwriters agrees to purchase from the Company the respective aggregate
number of shares of Underwritten Stock set forth opposite its name in Schedule
I. The price at which such shares of Underwritten Stock shall be sold by the
Company and purchased by the several Underwriters shall be $___ per share. In
making this Agreement, each Underwriter is contracting severally and not
jointly; except as provided in paragraphs (b) and (c) of this Section 3, the
agreement of each Underwriter is to purchase only the respective number of
shares of the Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such shares and portion on the terms herein
set forth. In any such case, either you or the Company shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to said Section 5 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company shall
make arrangements within the 24-hour periods stated above for the purchase of
all the shares of the Stock which the defaulting Underwriter or Underwriters
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph (b), and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
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(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the
Stockholders grant an option to the several Underwriters to purchase, severally
and not jointly, up to ______ shares in the aggregate of the Option Stock from
the Stockholders at the same price per share as the Underwriters shall pay for
the Underwritten Stock. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the thirtieth day after the date of this Agreement upon written or
telegraphic notice by you to the Company setting forth the aggregate number of
shares of the Option Stock as to which the several Underwriters are exercising
the option. Delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made as provided in Section 5 hereof. The number of shares of
the Option Stock to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Stock to be purchased by
the several Underwriters as such Underwriter is purchasing of the Underwritten
Stock, as adjusted by you in such manner as you deem advisable to avoid
fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth under "Underwriting" in the Registration
Statement, any Preliminary Prospectus and the Prospectus relating to the Stock
filed by the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus and the
Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of ______________, at 7:00 a.m., San Francisco time, on the
fourth(2) business day after the date of this Agreement, or at such time on such
other day, not later than seven full business days after such fourth business
day, as shall be agreed upon in writing by the Company and you. The date and
hour of such delivery and payment (which may be postponed as provided in Section
3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of
----------------
(2) This assumes that the transaction will be priced after the close of market
and that T+4 will apply to the transaction. If the pricing took place before
or during market hours (which will generally not be the case), the closing
would be three business days after pricing.
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_______________, at 7:00 a.m., San Francisco time, on the third business day
after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order by one or more certified or official bank check or
checks in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of __________________ on the business day prior to
the Closing Date or, in the case of the Option Stock, by 3:00 p.m., New York
time, on the business day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later date on which Option Stock is
purchased for the account of such Underwriter. Any such payment by you shall not
relieve such Underwriter from any of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees
as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A and
(ii) not file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you shall have reasonably objected in writing or which
is not in compliance with the Securities Act or the Rules and Regulations.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you a
signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of
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each of the foregoing (but without exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to you and
send to the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably request, and
(iii) thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, likewise send to
the Underwriters as many additional copies of the Prospectus and as many copies
of any supplement to the Prospectus and of any amended prospectus, filed by the
Company with the Commission, as you may reasonably request for the purposes
contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time such Prospectus
is delivered to such purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the Rules and Regulations for
such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic
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and special reports furnished to stockholders of the Company and of all
information, documents and reports filed with the Commission.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc. (herein
after called the NASD) of the Registration Statement, any Preliminary Prospectus
and the Prospectus, (ii) the furnishing to the Underwriters of copies of any
Preliminary Prospectus and of the several documents required by paragraph (c) of
this Section 6 to be so furnished, (iii) the printing of this Agreement and
related documents delivered to the Underwriters, (iv) the preparation, printing
and filing of all supplements and amendments to the Prospectus referred to in
paragraph (d) of this Section 6, (v) the furnishing to you and the Underwriters
of the reports and information referred to in paragraph (g) of this Section 6
and (vi) the printing and issuance of stock certificates, including the transfer
agent's fees.
(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for blue sky fees and related disbursements (including counsel
fees and disbursements and cost of printing memoranda for the Underwriters) paid
by or for the account of the Underwriters or their counsel in qualifying the
Stock under state securities or blue sky laws and in the review of the offering
by the NASD.
(k) The Company hereby agrees that, without the prior written consent of
Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, the Company will not, for a
period of 180 days following the commencement of the public offering of the
Stock by the Underwriters, directly or indirectly, (i) sell, offer, contract to
sell, make any short sale, pledge, 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 capital stock of the
Company or any securities convertible into or exchangeable or exercisable for or
any rights to purchase or acquire capital stock of the Company or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences or ownership of capital stock of the Company, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of capital stock of the Company or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the Stock to be sold to the
Underwriters pursuant to this Agreement.
