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EXHIBIT 1.1
THE MANAGEMENT NETWORK GROUP, INC.
4,000,000 Shares a/
Common Stock
($.001 par value)
UNDERWRITING AGREEMENT
New York, New York
_________, 2000
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxx Securities Inc.
Xxxxxx Brothers Inc.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The Management Network Group, Inc., a corporation organized under the
laws of the State of Delaware (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 1,000,000 shares of Common
Stock, $.001 par value ("Common Stock") of the Company, and the persons named in
Schedule II hereto (the "Selling Stockholders") propose to sell to the several
Underwriters an aggregate of 3,000,000 shares of Common Stock (said shares to be
issued and sold by the Company and shares to be sold by the Selling Stockholders
collectively being hereinafter called the "Underwritten Securities"). Certain
Selling Stockholders also propose to grant to the Underwriters an option to
purchase up to an aggregate of 600,000 additional shares of Common Stock to
cover over-allotments (the "Option Securities"; the Option Securities, together
with the Underwritten Securities, being hereinafter called the "Securities"). To
the extent there are no additional Underwriters listed on Schedule I other than
you, the term Representatives as used herein shall mean you, as Underwriters,
and the terms Representatives and Underwriters shall mean either the singular or
plural as the context requires. The use of the neuter in this Agreement shall
include the feminine and masculine wherever appropriate. Certain capitalized
terms used herein are defined in Section 17 hereof.
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a/ Plus an option to purchase from certain Selling Stockholders up to
600,000 additional Securities to cover over-allotments.
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1. Representations and Warranties.
(a) The Company and each of the Selling Stockholders jointly and
severally represent and warrant to, and agree with, each Underwriters as set
forth below in this Section 1.
(i) The Company has prepared and filed with the Commission a
registration statement (file number 333-40864) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. Copies of such registration
statement and each amendment thereto, including the related preliminary
prospectus (meeting the requirements of Rule 430A of the Rules and
Regulations) hereto filed by the Company with the Commission have been
delivered to you. The Company will next file with the Commission either
(A) prior to the Effective Date of such registration statement, a
further amendment to such registration statement (including the form of
final prospectus) or (B) after the Effective Date of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b).
In the case of clause (B), the Company has included in such registration
statement, as amended at the Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules thereunder to
be included in such registration statement and the Prospectus. As filed,
such amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other such
required information, and, except to the extent the Representatives
shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution Time or, to
the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained
in the latest Preliminary Prospectus) as the Company has advised you,
prior to the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined herein) and on any
date on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Effective Date,
the Prospectus, if not filed pursuant to Rule 424(b), will not, and on
the date of any filing pursuant
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to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or 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; provided,
however, that the Company and the Selling Stockholders make no
representations or warranties as to the information contained in or
omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(iii) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described
in the Prospectus and as being conducted, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws
of each jurisdiction which requires such qualification; except where the
failure to be so qualified would not have a Material Adverse Effect.
(iv) All the outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise
set forth in the Prospectus, all outstanding shares of capital stock of
such subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest or any other security interests, claims, liens or encumbrances.
(v) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company and of each of
its subsidiaries conforms in all material respects to the description
thereof contained in the Prospectus; the outstanding shares of Common
Stock (including the Securities being sold hereunder by the Selling
Stockholders) have been duly and validly authorized and issued and are
fully paid and nonassessable; the Securities being sold hereunder by the
Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities being
sold by the Selling Stockholders are duly listed, and admitted and
authorized for trading, on the Nasdaq National Market and the Securities
being sold hereunder by the Company are duly listed, and admitted and
authorized for trading, subject to official notice of issuance, on the
Nasdaq National Market, the certificates for the Securities are in valid
and sufficient form; the holders of outstanding shares of capital stock
of the Company are not entitled to preemptive rights, rights of first
refusal or rights of co-sale or other rights with respect to the
Securities; except as set forth in the Prospectus, no options, warrants
or other rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any securities
for, shares of capital stock of or ownership interests in the Company or
any of its subsidiaries are outstanding; and, no further approval or
authority of the stockholders or the Board of Directors of the Company
will be required for the issuance and sale of the Securities as
contemplated herein.
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(vi) There is no franchise, contract or other document of a
character required to be described or referred to in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto, which is
not described or filed as required by the Act or the Rules and
Regulations; any such contracts or other documents so described in the
Registration Statement and Prospectus are in full force and effect on
the date hereof, and neither the Company nor, to the best of the
Company's knowledge, any other party, is in breach of or default under
any of such contracts where such breach or default would have a Material
Adverse Effect; and the statements in the Prospectus under the headings
"Risk Factors--We used to be taxed under subchapter `S' of the Internal
Revenue Code and claims or taxing authorities related to our prior
subchapter `S' corporation status could harm us," "Business--Legal
Proceedings," and "Description of Capital Stock," insofar as such
statements summarize legal matters, agreements, documents, or
proceedings discussed therein, are accurate and fair summaries of such
legal matters, agreements, documents or proceedings.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
(viii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" or a company "controlled" by an "investment company" as such
terms are defined in the Investment Company Act.
(ix) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(x) The execution and delivery of this Agreement by the Company
and the Selling Stockholders, the issue and sale of the Securities and
the consummation of any other of the transactions herein contemplated
and the
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fulfillment of the terms hereof will not conflict with, constitute a
default under, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, (A) the charter or by-laws of
the Company or any of its subsidiaries, (B) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or instrument to
which the Company or any of its subsidiaries is a party or bound or to
which its or their property is subject, or (C) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties.
(xi) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement. Except
as otherwise disclosed in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company.
(xii) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods indicated,
comply as to form with the applicable accounting requirements of the Act
and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as otherwise noted therein). The selected financial data set
forth under the caption "Selected Consolidated Financial Data" in the
Prospectus and Registration Statement fairly present, on the basis
stated in the Prospectus and the Registration Statement, the information
included therein.
