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Exhibit 1.1
INTERLIANT, INC.
a Delaware Corporation
[___,000,000] Shares of Common Stock
PURCHASE AGREEMENT
Dated: May __, 1999
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TABLE OF CONTENTS
PAGE
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PURCHASE AGREEMENT........................................................................................... 1
SECTION 1. Representations and Warranties.................................................................. 3
(a) Representations and Warranties by the Company................................................... 3
(i) Compliance with Registration Requirements.............................................. 3
(ii) Independent Accountants................................................................ 4
(iii) Financial Statements................................................................... 4
(iv) No Material Adverse Change in Business................................................. 4
(v) Good Standing of the Company........................................................... 5
(vi) Good Standing of Subsidiaries.......................................................... 5
(vii) Capitalization......................................................................... 5
(viii) Authorization of Agreement............................................................. 6
(ix) Authorization and Description of Securities............................................ 6
(x) Absence of Defaults and Conflicts...................................................... 6
(xi) Absence of Labor Dispute............................................................... 6
(xii) Absence of Proceedings................................................................. 7
(xiii) Accuracy of Exhibits................................................................... 7
(xiv) Possession of Intellectual Property.................................................... 7
(xv) Absence of Further Requirements........................................................ 7
(xvi) Possession of Licenses and Permits..................................................... 8
(xvii) Title to Property...................................................................... 8
(xviii) Compliance with Cuba Act............................................................... 8
(xix) Investment Company Act................................................................. 8
(xx) Environmental Laws..................................................................... 9
(xxi) Registration Rights.................................................................... 9
(xxii) Year 2000 Compliance................................................................... 9
(xxiii) Systems and Controls................................................................... 9
(b) Officer's Certificates.......................................................................... 10
SECTION 2. Sale and Delivery to Underwriters; Closing..................................................... 10
(a) Initial Securities............................................................................. 10
(b) Option Securities.............................................................................. 10
(c) Payment........................................................................................ 10
(d) Denominations; Registration.................................................................... 11
SECTION 3. Covenants of the Company....................................................................... 11
(a) Compliance with Securities Regulations and Commission Requests................................. 11
(b) Filing of Amendments........................................................................... 12
(c) Delivery of Registration Statements............................................................. 12
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TABLE OF CONTENTS
(CONTINUED)
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(d) Delivery of Prospectuses....................................................................... 12
(e) Continued Compliance with Securities Laws...................................................... 12
(f) Blue Sky Qualifications........................................................................ 13
(g) Rule 158....................................................................................... 13
(h) Use of Proceeds................................................................................ 13
(i) Listing........................................................................................ 13
(j) Restriction on Sale of Securities.............................................................. 13
(k) Reporting Requirements......................................................................... 14
(l) Compliance with NASD Rules..................................................................... 14
(m) Compliance with Rule 463....................................................................... 14
SECTION 4. Payment of Expenses............................................................................ 14
(a) Expenses....................................................................................... 14
(b) Termination of Agreement....................................................................... 15
SECTION 5. Conditions of Underwriters' Obligations........................................................ 15
(a) Effectiveness of Registration Statement........................................................ 15
(b) Opinion of Counsel for Company................................................................. 15
(c) Opinion of Counsel for Underwriters............................................................ 15
(d) Officers' Certificate.......................................................................... 16
(e) Accountant's Comfort Letter.................................................................... 16
(f) Bring-down Comfort Letter...................................................................... 16
(g) Approval of Listing............................................................................ 17
(h) No Objection................................................................................... 17
(i) Lock-up Agreements............................................................................. 17
(j) Conditions to Purchase of Option Securities.................................................... 17
(k) Additional Documents........................................................................... 17
(l) Termination of Agreement....................................................................... 18
SECTION 6. Indemnification................................................................................ 18
(a) Indemnification of Underwriters................................................................ 18
(b) Indemnification of Company, Directors and Officers............................................. 19
(c) Actions against Parties; Notification.......................................................... 19
(d) Settlement without Consent if Failure to Reimburse............................................. 20
(e) Indemnification for Reserved Securities........................................................ 20
SECTION 7. Contribution................................................................................... 20
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 8. Representations, Warranties and Agreements to Survive Delivery................................. 22
SECTION 9. Termination of Agreement....................................................................... 22
(a) Termination; General........................................................................... 22
(b) Liabilities.................................................................................... 22
SECTION 10. Default by One or More of the Underwriters..................................................... 22