(l) The Company agrees to use its best efforts to cause all directors,
officers, optionholders and beneficial holders of more than 5% of the
outstanding capital stock of the Company to agree that, without the prior
written consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, such
person or entity will not, for a period of 180 days following the commencement
of the public offering of the Stock by the Underwriters, directly or indirectly,
(i) sell, offer, contract to sell, make any short sale, pledge, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or
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otherwise transfer or dispose of any shares of capital stock of the Company or
any securities convertible into or exchangeable or exercisable for or any rights
to purchase or acquire capital stock of the Company or (ii) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of capital stock of the Company, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of capital stock of the Company or such other securities, in cash or otherwise.
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(n) The Company is familiar with the Investment Company Act and has in
the past conducted its affairs, and will in the future conduct its affairs, in
such a manner to ensure that the Company was not and will not be an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act and the rules and regulations thereunder.
(o) The Company will comply with the Securities Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (herein called the Exchange
Act) and the Rules and Regulations, so as to permit the completion of the
distribution of the Stock as contemplated in this Agreement and the Prospectus.
(p) The Company shall apply the net proceeds of its sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds."
(q) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock of the Company.
(r) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(s) On or before the Closing Date, the Company will obtain, and it
agrees to maintain, a directors and officers liability insurance policy, in
an amount not being less than $__________, naming you as an additional insured.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Stockholders agree to indemnify and hold
harmless each Underwriter and each person (including each partner or officer
thereof) who controls any Underwriter within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable
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fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreements of the Company
and the Stockholders contained in this paragraph (a) shall not apply to any such
losses, claims, damages, liabilities or expenses if such statement or omission
was made in reliance upon and in conformity with information furnished as herein
stated or otherwise furnished in writing to the Company by or on behalf of any
Underwriter for use in any Preliminary Prospectus or the Registration Statement
or the Prospectus or any such amendment thereof or supplement thereto and (2)
the indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Stock which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company and the Stockholders contained in this paragraph (a) and the
representations and warranties of the Company and the Stockholders contained in
Section 2 hereof shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any indemnified party and shall
survive the delivery of and payment for the Stock. Notwithstanding the
foregoing, the liability of a Stockholder for indemnification under this
Section 7 shall not exceed the amount of the aggregate net proceeds received by
such Stockholder upon the sale of the Option Stock by such Stockholder to the
Underwriters.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, from and against any and all losses, claims, damages
or liabilities, joint or several, to which such indemnified parties or any of
them may become subject under the Securities Act, the Exchange Act, or the
common law or otherwise and to reimburse each of them for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may
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be brought against, the respective indemnified parties, in each case arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the Prospectus
as part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement) or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, if such statement or
omission was made in reliance upon and in conformity with information furnished
as herein stated or otherwise furnished in writing to the Company by such
indemnifying Underwriter expressly for use in the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto. The indemnity
agreement of each Underwriter contained in this paragraph (b) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and (b)
of this Section 7 agrees that, upon the service of a summons or other initial
legal process upon it in any action or suit instituted against it or upon its
receipt of written notification of the commencement of any investigation or
inquiry of, or proceeding against, it in respect of which indemnity may be
sought on account of any indemnity agreement contained in such paragraphs, it
will promptly give written notice (herein called the NOTICE) of such service or
notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if the party to whom such
Notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which the Notice would have related and was prejudiced by the
failure to give the Notice, but the omission so to notify such indemnifying
party or parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of such
indemnity agreement. Any indemnifying party shall be entitled at its own expense
to participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party shall
be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the NOTICE OF DEFENSE) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be
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necessary to protect the interests of the indemnified party or parties and (ii)
in any event, the indemnified party or parties shall be entitled to have counsel
chosen by such indemnified party or parties participate in, but not conduct, the
defense. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized to be
incurred by the indemnified party or parties. If, within a reasonable time after
receipt of the Notice, no Notice of Defense has been given, the indemnifying
party or parties shall be responsible for any legal or other expenses incurred
by the indemnified party or parties in connection with the defense of the
action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
of this Section 7, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in paragraph (a) or (b) of this Section 7 (i) in such proportion as
is appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each indemnifying party in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Stock received by the Company and
the total underwriting discount received by the Underwriters, as set forth in
the table on the cover page of the Prospectus, bear to the aggregate public
offering price of the Stock. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by each indemnifying party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent
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misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this paragraph
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after the
date of this Agreement trading in the Common Stock shall have been suspended, or
if there shall have occurred (i) the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, (ii) any
outbreak of hostilities or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
calamity, crisis or change in economic or political conditions in the financial
markets of the United States would, in the Underwriters' reasonable judgment,
make the offering or delivery of the Stock impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, The Nasdaq Stock Market, or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation by, any court, legislative body,
agency or other governmental authority which in the Underwriters' reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company, (v) declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Underwriters' reasonable opinion has a
material adverse effect on the securities markets in the United States. If this
Agreement shall be terminated pursuant to this Section 8, there shall be no
liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
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Company under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company of all its obligations to be performed hereunder at
or prior to the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective; and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder and
the validity and form of the certificates representing the Stock, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the Prospectus (except as to the financial
statements contained therein), shall have been approved at or prior to the
Closing Date by Xxxxxxxx & Xxxxxxxx LLP , counsel for the Underwriters.