(xiii) No action, suit, claim or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries or its or their
property is pending or, to the best knowledge of the Company, threatened
that (A) could reasonably be expected to have a material adverse effect
on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (B) could reasonably be expected to
have a Material Adverse Effect, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto).
(xiv) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently
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conducted. The Company and each of its subsidiaries has good and
marketable title to all of its respective properties and assets
reflected in the financial statements or as described in the Prospectus
filed with the Commission as part of the Registration Statement, free
and clear of any lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements or as described
in the Prospectus. All leases to which the Company or any of its
subsidiaries is a party are valid and binding obligations of the Company
or the subsidiary, as the case may be, and no default by the Company or
such subsidiary has occurred or is continuing thereunder which could
reasonably be expected to result in a Material Adverse Effect, and the
Company and each of its subsidiaries, as the case may be, enjoys
peaceful and undisturbed possession under all such leases to which it is
a party as lessee.
(xv) Neither the Company nor any of its subsidiaries is, nor
with the giving of notice or lapse of time or both will be, in violation
or default of (A) any provision of its charter or bylaws, (B) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (C) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its
properties, as applicable.
(xvi) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(xvii) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Securities.
(xviii) The Company and each of its subsidiaries has timely
filed all foreign, federal, state and local tax returns that are
required to be filed or has requested extensions thereof, and has paid
all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a Material
Adverse Effect. All tax liabilities (including those being contested in
good faith) for the periods covered by the financial statements of the
Company that are included in
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the Registration Statement have been adequately provided for in such
financial statements.
(xix) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers.
(xx) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged; all policies of insurance, and fidelity or
surety bonds, if any, insuring the Company or any of its subsidiaries or
their respective businesses, assets, employees, officers and directors
are in full force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; and there are no claims by the Company or any of its
subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation
of rights clause; neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for; and neither the
Company nor any such subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not have
a Material Adverse Effect.
(xxi) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus.
(xxii) The Company and its subsidiaries possess all licenses,
certificates, permits, consents, exemptions, authorizations and other
approvals (an "Authorization") issued by the appropriate federal, state
or foreign regulatory authorities necessary to conduct their respective
businesses. Each such Authorization is valid and in full force and
effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing
body) which allows or, after notice or
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lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or
lapse of time or both, would result in any other impairment of the
rights of the holder of any such Authorization; and such Authorizations
contain no restrictions that are burdensome to the Company or any of its
subsidiaries. The execution, delivery and performance of this Agreement
by the Company and the Selling Stockholders, the compliance by the
Company and the Selling Stockholders with all the provisions hereof and
the consummation of the transactions contemplated hereby will not result
in the suspension, termination or revocation of any Authorization of the
Company or any of its subsidiaries or any other impairment of the rights
of the holder of any such Authorization.
(xxiii) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxiv) The Company has not taken, directly or indirectly, any
action that has constituted or that was designed to or might reasonably
be expected to cause or result in, under the Exchange Act or otherwise,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(xxv) The Company and its subsidiaries are (A) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses, and (C) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or
contaminants, except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or
liability would not, individually or in the aggregate, have a Material
Adverse Effect. Neither the Company nor any of the subsidiaries has been
named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
(xxvi) In the ordinary course of its business, the Company
periodically
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reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which
it identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws,
or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis
of such review, the Company has reasonably concluded that such
associated costs and liabilities would not, singly or in the aggregate,
have a Material Adverse Effect.
(xxvii) Each of the Company and its subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of Section
302 of ERISA and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of
ERISA and such regulations and published interpretations) in which
employees of the Company and its subsidiaries are eligible to
participate and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and such regulations
and published interpretations. The Company and its subsidiaries have not
incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(xxviii) The subsidiaries listed on Exhibit A attached hereto
are the only significant subsidiaries of the Company as defined by Rule
1-02 of Regulation S-X.
(xxix) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
the Company's business as now conducted or as proposed in the Prospectus
to be conducted. Except as set forth in the Prospectus, (A) there are no
rights of third parties to any such Intellectual Property; (B) to the
Company's best knowledge, there is no material infringement by third
parties of any such Intellectual Property; (C) there is no pending or,
to the Company's best knowledge, threatened action, suit, proceeding or
claim by others challenging the Company's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (D) there is no
pending or, to the Company's best knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (E) there is no
pending or, to the Company's best knowledge,
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threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the Company is unaware
of any other fact which would form a reasonable basis for any such
claim; (F) there is no U.S. patent or published U.S. patent application
which contains claims that dominate or may dominate any Intellectual
Property described in the Prospectus as being owned by or licensed to
the Company or that interferes with the issued or pending claims of any
such Intellectual Property; (G) there is no prior art of which the
Company is aware that may render any U.S. patent held by the Company
invalid or any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark Office;
and (H) to the Company's best knowledge, none of the Intellectual
Property licensed to or by the Company or any of its subsidiaries is
unenforceable or invalid.
(xxx) The statements contained in the Prospectus under the
captions "Risk Factors--Our inability to protect our intellectual
property could harm our competitive position and our financial
performance" and "Business--Intellectual Property," insofar as such
statements summarize legal matters, agreements, documents, or
proceedings discussed therein, are accurate and fair summaries of such
legal matters, agreements, documents or proceedings.
(xxxi) Except as disclosed in the Registered Statement and the
Prospectus, the Company (A) does not have any material lending or other
relationship with any bank or lending affiliate of Xxxxxxx Xxxxx Barney
Holdings Inc. and (B) does not intend to use any of the proceeds from
the sale of the Securities hereunder to repay any outstanding debt owed
to any affiliate of Xxxxxxx Xxxxx Xxxxxx Holdings Inc.