SECTION 11. Notices........................................................................................ 23
SECTION 12. Parties........................................................................................ 23
SECTION 13. GOVERNING LAW AND TIME......................................................................... 24
SECTION 14. Effect of Headings............................................................................. 24
SCHEDULES
Schedule A - List of Underwriters.................................................................. Sch A-1
Schedule B - Pricing Information................................................................... Sch B-1
[Schedule C - List of Persons Subject to Lock-up................................................... Sch C-1]
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel................................................... A-1
Exhibit B - Form of Opinion of Digiweb Inc.'s Counsel.............................................. B-1
Exhibit C- Form of Opinion of Net Daemons Associates Inc.'s Counsel................................ B-2
Exhibit D- Form of Lock-Up Letter.................................................................. B-3
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Draft of May 17, 1999
INTERLIANT, INC.
(a Delaware corporation)
__________ Shares of Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
___________, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx
CIBC Oppenheimer Corp.
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx,
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Interliant, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Xxxxxxx Lynch, Donaldson, Lufkin & Xxxxxxxx and CIBC
Xxxxxxxxxxx Corp. are acting as representative(s) (in such capacity, the
"Representative(s)"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the Underwriters, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of
__________ additional shares of Common Stock to cover over-allotments, if any.
The aforesaid ___________ shares of Common Stock (the "Initial Securities") to
be purchased by the Underwriters and all or any part of the _____________ shares
of Common Stock subject to the
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option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deem advisable after
this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to _______ shares of the
Securities to be purchased by the Underwriters (the "Reserved Securities") shall
be reserved for sale by the Underwriters to certain eligible employees and other
persons designated by the Company, as part of the distribution of the Securities
by the Underwriters, subject to the terms of this Agreement, the applicable
rules, regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations. To the
extent that such Reserved Securities are not orally confirmed for purchase by
such eligible employees and such persons designated by the Company by the end of
the first business day after the date of this Agreement, such Reserved
Securities may be offered to the public as part of the public offering
contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-74403) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall
refer to the preliminary prospectus dated April 30, 1999 together with the Term
Sheet and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any
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of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("XXXXX").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company . The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with. At the respective times the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), the Registration Statement,
the Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Prospectus, any preliminary prospectus and any supplement thereto or
prospectus wrapper prepared in connection therewith, at their respective times
of issuance and at the Closing Time, complied and will comply in all material
respects with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus and such preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the offer and
sale of Reserved Securities. Neither the Prospectus nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectus or any such amendment or supplement was issued and at the Closing
Time (and, if any Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Company will comply with the requirements
of Rule 434 and the Prospectus shall not be "materially different", as such term
is used in Rule 434, from the prospectus included in the Registration Statement
at the time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through Xxxxxxx Xxxxx
expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule
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424 under the 1933 Act, complied when so filed in all material respects with the
1933 Act Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectus, together with the related notes,
present fairly in all material respects the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The selected financial data and the summary financial
information included in the Prospectus have been derived from the consolidated
financial statements of the Company. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the Prospectus
comply as to form in all material respects with the applicable requirements of
Rule 11-02 of Regulation S-X under the 1933 Act, and the pro forma adjustments
have been applied properly in all material respects to the historical amounts in
the compilation of such pro forma financial statements.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
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(vi) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each a
"Subsidiary" and, collectively, the "Subsidiaries") has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
capital stock of each such Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive or
similar rights of any securityholder of such Subsidiary. The only subsidiaries
of the Company are the subsidiaries listed on Exhibit 21 to the Registration
Statement.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company on March 31, 1999 and as of the date hereof are as set
forth in the Prospectus in the columns entitled "Actual" and "Pro Forma",
respectively, under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements, acquisitions or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options referred to in
the Prospectus). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities
have been duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable; the Common Stock conforms in all
material respects to all statements relating thereto contained in the Prospectus
and such description conforms in all material respects to the rights set forth
in the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract,
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indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments") except for such defaults that would not result in
a Material Adverse Effect; and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and in
the Registration Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the Company
with its obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary pursuant to, the Agreements and Instruments or
violation of any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any subsidiary or any of
their assets, properties or operations (except for such conflicts, violations,
breaches or defaults or liens, charges or encumbrances that would not result in
a Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary. As used
herein, a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any subsidiary, which is
required to be disclosed in the Registration Statement or the Prospectus (other
than as disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or any subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
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(xiii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so described
and filed as required.