(c) You shall have received from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, counsel for the Company, an opinion, addressed to the
Underwriters and dated the Closing Date, covering the matters set forth in Annex
A hereto, and if Option Stock is purchased at any date after the Closing Date,
an additional opinion from such counsel, addressed to the Underwriters and dated
the Option Closing Date, confirming that the statements expressed as of the
Closing Date in such opinion remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any Material Adverse Effect or any development involving a prospective
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has entered
into any material transaction not referred to in the Registration Statement in
the form in which it originally became effective and the Prospectus contained
therein, (iv) neither the Company nor any of its subsidiaries has any material
contingent obligations which are not disclosed in the Registration Statement and
the Prospectus, (v) there are not any pending or known threatened legal
proceedings to which the Company or any of its subsidiaries is a party or of
which property of the Company or any of its subsidiaries is the subject which
are material and which are not disclosed in the Registration Statement and the
Prospectus, (vi) there are not any franchises, contracts, leases or other
documents which are required to be filed as exhibits to the Registration
Statement which have not been filed as required, (vii) the representations and
warranties of the Company and the Stockholders herein
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are true and correct in all material respects as of the Closing Date or any
later date on which Option Stock is to be purchased, as the case may be, and
(viii) there has not been any material change in the market for securities in
general or in political, financial or economic conditions from those reasonably
foreseeable as to render it impracticable in your reasonable judgment to make a
public offering of the Stock, or a material adverse change in market levels for
securities in general (or those of companies in particular) or financial or
economic conditions which render it inadvisable to proceed.
(e) You shall have received on the Closing Date and the Option Closing
Date, a certificate, dated the Closing Date or the Option Closing Date, as the
case may be, and signed by the President and the Chief Financial Officer of the
Company, stating that the respective signers of said certificate have carefully
examined the Registration Statement in the form in which it originally became
effective and the Prospectus contained therein and any supplements or amendments
thereto, and that the statements included in clauses (i) through (viii) of
paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from Deloitte & Touche LLP a letter or
letters, addressed to the Underwriters and dated the Closing Date and the Option
Closing Date, as the case may be, confirming that they are independent public
accountants with respect to the Company within the meaning of the Securities Act
and the Rules and Regulations and based upon the procedures described in their
letter delivered to you concurrently with the execution of this Agreement
(herein called the ORIGINAL LETTER), but carried out to a date not more than
three business days prior to the Closing Date or such later date on which Option
Stock is purchased (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing Date
or the Option Closing Date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company or any of its subsidiaries which, in your sole judgment, makes it
impractical or inadvisable to proceed with the public offering of the Stock or
the purchase of the Option Stock as contemplated by the Prospectus.
The Original Letter shall be in form and substance satisfactory to the
Underwriters and shall (i) set forth their opinion with respect to their audit
of the consolidated balance sheets of the Company as of January 2, 1999 and
December 31, 1997, and related consolidated statements of income and
comprehensive income, stockholders' equity (deficiency in assets), and cash
flows for the years ended January 2, 1999, December 31, 1997 and 1996, (ii)
state that Deloitte & Touche LLP has performed the procedures set out in
Statement on Auditing Standards No. 71 (herein called SAS 71) as described in
SAS 71 on the unaudited condensed interim consolidated financial statements for
the nine month period ended October 2, 1999, (herein called the Interim
Financial Statements), (iii) state that in the course of such review, nothing
came to their attention that leads them to believe that any material
modifications need to be made to any of the Interim Financial Statements in
order for them to be in compliance with generally accepted accounting principles
consistently applied across the periods presented, and (iv) address other
matters agreed upon by Deloitte & Touche LLP and you.