(xxxii) The Company and its subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that
their computer hardware and software may be unable to recognize and
properly execute date-sensitive functions involving certain dates prior
to and any dates after December 31, 1999 (the "Year 2000 Problem") and
has determined that their computer hardware and software are and will be
able to process all date information prior to and after December 31,
1999 without any errors, aborts, delays or other interruptions in
operations associated with the Year 2000 Problem; and the Company
believes, after due inquiry, that each supplier, vendor, customer or
financial service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year 2000
Problem, except to the extent that a failure to remedy by any such
supplier, vendor, customer or financial service organization would not
have a Material Adverse Effect. The Company is in compliance with the
Commission's Release No. 33-7558 related to Year 2000 compliance.
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(xxxiii) Neither the Company nor any of its subsidiaries nor any
of its or their properties or assets has any immunity from the
jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) under the laws of the State of New York.
(xxxiv) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering
of the Securities, nor, to the best knowledge of the Company, instituted
proceedings for that purpose.
(xxxv) The statements in the Prospectus under the heading
"Certain Transactions" set forth all existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company, on the one
hand, and any officer, director or stockholder of the Company, or with
any partner, affiliate or associate of any of the foregoing persons or
entities, on the other hand, required to be set forth or described
thereunder.
(xxxvi) The Company and its subsidiaries are operating
substantially in compliance with all statutes, laws, regulations,
ordinances or court decrees applicable to their respective businesses
and operations. Neither the Company nor any of its subsidiaries has
violated any provisions of any foreign, federal, state or local law or
regulation relating to discrimination in the hiring, promotion or pay
of, or to the wages and hours of, employees. Neither the Company nor any
of its subsidiaries has at any time since its inception (A) made any
unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (B) made any
payment to any U.S. federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(xxxvii) The Company has not distributed and will not distribute
prior to the later of (A) the Closing Date, or any date on which Option
Securities are to be purchased, as the case may be, and (B) completion
of the distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Act.
(xxxviii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
occurred any Materially Adverse Effect or any development involving a
prospective Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, and there has not been
any material transaction entered into or any material
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transaction that is probable of being entered into by the Company or any
of its subsidiaries, other than transactions in the ordinary course of
business and as set forth in the Registration Statement and the
Prospectus. Neither the Company nor any of its subsidiaries has material
contingent obligations which are not disclosed or provided for in the
Company's financial statements that are included in the Registration
Statement.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(b) Each Selling Stockholder represents and warrants to, and agrees
with, each Underwriters that:
(i) Such Selling Stockholder is the record and beneficial owner
of the Securities to be sold by it hereunder and has good and marketable
title to such Securities, free and clear of all liens, encumbrances,
equities, security interests and claims whatsoever, with full right and
authority to deliver the same hereunder, and that upon delivery of and
payment for such Securities, the several Underwriters will receive good
and marketable title thereto, free and clear of all liens, encumbrances,
equities, security interests and claims whatsoever.
(ii) Such Selling Stockholder has duly endorsed such Securities
in blank, and, assuming that each Underwriter acquires its interest in
the Securities it has purchased from such Selling Stockholder without
notice of any adverse claim (within the meaning of Section 8-105 of the
New York Uniform Commercial Code ("UCC")), each Underwriter that has
purchased such Securities delivered on the Closing Date to The
Depository Trust Company or other securities intermediary by making
payment therefor as provided herein, and that has had such Securities
credited to the securities account or accounts of such Underwriters
maintained with The Depository Trust Company or such other securities
intermediary will have acquired a security entitlement (within the
meaning of Section 8-102(a)(17) of the UCC) to such Securities purchased
by such Underwriter, and no action based on an adverse claim (within the
meaning of Section 8-105 of the UCC) may be asserted against such
Underwriter with respect to such Securities.
(iii) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act
or otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale
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or resale of the Securities.
(iv) Certificates in negotiable form for such Selling
Stockholder's Securities have been placed in custody, for delivery
pursuant to the terms of this Agreement, under a Custody Agreement and
Power of Attorney duly authorized (if applicable) executed and delivered
by such Selling Stockholder, in the form heretofore furnished to you
(the "Custody Agreement") with ___________, as Custodian (the
"Custodian"); the Securities represented by the certificates so held in
custody for each Selling Stockholder are subject to the interests
hereunder of the Underwriters; the arrangements for custody and delivery
of such certificates, made by such Selling Stockholder hereunder and
under the Custody Agreement, are not subject to termination by any acts
of such Selling Stockholder, or by operation of law, whether by the
death or incapacity of such Selling Stockholder or the occurrence of any
other event; and if any such death, incapacity or any other such event
shall occur before the delivery of such Securities hereunder,
certificates for the Securities will be delivered by the Custodian in
accordance with the terms and conditions of this Agreement and the
Custody Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian shall have received
notice of such death, incapacity or other event.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except such
as may have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters and such
other approvals as have been obtained.
(vi) Neither the sale of the Securities being sold by such
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder or the
fulfillment of the terms hereof by such Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or any organizational documents of such Selling
Stockholder or the terms of any indenture or other agreement or
instrument to which such Selling Stockholder or any of its subsidiaries
is a party or bound, or any judgment, order or decree applicable to such
Selling Stockholder or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder or any of its subsidiaries.