(xiv) Possession of Intellectual Property. Except as disclosed in
the Prospectus, the Company and its subsidiaries own or possess, or can acquire
on reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business now
operated by them, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property invalid
or inadequate to protect the interest of the Company or any of its subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement, except (i)
such as have been already obtained or as may be required under the 1933 Act or
the 1933 Act Regulations or state securities laws or pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), (ii) such as may be required
by the rules and regulations of the National Association of Securities Dealers,
Inc. and (iii) such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved Shares are
offered.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them except where the failure to possess
such Governmental Licenses would not have a Material Adverse Effect; the Company
and its subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
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(xvii) Title to Property. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in the
Prospectus or (b) do not, singly or in the aggregate, have a Material Adverse
Effect; and all of the leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the Prospectus,
are in full force and effect, and neither the Company nor any subsidiary has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any subsidiary under any of the leases
or subleases mentioned above, or affecting or questioning the rights of the
Company or such subsidiary to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied in all
material respects with, and is and will be in compliance in all material
respects with, the provisions of that certain Florida act relating to disclosure
of doing business with Cuba, codified as Section 517.075 of the Florida
statutes, and the rules and regulations thereunder (collectively, the "Cuba
Act") or is exempt therefrom.
(xix) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be, 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 (the
"1940 Act").
(xx) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
to the knowledge of the Company threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for
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clean-up or remediation, or an action, suit or proceeding by any private party
or governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(xxi) Registration Rights. Except as disclosed in the Prospectus,
there are no persons with registration rights or other similar rights to have
any securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xxii) Year 2000 Compliance. The Company is using reasonable
procedures to verify that the software used in its products will recognize and
process date fields after the turn of the century, and perform date-dependent
calculations and operations (including sorting, comparing and reporting) after
the turn of the century correctly, and is using reasonable efforts to ensure
that its software will not produce invalid and/or incorrect results as a result
of the change of century (all without human intervention, other than original
data entry of valid dates), except where the failure to use such procedures or
efforts would not have a Material Adverse Effect, provided that the software
receives correct and properly formatted date inputs from all software and
hardware that exchanges data with or provides data to the software.
(xxiii) Systems and Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit timely
preparation of financial statements in conformity in all material respects with
generally accepted accounting principles and to maintain asset accountability;
and (iii) access to assets is permitted only in accordance with management's
general or specific authorization.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Representative(s) or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the respective
number of Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants
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an option to the Underwriters, severally and not jointly, to purchase up to an
additional ____________ shares of Common Stock at the price per share set forth
in Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not payable on
the Option Securities. The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by the
Representative(s) to the Company setting forth the number of Option Securities
as to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the
Representative(s), but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Xxxxx
Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date hereof
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representative(s) and the Company (such time and date of payment and
delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representative(s)
and the Company, on each Date of Delivery as specified in the notice from the
Representative(s) to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative(s) for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representative(s), for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
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(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representative(s) may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities and
the Option Securities, if any, will be made available for examination and
packaging by the Representative(s) in The City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representative(s) immediately,
and confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening known
to the Company of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representative(s)
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
will furnish the Representative(s) with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Representative(s) or
counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representative(s) and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative(s), without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto
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furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its commercially
reasonable efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Representatives may
designate and to maintain such qualifications in effect for a period of not less
than one year from the later of the effective date of the Registration Statement
and any Rule 462(b) Registration Statement; 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 or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so qualified,
the Company will file such statements and reports as may be required by the laws
of such jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration Statement and
any Rule 462(b) Registration Statement.