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(g) You shall have received from Deloitte & Touche LLP a letter stating
that their review of the Company's system of internal accounting controls, to
the extent they deemed necessary in establishing the scope of their audit of the
Company's consolidated financial statements as of January 2, 1999, did not
disclose any weakness in internal controls that they considered to be material
weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq National
Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received from all
directors, officers, optionholders and beneficial holders of more than 5% of the
outstanding capital stock of the Company agreements, in form reasonably
satisfactory to Xxxxxxxxx & Xxxxx LLC, stating that without the prior written
consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, such person or
entity will not, for a period of 180 days following the commencement of the
public offering of the Stock by the Underwriters, directly or indirectly, (i)
sell, offer, contract to sell, make any short sale, pledge, 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
capital stock of the Company or any securities convertible into or exchangeable
or exercisable for or any rights to purchase or acquire capital stock of the
Company or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of capital stock of
the Company, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of capital stock of the Company or such other
securities, in cash or otherwise.
(k) On or prior to the Closing Date, you shall have received a copy of
the Company's directors and officers liability insurance policy, in an amount
not being less than $______, naming you as an additional insured.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters,
shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraphs (i) and (j) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the transactions
contemplated hereby.
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10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of the
Company to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company by giving notice
to you. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that in the event of any such termination the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraphs (i) and (j) of
Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of the Company and the several Underwriters and, with respect to
the provisions of Section 7 hereof, the several parties (in addition to the
Company and the several Underwriters) indemnified under the provisions of said
Section 7, and their respective representatives, successors and assigns. Nothing
in this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Xxxxxxxxx & Xxxxx LLC, Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, with a copy to Xxxxxxxx & Xxxxxxxx LLP, 000
Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxx, Esq.; and
if to the Company, shall be mailed, telegraphed or delivered to it at its
office, 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxx, Attention:
_____________. All notices given by telegraph shall be promptly confirmed by
letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person
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thereof, or by or on behalf of the Company or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraphs (k) and (l) of Section 6 hereof shall be of
no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of California.
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
THE MANAGEMENT NETWORK GROUP, INC.
By:
-------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
THE STOCKHOLDERS:
Xxxxxxx Capital II L.P.
By:
-------------------------------
[NAME]
General Partner
Strategic Entrepreneur Fund II, L.P.
By:
-------------------------------
[NAME]
General Partner
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----------------------------------
Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxx
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
BANCBOSTON XXXXXXXXX XXXXXXXX INC.
XXXXXXX XXXXX XXXXXX INC
XXXXXXXXX & COMPANY INC.
By Xxxxxxxxx & Xxxxx LLC
By:
-------------------------------
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
SHARES
NUMBER OF TO BE
UNDERWRITERS PURCHASED
------------ ---------
Xxxxxxxxx & Xxxxx LLC .....................................
BancBoston Xxxxxxxxx Xxxxxxxx Inc. ........................
Xxxxxxx Xxxxx Barney Inc. .................................
Xxxxxxxxx & Company Inc. ..................................
--------
Total ............................................... ______
========
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ANNEX A
MATTERS TO BE COVERED IN THE OPINION
OF
XXXXXX XXXXXXX XXXXXXXX & XXXXXX, PROFESSIONAL CORPORATION
COUNSEL FOR THE COMPANY
(i) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified as a foreign
corporation and in good standing in each jurisdiction in which its
ownership or leasing of property requires such qualification, and has
full corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; all the
issued and outstanding capital stock of each of the subsidiaries of the
Company has been duly authorized and validly issued and is fully paid
and nonassessable, and is owned by the Company free and clear of all
liens, claims, encumbrances and security interests, and no options,
warrants or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligations into shares of capital
stock or ownership interests in such subsidiaries are outstanding;
(ii) the authorized capital stock of the Company consists of 10,000,000
shares of Preferred Stock, $.001 par value per share, none of which is
issued and outstanding, and 100,000,000 shares of Common Stock, $.001
par value per share, of which there are outstanding _______ shares
(including the Underwritten Stock), proper corporate proceedings have
been taken validly to authorize such authorized capital stock; all of
the outstanding shares of such capital stock (including the Underwritten
Stock) have been duly and validly issued and are fully paid and
nonassessable; any Option Stock purchased after the Closing Date, when
issued and delivered to and paid for by the Underwriters as provided in
the Underwriting Agreement, will have been duly and validly issued and
be fully paid and nonassessable; and no preemptive rights of, or rights
of refusal in favor of, stockholders exist with respect to the Stock, or