Any certificate signed by any Selling Stockholder or an officer, general
partner, managing member or trustee of any Selling Stockholder and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the
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Securities shall be deemed a representation and warranty by such Selling
Stockholder, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company and the Selling
Stockholders agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and the Selling Stockholders, at a purchase price of $_____ per share, the
amount of the Underwritten Securities set forth opposite such Underwriter's name
in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling Stockholders named
in Schedule II hereto hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to 600,000 Option Securities at the same
purchase price per share as the Underwriters shall pay for the Underwritten
Securities. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the Prospectus upon written or telegraphic notice
by the Representatives to such Selling Stockholders setting forth the number of
shares of the Option Securities as to which the several Underwriters are
exercising the option and the settlement date. The maximum aggregate number of
Option Securities to be sold by the Selling Stockholders is 600,000 shares. The
maximum number of Option Securities which each Selling Stockholder agrees to
sell is set forth in Schedule II hereto. In the event that the Underwriters
exercise less than their full over-allotment option, the number of Option
Securities to be sold by each Selling Stockholder listed on Schedule II shall
be, as nearly as practicable, in the same proportion as the maximum number of
Option Securities to be sold by each Selling Stockholder and the number of
Option Securities to be sold. The number of Option Securities to be purchased by
each Underwriter shall be the same percentage of the total number of shares of
the Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised no later than 10:00 a.m., New York time, on the
date two Business Days prior to the Closing Date) shall be made at 10:00 AM, New
York City time, on ___________, 2000, or at such time on such later date not
more than three Business Days after the foregoing date as the Representatives
shall designate, which date and time may
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be postponed by agreement among the Representatives, the Company and the Selling
Stockholders or as provided in Section 9 hereof (such date and time of delivery
and payment for the Securities being herein called the "Closing Date"). Delivery
of the Securities shall be made to the Representatives for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representatives of the respective aggregate purchase prices of the
Securities being sold by the Company and each of the Selling Stockholders to or
upon the order of the Company and the Selling Stockholders by wire transfer
payable in same-day funds to the accounts specified by the Company and the
Selling Stockholders. Delivery of the Underwritten Securities and the Option
Securities shall be made through the facilities of The Depository Trust Company
unless the Representatives shall otherwise instruct.
Each Selling Stockholder will pay all applicable state transfer taxes,
if any, involved in the transfer to the several Underwriters of the Securities
to be purchased by them from such Selling Stockholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after
10:00 a.m., New York time, on the date two Business Days prior to the Closing
Date, the Selling Stockholders named in Schedule II hereto will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Selling Stockholders named in Schedule
II by wire transfer payable in same-day funds to the accounts specified by the
Selling Stockholders named in Schedule II hereto. If settlement for the Option
Securities occurs after the Closing Date, such Selling Stockholders will deliver
to the Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the
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Company will not file any amendment of the Registration Statement or
supplement to the Prospectus or any Rule 462(b) Registration Statement
unless the Company has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or supplement to
which you reasonably object or which is not in compliance with the Act
or the Rules and Regulations thereunder. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required
under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly advise
the Representatives (A) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (B) when
the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(C) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (D) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (A) notify the Representatives of any such event, (B)
prepare and file with the Commission, subject to the second sentence of
paragraph (a)(i) of this Section 5, an amendment or supplement which
will correct such statement or omission or effect such compliance and
(C) supply any supplemented Prospectus to you in such quantities as you
may reasonably request.
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(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
(iv) The Company will (A) on or before the Closing Date, deliver
to you a signed copy of the Registration Statement as originally filed
and of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a
signed copy of each post-effective amendment, if any, to the
Registration Statement (together with, in each case, all exhibits
thereto unless previously furnished to you) and will also deliver to
you, for distribution to the Underwriters, a sufficient number of
additional conformed copies of each of the foregoing (but without
exhibits) so that one copy of each may be distributed to each
Underwriter, (B) as promptly as possible deliver to you and send to the
several Underwriters, at such office or offices as you may designate, as
many copies of the Prospectus as you may reasonably request, and (C)
thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, likewise
send to the Underwriters as many additional copies of the Prospectus and
as many copies of any supplement to the Prospectus and of any amended
prospectus, filed by the Company with the Commission, as you may
reasonably request for the purposes contemplated by the Act.
(v) The Company will arrange, if necessary, for the
qualification of the Securities for offer and sale under the laws of
such jurisdictions as the Representatives may designate and will
maintain such qualifications in effect so long as required for the
distribution of the Securities; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action that would subject it
to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not
now so subject.
(vi) The Company will not, without the prior written consent of
Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any other shares of Common
Stock or any securities convertible into, or exercisable, or
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exchangeable for, shares of Common Stock; or publicly announce an
intention to effect any such transaction, for a period of ninety (90)
days after the date of the Underwriting Agreement, provided, however,
that the Company may issue and sell Common Stock pursuant to any
employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the Execution Time and the
Company may issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the Execution
Time. The foregoing sentence shall not apply to the Securities to be
sold to the Underwriters pursuant to this Agreement.
(vii) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(viii) The Company and the Selling Stockholders (in proportion
to the number of Securities being offered by each of them, including any
Option Securities which the Underwriters shall have elected to purchase)
agree to pay the costs and expenses relating to the following matters:
(A) the preparation, printing or reproduction and filing with the
Commission of the Registration Statement (including financial statements
and exhibits thereto), each Preliminary Prospectus, the Prospectus, and
each amendment or supplement to any of them; (B) the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and all
amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (C) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (D) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (E) the registration of the Securities under the
Exchange Act and the listing of the Securities on the Nasdaq National
Market; (F) any registration or qualification of the Securities for
offer and sale under the securities or blue sky laws of the several
states (including filing fees and the reasonable fees and expenses of
counsel for the Underwriters relating to such registration and
qualification); (G) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to
such filings); (H) the transportation and other expenses incurred by or
on behalf of Company
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representatives in connection with presentations to prospective
purchasers of the Securities; (I) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and
special counsel) for the Company and the Selling Stockholders; and (J)
all other costs and expenses incident to the performance by the Company
and the Selling Stockholders of their obligations hereunder.
(ix) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who may
so request in writing, copies of all periodic and special reports
furnished to stockholders of the Company and of all information,
documents and reports filed with the Commission.
(x) The Company is familiar with the Investment Company Act and
has in the past conducted its affairs, and will in the future conduct
its affairs, in such a manner to ensure that the Company was not and
will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act.
(xi) The Company will comply with the Act, the Exchange Act and
the Rules and Regulations, so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and the
Prospectus.
(xii) The Company shall apply the net proceeds of its sale of
the Securities substantially as set forth in the Prospectus under the
heading "Use of Proceeds."