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(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in all material respects in the manner
specified in the Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its commercially reasonable efforts
to effect and maintain the quotation of the Securities on the Nasdaq National
Market and will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities that
are traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectus, the Company will not, without the prior written
consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued in connection with
acquisitions of other entities by the Company if the recipient of such shares
executes a similar lock-up agreement with Xxxxxxx Xxxxx.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such
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restrictions any of the Reserved Securities, the Company agrees to reimburse the
Underwriters for any reasonable expenses (including, without limitation, legal
expenses) they incur in connection with such release.
(m) Compliance with Rule 463. The Company will file with the Commission
such reports or take such other actions as may be required pursuant to Rule 463
of the 1933 Act Regulations.
(n) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, to impose
stop-transfer instructions with respect to all securities acquired by
individuals upon exercise of options issued by the Company in accordance with
written agreements between the Company and such persons.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the Securities and
(ix) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Securities, (x) the fees and expenses incurred in connection with the
inclusion of the Securities in the Nasdaq National Market and (xi) all costs and
expenses of the Underwriters, including the reasonable fees and disbursements of
counsel for the Underwriters, in connection with matters related to the Reserved
Securities which are designated by the Company for sale to employees, directors
and other people designated by the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative(s) in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of
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the Company delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxx Xxxxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the Underwriters
may reasonably request.
(c) Opinion of Counsel for Digiweb, Inc. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxxxx & Associates, P.C., counsel for Digiweb, Inc, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit B hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(d) Opinion of Counsel for Net Daemons Associates, Inc.. At Closing
Time, the Representatives shall have received the favorable opinion, dated as of
Closing Time, of Sheetman & Halperin, counsel for Net Daemons Associates, Inc.,
in form and substance satisfactory to counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit C hereto and to such further
effect as counsel to the Underwriters may reasonably request.
(e) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters with respect to the matters set forth in clauses
(i), (ii), (v), (vi) (solely as to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the Company), (viii) through
(x), inclusive, (xii), (xiv) (solely as to the information in the Prospectus
under "Description of Capital Stock--Common Stock") and the penultimate
paragraph of Exhibit A hereto. In giving such opinion such counsel may rely, as
to all matters governed by the laws of jurisdictions other than the law of the
State of California, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representative(s). Such counsel may also state that, insofar
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as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials.
(f) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representative(s) shall have
received a certificate on behalf of the Company of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus. Additionally, at the time of
the execution of this Agreement, the Representatives shall have received from
Xxxxxx Xxxx & Xxxxxx PC, BSC&E, PriceWaterhouseCoopers LLC, Frankel, Lodgen,
Lacher, Golditch, Sardi & Xxxxxx, BDO Xxxxxxx, LLP, Deloitte & Touche LLP and
Ernst & Young LLP letters dated such date, in form and substance satisfactory to
the Representatives, together with signed or reproduced copies of such letter
for each of the other Underwriters containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements of Tri Star Web Creations Inc., Gen
International, Inc and Consolidated subsidiaries, Digiweb, Inc., Clever
Computers, Inc., Homecom Communications, Inc. (Host America Division), B.N.
Technology, Inc. (DBA Internet Communications), Telephonetics International,
Inc. and affiliate, Net Daemons Associates and Interliant, Inc. contained in the
Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Representative(s)
shall have received from each of Ernst & Young LLP letters dated as of Closing
Time, to the effect that they reaffirm the statements made in the letters
furnished pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
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(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit D hereto signed by the persons listed on Schedule C hereto.