the issue and sale thereof, by operation of law or pursuant to the
Certificate of Incorporation or Bylaws of the Company, and there are no
contractual preemptive rights, rights of first refusal or rights of
co-sale which exist with respect to the Option Stock being sold by the
Stockholders or the issue and sale of the Underwritten Stock;
(iii) the Registration Statement has become effective under the
Securities Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus is in effect and no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission;
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(iv) the Registration Statement, the Prospectus and each amendment to
the Registration Statement, as of their respective effective or issue
dates (except as to the financial statements and schedules and other
financial data contained therein, as to which such counsel need express
no opinion), comply as to form in all material respects with the
requirements of the Securities Act and with the rules and regulations of
the Commission thereunder;
(v) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to such
counsel), 11(a), 11(b), 11(c) and 15 of Form S-1, has been reviewed by
such counsel and is correct in all material respects; the description of
the Company's stock option plans and the options granted and which may
be granted thereunder and the options granted otherwise than under such
plans set forth in the Prospectus accurately and fairly presents in all
material respects the information required to be shown with respect to
said plans and options to the extent required by the Securities Act and
the rules and regulations of the Commission thereunder; and to the best
of such counsel's knowledge, there are no statutes or regulations, and
no legal or governmental actions, suits or proceedings pending or
threatened against the Company that are required to be described in the
Prospectus that are not described as required;
(vi) all descriptions in the Prospectus of contracts and other documents
to which the Company or it subsidiaries are a party are accurate in all
material respects; to such counsel's knowledge, there are no franchises,
contracts, leases, loan agreements, notes, documents or legal
proceedings, pending or threatened, required to be described or referred
to in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement, which are not described and
filed as required; and no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, lease, loan agreement, note or other document
filed as an exhibit to the Registration Statement;
(vii) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the issue and sale by the Company of the shares of Stock sold by
the Company as contemplated by the Underwriting Agreement will not
conflict with, or result in a breach of, the Certificate of
Incorporation or Bylaws of the Company or any of its subsidiaries or any
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party, or any applicable law or regulation,
or so far as is known to such counsel, any order, writ, injunction or
decree, of any jurisdiction, court or governmental instrumentality;
(ix) to such counsel's knowledge and information, there is not pending,
and the Company has not received any notice of any threatened, action,
suit, proceeding, inquiry or investigation, to which the Company or any
of its subsidiaries is a party, or to which the property of the Company
or any of its subsidiaries is subject, before or brought by any court or
governmental agency or body, which might
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reasonably be expected to result in any Material Adverse Change, or
which might reasonably be expected to materially and adversely affect
the properties or assets of the Company or the consummation of the
Underwriting Agreement or the performance by the Company of its
obligations under the Underwriting Agreement; and all pending legal or
governmental proceedings to which the Company or any of its subsidiaries
is a party or that affect any of their respective properties that are
not described in the Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Change;
(x) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of
the filing of the Registration Statement by the Company have waived such
rights or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement;
(xi) good and marketable title to the shares of Option Stock sold by the
Stockholders under the Underwriting Agreement, free and clear of all
liens, encumbrances, equities, security interests and claims, has been
transferred to the Underwriters who have severally purchased such shares
of Option Stock under the Underwriting Agreement, assuming for the
purpose of this opinion that the Underwriters purchased the same in good
faith without notice of any adverse claims; [the opinion in this clause
(xi) will be provided at any closing at which Option Stock is purchased]
(xii) no consent, approval, authorization or order of any court or
governmental agency or body is required by the Company for the
consummation of the transactions contemplated in the Underwriting
Agreement, 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 Stock by the
Underwriters;
(xiii) the Stock sold by the Stockholders and the Stock issued and sold
by the Company will have been duly authorized for listing on the Nasdaq
National Market upon official notice of issuance;
(xiv) 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;
(xv) to such counsel's knowledge, neither the Company nor its
subsidiaries are in violation of their charters or bylaws.
In addition, such counsel shall also state that such counsel has
no reason to believe that the Registration Statement (except as to the
financial statements and schedules and other financial and statistical
data contained or incorporated by reference therein, as to which such
counsel need not express any opinion or belief) at the Effective Date
contained any untrue statement of a material fact or omitted
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to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus
(except as to the financial statements and schedules and other financial
and statistical data contained or incorporated by reference therein, as
to which such counsel need not express any opinion or belief) as of its
date or at the Closing Date (or any later date on which Option Stock is
purchased), contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
31