(xiii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its
Common Stock.
(b) Each Selling Stockholder covenants and agrees with the several
Underwriters that:
(i) Such Selling Stockholder will not, without the prior written
consent of Xxxxxxx Xxxxx Barney, offer, sell, contract to sell, pledge
or otherwise dispose of, (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Selling
Stockholder or any affiliate of the Selling Stockholder or any person in
privity with the Stockholder or any affiliate of the Selling
Stockholder) directly or indirectly, or file (or participate in the
filing of) a registration statement with the Commission in respect of,
or establish or increase a put equivalent position or
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liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act with respect to, any shares of capital
stock of the Company or any securities convertible into or exercisable
or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of ninety (90)
days after the date of this Agreement, other than shares of Common Stock
disposed of as bona fide gifts approved by Xxxxxxx Xxxxx Xxxxxx Inc.
(ii) Such Selling Stockholder will not take any action designed
to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(iii) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Securities by an underwriter or
dealer may be required under the Act, of (A) any material change in the
Company's condition (financial or otherwise), prospects, earnings,
business or properties, (B) any change in information in the
Registration Statement or the Prospectus relating to such Selling
Stockholder or (C) any new material information relating to the Company
or relating to any matter stated in the Prospectus which comes to the
attention of such Selling Stockholder.
(iv) Such Stockholder has not distributed and will not
distribute prior to the later of (A) any date on which Option Securities
are to be purchased, and (B) completion of the distribution of the
Securities, any offering material in connection with the offering and
sale of the Securities other than any Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials, if any,
permitted by the Act.
(v) Such Selling Stockholder has reviewed the Registration
Statement and Prospectus and on the Effective Date, the Registration
Statement did not, and on each of the Closing Date and the Option
Closing Date, will not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not, and on
each of the Closing Date and the Option Closing Date, will not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties in this
subparagraph (v) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to
the Company by or
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on behalf of the Underwriters for use in the Registration Statement or
the Prospectus.
(vi) This Agreement has been duly authorized, executed and
delivered by the Selling Stockholder and is a valid and binding
obligation of the Selling Stockholder.
(vii) Such Selling Stockholder will comply with the agreement
contained in Section 5(a)(viii).
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later time, the
Registration Statement will become effective not later than (i) 6:00 PM New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on such date or
(ii) 9:30 AM on the Business Day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have requested and caused Wilson, Sonsini,
Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the Company, to have
furnished to the Representatives their opinion, dated the Closing Date and
addressed to the Representatives, to the effect that:
(i) each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Prospectus, and is duly qualified to do
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business as a foreign corporation and is in good standing under the laws
of each jurisdiction which requires such qualification;
(ii) all the outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise
set forth in the Prospectus, all outstanding shares of capital stock of
each of the subsidiaries of the Company are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any
perfected security interest and any other security interest, claim, lien
or encumbrance, and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in such
subsidiaries are outstanding;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock (including the
Securities being sold hereunder by the Selling Stockholders) have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold hereunder by the Company have
been duly and validly authorized, and, when issued and delivered to and
paid for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities being sold by the Selling
Stockholders are duly listed, and admitted and authorized for trading,
on the Nasdaq National Market and the Securities being sold hereunder by
the Company are duly listed, and admitted and authorized for trading,
subject to official notice of issuance, on the Nasdaq National Market,
the certificates for the Securities are in valid and sufficient form;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive rights, rights of first refusal or rights of
co-sale or other rights with respect to the Securities; and, except as
set forth in the Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to convert
any obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit, inquiry, investigation or proceeding by or
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or its or
their property of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the
Prospectus, and all pending legal or governmental proceedings to which
the Company or any of its subsidiaries is a party or that affect any of
their respective properties that are not described in the Prospectus,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Change;
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(v) all descriptions in the Prospectus of contracts and other
documents to which the Company or it subsidiaries are a party are
accurate in all material respects; to such counsel's knowledge, there
are no franchises, contracts, leases, loan agreements, notes, documents
or legal proceedings, pending or threatened, required to be described or
referred to in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement, which are not described
and filed as required; and no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, lease, loan agreement, note or other document
filed as an exhibit to the Registration Statement;
(vi) the statements in the Prospectus under the heading "Shares
Eligible for Future Sale," insofar as such statements summarize legal
matters, agreements, documents, or proceedings discussed therein, are
accurate and fair summaries of such legal matters, agreements, documents
or proceedings;
(vii) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has been issued, no
proceedings for that purpose have been instituted or threatened or
contemplated by the Commission and the Registration Statement and the
Prospectus (other than the financial statements and other financial
information contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations thereunder;
(viii) the information required to be set forth in the
Registration Statement in answer to Items 9, 10 (insofar as it relates
to such counsel), 11(a), 11(b), 11(c) and 15 of Form S-1, has been
reviewed by such counsel and is correct in all material respects; the
description of the Company's stock option plans and the options granted
and which may be granted thereunder and the options granted otherwise
than under such plans set forth in the Prospectus accurately and fairly
presents in all material respects the information required to be shown
with respect to said plans and options to the extent required by the Act
and the Rules and Regulations thereunder; and to the best of such
counsel's knowledge, there are no statutes or regulations, and no legal
or governmental actions, suits or proceedings pending or threatened
against the Company that are required to be described in the Prospectus
that are not described as required;
(ix) to such counsel's knowledge, neither the Company nor any of
its subsidiaries are in violation of their respective charters or
bylaws, and the issue
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and sale by the Company of the shares of Stock sold by the Company as
contemplated by the Underwriting Agreement will not conflict with, or
result in a breach of, the Certificate of Incorporation or Bylaws of the
Company or any of its subsidiaries or any agreement or instrument known
to such counsel to which the Company or any of its subsidiaries is a
party, or any applicable law or regulation, or so far as is known to
such counsel, any order, writ, injunction or decree, of any
jurisdiction, court or governmental instrumentality;
(x) this Agreement has been duly authorized, executed and
delivered by the Company;
(xi) the Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be, an "investment company" or
an entity "controlled" by and "investment company," as such terms are
defined in the Investment Company Act;
(xii) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and such other
approvals (specified in such opinion) as have been obtained;
(xiii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or its subsidiaries pursuant
to, (A) the charter or by-laws of the Company or its subsidiaries, (B)
the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or its
subsidiaries is a party or bound or to which its or their property is
subject, or (C) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or its subsidiaries
or any of its or their properties; and
(xiv) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
In addition, such counsel shall state that such counsel has no reason to
believe that
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on the Effective Date or the date the Registration Statement was last deemed
amended the Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus
as of its date and on the Closing Date included or includes any untrue statement
of a material fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the financial statements and
other financial information contained therein, as to which such counsel need
express no opinion).