(l) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representative(s) shall have received:
(i) Officers' Certificate. A certificate, on behalf of the
Company, dated such Date of Delivery, of the President or a Vice
President of the Company and of the chief financial or chief accounting
officer of the Company confirming that the certificate delivered at the
Closing Time pursuant to Section 5(d) hereof remains true and correct
as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
Xxxxx Xxxxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iii) Opinion of Counsel for Underwriters. The favorable
opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young
LLP, in form and substance satisfactory to the Representative(s) and
dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Representative(s) pursuant to
Section 5(f) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
(m) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representative(s) and counsel for the Underwriters.
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(n) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representative(s) by notice to the Company
at any time at or prior to Closing Time or such Date of Delivery, as the case
may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7 and
8 shall survive any such termination and remain in full force and effect.
SECTION 6.
(a) Indemnification of Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of
any applicable laws or regulations of foreign jurisdictions where
Reserved Securities have been offered and (B) any untrue statement or
alleged untrue statement of a material fact included in the supplement
or prospectus wrapper material distributed in foreign jurisdictions in
connection with the reservation and sale of the Reserved Securities to
eligible employees, directors and other persons designated by the
Company or the omission or alleged omission therefrom of a material
fact necessary to make the statements therein, when considered in
conjunction with the Prospectus or preliminary prospectus, not
misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof; provided that (subject to Section 6(d) below) any
such settlement is effected with the written consent of the Company;
and
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(iv) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
Xxxxxxx Xxxxx), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of the nature referred to in Section 6(a)(ii)(A) hereof, to
the extent that any such expense is not paid under (i), (ii) or (iii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided further that
the Company will not be liable to any Underwriter with respect to any Prospectus
to the extent that the Company shall sustain the burden of proving that any such
loss, liability, claim, damage or expense resulted from the fact that such
Underwriter, in contravention of a requirement of this Agreement or applicable
law, sold securities to a person to whom such Underwriter failed to send or
give, at or prior to the Closing Date, a copy of the Prospectus, as then amended
or supplemented if: (i) the Company has previously funished copies thereof
(sufficiently in advance of the Closing Date to allow for distribution by the
Closing Date) to the Underwriter and the loss, liability, claim, damage or
expense of such Underwriter resulted from an untrue statement or omission of a
material fact contained in or omitted from the preliminary prospectus which was
corrected in the Prospectus as, if applicable, amended or supplemented prior to
the Closing Date and such Prospectus was required by law to be delivered at or
prior to the written confirmation of sale to such person and (ii) such failure
to give or send such Prospectus by the Closing Date to the party or parties
asserting such loss, liability, claim, damage, or expense would have constituted
a valid defense to the claim asserted by such person.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying
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party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 6(a) above, counsel to the indemnified parties shall be selected by
Xxxxxxx Xxxxx, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel to which such indemnified
party is entitled under this Section 6, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by Section
6(a)(ii) and Section 6(a)(iii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of employees, directors and other persons
designated by the Company to pay for and accept delivery of Reserved Securities
which, by the end of the first business day following the date of this
Agreement, were subject to a properly confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred
-20-
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by such indemnified party, as incurred, (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions, or in connection with any violation
of the nature referred to in Section 6(a)(ii)(A) hereof, which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission or any violation of the nature referred to in Section
6(a)(ii)(A) hereof.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
-21-
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For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative(s) may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representative(s), impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of the
Underwriters shall fail at Closing Time or a Date of Delivery to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representative(s) shall have the
-22-
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right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representative(s) shall
not have completed such arrangements within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representative(s) or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Representative(s) at North Tower, World Financial Center, New
York, New York 10281-1201, attention of Xxxxxx Xxxxxxxx; and notices to the
Company shall be directed to it at Interliant, Inc., 00 Xxxxxxx Xxxxxx, Xxxxx
Xxxxxx, XX 00000, attention: General Counsel; copy to Xxxxx Xxxxxxxxxx LLP,
attention: Xxxxxxxx Xxxxxxxx.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be binding
upon the Underwriters and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors,
-23-
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and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.