In rendering such opinion, such counsel may rely as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date.
(c) The Selling Stockholders shall have requested and caused Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the Selling
Stockholders, to have furnished to the Representatives their opinion dated the
Closing Date and addressed to the Representatives, to the effect that:
(i) this Agreement and the Custody Agreement and Power of
Attorney have been duly authorized, executed and delivered by the
Selling Stockholders, the Custody Agreement is valid and binding on the
Selling Stockholders and each Selling Stockholder has full legal right
and authority to sell, transfer and deliver in the manner provided in
this Agreement and the Custody Agreement the Securities being sold by
such Selling Stockholder hereunder;
(ii) assuming that each Underwriter acquires its interest in the
Securities it has purchased from such Selling Stockholder without notice
of any adverse claim (within the meaning of Section 8-105 of the UCC),
each Underwriter that has purchased such Securities delivered on the
Closing Date to The Depository Trust Company or other securities
intermediary by making payment therefor as provided herein, and that has
had such Securities credited to the securities account or accounts of
such Underwriters maintained with The Depository Trust Company or such
other securities intermediary will have acquired a security entitlement
(within the meaning of Section 8-102(a)(17) of the UCC) to such
Securities purchased by such Underwriter, and no action based on an
adverse claim (within the meaning of Section 8-105 of the UCC) may be
asserted against such Underwriter with respect to such Securities;
(iii) good and marketable title to the shares of Securities sold
by the Selling Stockholders under the Underwriting Agreement, free and
clear of all liens, encumbrances, equities, security interests and
claims, has been transferred
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to the Underwriters who have severally purchased such Securities under
the Underwriting Agreement, assuming for the purpose of this opinion
that the Underwriters purchased the same in good faith without notice of
any adverse claims;
(iv) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by any
Selling Stockholder of the transactions contemplated herein, except such
as may have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters and such
other approvals (specified in such opinion) as have been obtained; and
(v) neither the sale of the Securities being sold by any Selling
Stockholder nor the consummation of any other of the transactions herein
contemplated by any Selling Stockholder or the fulfillment of the terms
hereof by any Selling Stockholder will conflict with, result in a breach
or violation of, or constitute a default under any law or any of the
governing documents of the Selling Stockholder or the terms of any
indenture or other agreement or instrument known to such counsel and to
which any Selling Stockholder or any of its subsidiaries is a party or
bound, or any judgment, order or decree known to such counsel to be
applicable to any Selling Stockholder or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over any Selling Stockholder or any of
its subsidiaries.
In rendering such opinion, such counsel may rely as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of the
Selling Stockholders and public officials.
(d) The Representatives shall have received from Xxxxxxxx & Xxxxxxxx
LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing
Date and addressed to the Representatives, with respect to the issuance and sale
of the Securities, the Registration Statement, the Prospectus (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require, and the Company and each Selling Stockholder shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the President and Chief Financial Officer
of the Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Prospectus,
any supplements to the Prospectus and this Agreement and that:
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(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date and the Company has complied
with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge, threatened;
and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), there
has been no material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto).
(f) Each Selling Stockholder shall have furnished to the Representatives
a certificate, signed by Selling Stockholder or the principal executive officer
and the principal financial or accounting officer of such Selling Stockholder,
dated the Closing Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus, any supplement to
the Prospectus and this Agreement and that the representations and warranties of
such Selling Stockholder in this Agreement are true and correct on and as of the
Closing Date to the same effect as if made on the Closing Date.
(g) The Company shall have requested and caused Deloitte & Touche LLP to
have furnished to the Representatives letters, at the Execution Time and at the
Closing Date, dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Representatives, confirming that
they are independent accountants within the meaning of the Act and the
applicable Rules and Regulations thereunder and that they have performed a
review of the unaudited interim financial information of the Company for the
six-month period ended July 1, 2000 and as at July 1, 2000, in accordance with
Statement on Auditing Standards No. 71, and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement and
the Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related Rules and Regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements
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made available by the Company and its subsidiaries; their limited
review, in accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial
information for the six-month period ended July 1, 2000, and as at July
1, 2000; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and executive and audit
committees of the Board of Directors of the Company and its
subsidiaries; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and
its subsidiaries as to transactions and events subsequent to January 1,
2000, nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply as to
form in all material respects with applicable accounting
requirements of the Act and with the related Rules and
Regulations adopted by the Commission with respect to
registration statements on Form S-1; and said unaudited
financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus;
(2) with respect to the period subsequent to July 1,
2000, there were any changes, at a specified date not more than
five days prior to the date of the letter, in the long-term debt
of the Company and its subsidiaries or capital stock of the
Company or decreases in the stockholders' equity or net working
capital of the Company as compared with the amounts shown on the
July 1, 2000, consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period
from July 2, 2000, to such specified date there were any
decreases, as compared with January 1, 2000 in net revenues or
income before income taxes or in total or per share amounts of
net income of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives; or
(3) the information included in the Registration
Statement and Prospectus in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary Financial
Information), Item 402 (Executive Compensation) and Item 503(d)
(Ratio of Earnings to Fixed
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Charges) is not in conformity with the applicable disclosure
requirements of Regulation S-K; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus, including the information set forth
under the captions "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Summary of Quarterly Results of
Operations" in the Prospectus, agrees with the accounting records
of the Company and its subsidiaries, excluding any questions of
legal interpretation.
References to the Prospectus in this paragraph (g) include any
supplement thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (g) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
its subsidiaries taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto) the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectus (exclusive of any supplement thereto).
(i) Prior to the Closing Date, the Company and the Selling Stockholders
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
(j) The legality and sufficiency of the sale of the Securities hereunder
and the validity and form of the certificates representing the Securities, all
corporate proceedings and other legal matters incident to the foregoing, and the
form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or prior to
the Closing Date by Xxxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters.
(k) The Underwriters shall be satisfied that (i) as of the Effective
Date, the
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statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any Material Adverse Effect or any development involving a prospective
Material Adverse Effect, and, since such dates, except in the ordinary course of
business, neither the Company nor any of its subsidiaries has entered into any
material transaction not referred to in the Registration Statement in the form
in which it originally became effective and the Prospectus contained therein,
(iv) neither the Company nor any of its subsidiaries has any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus, (v) there are not any pending or known threatened legal proceedings
to which the Company or any of its subsidiaries is a party or of which property
of the Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus, (vi)
there are not any franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement which have not
been filed as required, (vii) the representations and warranties of the Company
and the Selling Stockholders herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Securities are
to be purchased, as the case may be, and (viii) there has not been any material
change in the market for securities in general or in political, financial or
economic conditions from those reasonably foreseeable as to render it
impracticable in your reasonable judgment to make a public offering of the
Securities, or a material adverse change in market levels for securities in
general (or those of companies in particular) or financial or economic
conditions which render it inadvisable to proceed.
(l) The Underwriters shall have been furnished evidence in usual written
or telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (a)(v) of Section 5 hereof.
(m) The Securities shall have been listed and admitted and authorized
for trading on the Nasdaq National Market, and satisfactory evidence of such
actions shall have been provided to the Representatives.
(n) On or prior to the Closing Date, the Underwriters shall have
received from all directors, executive officers, Selling Stockholders and
beneficial holders of more than 5% of the outstanding capital stock of the
Company agreements, in substantially the form set forth in Exhibit B hereto or
otherwise reasonably satisfactory to Xxxxxxx Xxxxx Xxxxxx Inc., stating that
such person or entity will not, without the prior written consent of
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Xxxxxxx Xxxxx Barney Inc., offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by such person or entity or any affiliate of such person or entity or
any person in privity with such person or entity or any affiliate of such person
or entity) directly or indirectly, including the filing (or participation in the
filing) of a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, any
other shares of Common Stock or any securities convertible into, or exercisable,
or exchangeable for, shares of Common Stock; or publicly announce an intention
to effect any such transaction, for a period of ninety (90) days after the date
of the Underwriting Agreement.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company and each Selling Stockholder in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Xxxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters, at 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Selling
Stockholders to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Xxxxxxx Xxxxx Barney Inc. on demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities. If the Company is required to make any
payments to the Underwriters under this Section 7 because of any Selling
Stockholder's refusal, inability or failure to satisfy any condition to the
obligations of the Underwriters set forth in Section 6, the Selling Stockholders
pro rata in proportion to the percentage of Securities to be sold by each shall
reimburse the Company on demand for all amounts so paid.
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8. Indemnification and Contribution.
(a) The Company and each of the Selling Stockholders jointly and
severally agree to indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person who controls
any Underwriter within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
such indemnified parties or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company and the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company or
the Selling Stockholders may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each Selling Stockholder, to
the same extent as the foregoing indemnity to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company and each Selling Stockholder
acknowledge that the information set forth in the last paragraph of the cover
page regarding delivery of the Securities and, under the heading "Underwriting,"
(i) the list of underwriters and their respective participation in the sale of
the Securities, (ii) the sentences related to concessions and reallowances, and
(iii) the paragraph related to stabilization, syndicate covering transactions
and penalty bids, in any Preliminary Prospectus and the Prospectus constitute
the only information furnished in writing by or
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on behalf of the several Underwriters for inclusion in any Preliminary
Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Selling Stockholders, jointly and
severally, and the
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Underwriters severally agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Company, the Selling Stockholders and one or more of the Underwriters
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and by the Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Selling Stockholders, jointly
and severally, and the Underwriters severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and of the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling Stockholders
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by it, and benefits received by the Underwriters
shall be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Prospectus. Relative fault
shall be determined by reference to, among other things, whether any untrue or
any alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information provided by the Company
or the Selling Stockholders on the one hand or the Underwriters on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company, the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The liability of each Selling Stockholder under such Selling
Stockholder's
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representations and warranties contained in Section 1 hereof and under the
indemnity and contribution agreements contained in this Section 8 shall be
limited to an amount equal to the aggregate public offering price of the
Securities sold by such Selling Stockholder to the Underwriters. The Company and
the Selling Stockholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Stockholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended or trading
in securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchange or the Nasdaq National Market, (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto).
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11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Stockholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Stockholder or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc., at 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: General Counsel (fax no.: (212)
000-0000), with a copy to Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, XX 00000, Attention: Xxxxx X. Xxxx, Esq.; or, if sent to the
Company, will be mailed, delivered or telefaxed to its office, 0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, XX 00000 (fax no. (000) 000-0000),
Attention: President, with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000, Attention:
Xxxxxxxxxxx X. Xxxxxxxx, Esq.; or if sent to any Selling Stockholder, will be
mailed, delivered or telefaxed and confirmed to it at the address set forth in
Schedule II hereto. All notices given by telegraph shall be promptly confirmed
by letter.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder. The term "successors and assigns" as herein used shall not include
any purchaser, as such purchaser, of any of the Securities from any of the
several Underwriters.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
37
37
17. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder.