-24-
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
INTERLIANT, INC.
By ____________________________
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
CIBC XXXXXXXXXXX CORP.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By ___________________________________
Authorized Signatory
For themselves and as Representative(s) of the other Underwriters named in
Schedule A hereto.
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SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated....................................
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation...................................
CIBC Xxxxxxxxxxx Corp.............................................
---------
Total............................................................. [1]
=========
Sch A-1
31
SCHEDULE B
INTERLIANT, INC.
___,000,000 Shares of Common Stock
(Par Value $[.01] Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_______.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $________, being an amount equal to the initial
public offering price set forth above less $________ per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities.
Sch B-1
32
SCHEDULE C
[List of persons and entities
subject to lock-up]
Sch C-1
33
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, and to such counsel's best knowledge, issued and
outstanding capital stock of the Company on March 31, 1999 and as of the date
hereof are as set forth in the Prospectus in the columns entitled "Actual" and
"Pro Forma", respectively under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to the Purchase Agreement or pursuant to
reservations, acquisitions, agreements or employee benefit plans referred to in
the Prospectus or pursuant to the exercise of convertible securities or options
referred to in the Prospectus); the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of the statutory (or to such counsel's best
knowledge contractual) preemptive or other similar rights of any securityholder
of the Company.
(v) The Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment of
the consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the Securities is or will be
subject to personal liability by reason of being such a holder.
(vi) The issuance of the Securities is not subject to statutory (or to
such counsel's best knowledge contractual) preemptive or other similar rights of
any securityholder of the Company.
(vii) Sage Networks Acquisition Corp., Telephonetics, Inc., B.N.
Technology, Inc. (dba ICOM) and Interliant of Texas, inc. (the "Designated
Subsidiaries") have been duly incorporated and are validly existing as
corporations in good standing under the laws of the jurisdiction of their
incorporation, have corporate power and authority to own, lease and operate
their properties and to conduct their business as described in the Prospectus
and are duly qualified as foreign corporations
A-1
34
to transact business and are in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Designated Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and, to the best of our
knowledge, is owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any Designated
Subsidiary was issued in violation of the statutory (or to such counsel's best
knowledge contractual) preemptive or similar rights of any securityholder of
each such subsidiary.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 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 our knowledge, no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus and each amendment or supplement to the Registration
Statement and Prospectus as of their respective effective or issue dates (other
than the financial statements and financial, statistical or accounting data
derived therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable requirements of the
Delaware General Corporation Law, with any applicable requirements of the
charter and by-laws of the Company and the requirements of the Nasdaq National
Market.
(xiii) To the best of our knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any subsidiary is a party, or to which the property of the Company or any
subsidiary is subject, before or brought by any court or governmental agency or
body, domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by the
Company of its obligations thereunder.
A-2
35
(xiv) The information in the Prospectus under "Description of Capital
Stock--Common Stock", "Business--Facilities", "Business--Government Regulation",
"Business--Litigation", and "Description of Capital Stock--Preferred Stock," and
in the Registration Statement under Item 14, to the extent that it constitutes
matters of law, summaries of legal matters, the Company's charter and by-laws or
legal proceedings, or legal conclusions, has been reviewed by us and is correct
in all material respects.
(xv) To the best of our knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.
(xvi) All descriptions in the Registration Statement of contracts and
other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto.
(xvii) To the best of our knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree under the General Corporation Law
of the state of Delaware (except for the filing of the Amended and Restated
Certificate of Incorporation of the Company) or of, any New York or federal
court or governmental authority or agency, domestic or foreign (other than under
the 1933 Act and the 1933 Act Regulations or pursuant to the 1934 Act and the
1934 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance
or sale of the Securities.