"Material Adverse Effect" shall mean a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business.
"Preliminary Prospectus" shall mean any preliminary prospectus referred
to in paragraph 1(i)(a) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final prospectus
relating to the Securities included in the Registration Statement at the
Effective Date.
"Registration Statement" shall mean the registration statement referred
to in paragraph 1(i)(a) above, including exhibits and financial statements, as
amended at the
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Execution Time (or, if not effective at the Execution Time, in the form in which
it shall become effective) and, in the event any post-effective amendment
thereto or any Rule 462(b) Registration Statement becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall include
any Rule 430A Information deemed to be included therein at the Effective Date as
provided by Rule 430A.
"Rules and Regulations" shall mean the rules and regulations of the
Commission.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the registration statement referred to in Section 1(a)
hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholders and the several Underwriters.
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40
Very truly yours,
THE MANAGEMENT NETWORK GROUP, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
SELLING STOCKHOLDERS:
Xxxxxxx Capital II L.P.
By:
-------------------------------------
Xxxxxxx Brothers LLC
its General Partner
By:
----------------------------------
Xxxxx X. Xxxxxxx
Managing Member
Strategic Entrepreneur Fund II, L.P.
By:
-------------------------------------
Xxxxxxx Brothers LLC,
its General Partner
By:
-------------------------------------
Xxxxx X. Xxxxxxx
Managing Member
----------------------------------------
Xxxxxxx X. Xxxxxxx
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41
----------------------------------------
Xxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxxx
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
Xxxxxxx Xxxxx Barney Inc.
By:
----------------------------------------
Name:
Title:
For itself and the other several
Underwriters named in Schedule I to the
foregoing Agreement.
42
SCHEDULE I
NUMBER OF UNDERWRITTEN
UNDERWRITERS SECURITIES TO BE PURCHASED
------------ --------------------------
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxx Securities Inc.
Xxxxxx Brothers Inc.
------------------
Total................
==================
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SCHEDULE II
MAXIMUM NUMBER OF
NUMBER OF UNDERWRITTEN OPTION SECURITIES
SELLING STOCKHOLDERS: SECURITIES TO BE SOLD TO BE SOLD
--------------------- ---------------------- -----------------
Xxxxxxx Capital II L.P 2,635,000 530,000
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (212) _________
Xxxxxxx X. Xxxxxxx 300,000 70,000
c/o The Management Network Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Xxxxx X. Xxxx 40,000 -0-
c/o The Management Network Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Xxxxxx X. Xxxxx 25,000 -0-
c/o The Management Network Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
--------- ---------
Total 3,000,000 600,000
========= =========
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EXHIBIT A
THE MANAGEMENT NETWORK GROUP, INC.
LIST OF SUBSIDIARIES
1. XXXX.xxx, Inc., incorporated in the U.S. under the laws of the State of
Delaware.
2. TMNG Canada, Ltd., incorporated in Canada.
3. TMNG Europe, Ltd., incorporated in England and Wales.
45
[FORM OF LOCK-UP AGREEMENT] EXHIBIT B
THE MANAGEMENT NETWORK GROUP, INC.
LOCK-UP AGREEMENT
July __, 2000
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxx Securities Inc.
Xxxxxx Brothers Inc.
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned understands that you, as representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") with The Management Network Group, Inc.
(the "Company"), providing for the underwritten public offering (the "Public
Offering") by the Underwriters, including yourselves, of shares of the Common
Stock, par value $0.001, of the Company (the "Common Stock"), pursuant to a
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission (the "Registration Statement").
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, and in consideration of the Underwriters' agreement to
purchase and make the Public Offering of the Common Stock, and for other good
and valuable consideration the receipt of which is hereby acknowledged, the
undersigned hereby irrevocably agrees that it will not, directly or indirectly,
for a period of ninety (90) days after the effective date of the Registration
Statement (the "Lock-Up Period"), sell, offer to sell, contract to sell,
transfer the economic risk of ownership in, loan, pledge, grant any rights with
respect to or otherwise dispose of (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the undersigned or any affiliate of the undersigned
or any person in privity with the undersigned or any affiliate of the
undersigned) (collectively, a "Disposition"), including the filing of (or
participation in the filing of) a registration statement with the Securities and
Exchange Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of capital stock of the Company, any options or
warrants to purchase any shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for shares
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2
of such capital stock, now owned or hereafter acquired directly by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition (collectively, "Securities"), or publicly announce an
intention to effect any such transaction, otherwise than (i) as a bona fide gift
or gifts, provided the donee or donees thereof agree to be bound by this Lock-Up
Agreement, (ii) as a distribution to limited partners or shareholders of the
undersigned, provided that the distributees thereof agree in writing to be bound
by the terms of this Lock-Up Agreement or (iii) with the prior written consent
of Xxxxxxx Xxxxx Xxxxxx Inc.
The foregoing restriction is expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-Up Period even if such Securities would be disposed
of by someone other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including without
limitation any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Notwithstanding the foregoing, this Lock-Up Agreement does not
prohibit the sale of shares of Common Stock by the undersigned to the
Underwriters in the Public Offering.
The undersigned understands that the agreements of the undersigned set
forth in this Lock-Up Agreement are irrevocable and shall be binding upon the
undersigned's heirs, legal representatives, successors and assigns. Furthermore,
the undersigned hereby agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Securities held by the undersigned except in compliance with this Lock-Up
Agreement.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Very truly yours,
---------------------------------
(signature)
Name:
----------------------------
Address:
--------------------------
---------------------------------
---------------------------------
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(Social Security or Taxpayer Identification No.):
Number of shares of Common Stock owned:
Certificate Numbers:
[Number of [list names of securities that are convertible into,
or exercisable or exchangeable for, Common Stock]:
Number of shares of Common Stock issuable upon
[conversion, exercise or exchange] of such securities:
Certificate Numbers: -------------------------------