(xix) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(x) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any Designated
Subsidiary is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any Designated Subsidiary is
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any Designated Subsidiary, the General Corporation Law
A-3
36
of the state of Delaware or any applicable New York or Federal law, statute,
rule, regulation, judgment, order, writ or decree, known to us, of any New York
or Federal government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Designated Subsidiary or any of
their respective properties, assets or operations.
(xx) To the best of our knowledge, except as disclosed in the
Prospectus there are no persons with registration rights or other similar rights
to have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 0000 Xxx.
(xxi) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
Such counsel shall also state that nothing has come to our attention
that would lead us to believe that the Registration Statement or any amendment
thereto, including the Rule 430A Information and Rule 434 Information (if
applicable), (except for financial statements and financial, statistical or
accounting data derived therefrom, as to which we need make no statement), at
the time such Registration Statement or any such amendment became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and financial, statistical or accounting data
derived therefrom, as to which we need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion and making such statement, such counsel may
rely as to matters of fact (but not as to legal conclusions), to the extent they
deem proper, on certificates of responsible officers of the Company and public
officials and may rely as to materiality as to facts upon the judgment of
officers of the Company. Such opinion shall not state that it is to be governed
or qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
For purposes of the opinion, "best knowledge" is without inquiry other than
inquiring of officers of the Company.
A-4
37
Exhibit B
FORM OF OPINION OF DIGIWEB INC.'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
(i) Digiweb, Inc. ("Digiweb") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland.
(ii) Based solely upon various corporate governance documents, Digiweb
has corporate power and authority to own, lease and operate its properties and
to conduct its business activities for the purpose set forth in the Articles.
(iii) Based solely upon a certificate from Digiweb and to the best of
such counsel's knowledge, information and belief, Digiweb is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(iv) Based solely upon a certificate from Digiweb and to the best of
such counsel's knowledge, information and belief, (a)all of the issued and
outstanding capital stock of Digiweb has been duly authorized and validly issued
and is fully paid and non-assessable and is owned by the Company directly, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity and (b)none of the issued and outstanding shares of capital stock of
Digiweb was issued in violation of the preemptive or other similar rights of any
person or entity arising by operation of law or under the certificate of
incorporation or the by-laws of Digiweb, or under any agreement or obligation
known to us to which Digiweb is a party or by which it is bound.
(v) Based solely upon a certificate from Digiweb and to the best of
such counsel's knowledge, information and belief, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
Digiweb is a party, or to which the property of Digiweb is subject, before or
brought by any court or governmental agency or body, domestic or foreign, which
might reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.
(xvii) Based solely upon a certificate from Digiweb and to the best of such
counsel's knowledge, information and belief, Digiweb is not in violation of its
charter or by-laws and no default by Digiweb exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument in which it is a party.
B-1
38
Exhibit C
FORM OF OPINION OF NET DAEMONS ASSOCIATES INC.'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(d)
(i) Net Daemons Associates, Inc. ("NDA") has been duly organized, is
validly existing and is in good standing as a corporation under the laws of the
Commonwealth of Massachusetts and has the power and authority to own its
properties and assets.
(ii) NDA is duly qualified as a foreign corporation to transact
business and is in good standing in the states of California and Colorado.
(iii) The Company is the sole owner of and has good title to all of the
issued and outstanding shares of capital stock of NDA.
(iv) According to a certificate provided by NDA, none of the issued and
outstanding shares of capital stock of NDA were issued in violation of the
preemptive or other similar rights of any person or entity arising by operation
of law or under the certificate of incorporation or the by-laws of NDA, or under
any agreement or obligation known to such counsel to which NDA is a party or by
which it is bound.
(v) According to a certificate provided by NDA, NDA is not in violation
of its charter or by-laws and no default by NDA exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument in which it is a party.
(vi) According to a certificate provided by NDA, there is not pending
or threatened any action, suit, proceeding, inquiry or investigation, to which
NDA is a party, or to which the property of NDA is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(i)]
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Exhibit D
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Annex A
FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)
We are independent public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable published 1933 Act Regulations
(i) in our opinion, the audited financial statements and the
related financial statement schedules included in the Registration
Statement and the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim consolidated financial statements of
the Company for the three month period ended March 31, 1999 included in
the Registration Statement and the Prospectus (collectively, the
"Quarterly Financials"), a reading of the latest available unaudited
interim consolidated financial statements of the Company, a reading of
the minutes of all meetings of the stockholders and directors of the
Company and its subsidiaries and the Audit and Compensation Committees
of the Company's Board of Directors since January 1, 1999, inquiries of
certain officials of the Company and its subsidiaries responsible for
financial and accounting matters, a review of interim financial
information in accordance with standards established by the American
Institute of Certified Public Accountants in Statement on Auditing
Standards No. 71, Interim Financial Information ("SAS 71"), with
respect to the Quarterly Financials and such other inquiries and
procedures as may be specified in such letter, nothing came to our
attention that caused us to believe that:
(A) the Quarterly Financials included in the Registration
Statement and the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or any material modifications should be
made to the unaudited consolidated financial statements included in the
Registration Statement and the Prospectus for them to be in conformity
with generally accepted accounting principles;
(B) at a specified date not more than five days prior to the
date of this Agreement, there was any change in the capital stock of
the Company and its subsidiaries or any decrease in the net current
assets or stockholders equity of the Company and its subsidiaries or
any increase in the long-term debt of the Company and its subsidiaries,
in each case as compared with amounts shown in the latest balance sheet
included in the Registration Statement, except in each case for
changes, decreases or increases that the Registration Statement
discloses have occurred or may occur; or
(C) for the period from March 31, 1999_ to a specified date
not more than five days prior to the date of this Agreement, there was
any decrease in consolidated net revenues or operating profit, or any
increase in net loss or basic net loss per share in each case as
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compared with the comparable period in the preceding year, except in
each case for any decreases that the Registration Statement discloses
have occurred or may occur;
(iii) based upon the procedures set forth in clause (ii) above
and a reading of the Selected Consolidated Financial Data included in
the Registration Statement and a reading of the financial statements
from which such data were derived, nothing came to our attention that
caused us to believe that the Selected Consolidated Financial Data
included in the Registration Statement do not comply as to form in all
material respects with the disclosure requirements of Item 301 of
Regulation S-K of the 1933 Act, that the amounts included in the
Selected Consolidated Financial Data are not in agreement with the
corresponding amounts in the audited consolidated financial statements
for the respective periods or that the financial statements not
included in the Registration Statement from which certain of such data
were derived are not in conformity with generally accepted accounting
principles;
(iv) we have compared the information in the Registration
Statement under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures
specified herein. nothing came to our attention that caused us to
believe that this information does not comply as to form in all
material respects with the disclosure requirements of Items 302, 402
and 503(d), respectively, of Regulation S-K;
(v) we are unable to and do not express any opinion on the Pro
Forma Combining Statement of Operations (the "Pro Forma Statement")
included in the Registration Statement or on the pro forma adjustments
applied to the historical amounts included in the Pro Forma Statement;
however, for purposes of this letter we have:
(A) read the Pro Forma Statement;
(B) performed an audit or a review in accordance with
SAS 71 of the financial statements to which the pro forma
adjustments were applied;
(C) made inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters about the basis for their determination of the pro
forma adjustments and whether the Pro Forma Statement complies
as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X; and
(D) proved the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in the
Pro Forma Statement; and on the basis of such procedures and
such other inquiries and procedures as specified herein,
nothing came to our attention that caused us to believe that
the Pro Forma Statement included in the Registration Statement
does not comply as to form in all material respects with the
applicable requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those
statements; and
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(vi) in addition to the procedures referred to in clause (ii)
above, we have performed other procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which
are specified herein, and have compared certain of such items with, and
have found such items to be in agreement with, the accounting and
financial records of the Company.
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