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EXHIBIT 1.1
____________ SHARES
PNV. NET, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
__________________ ____, 1999
CIBC World Markets Corp.
Xxxxx & Company Incorporated
Xxxxx Xxxxx Xxxxxx & Company
Xxxxxxx Xxxxx & Company
c/o CIBC World Markets Corp.
World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
XXX.Xxx, Inc., a Delaware corporation (the "Company") proposes, subject
to the terms and conditions contained herein, to sell to you and the other
underwriters named on Schedule I to this Agreement (the "Underwriters"), for
whom you are acting as Representatives (the "Representatives"), an aggregate of
_______ shares (the "Firm Shares") of the Company's Common Stock, $0.001 par
value (the "Common Stock"). The respective amounts of the Firm Shares to be
purchased by each of the several Underwriters are set forth opposite their names
on Schedule I hereto. In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional _________ shares (the
"Option Shares") of Common Stock from it for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The Firm Shares
and the Option Shares are together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
a) The Company agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a price of
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$_____ per share (the "Initial Price"), the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of Firm Shares to
be Purchased from the Company" on Schedule I to this Agreement, subject to
adjustment in accordance with Section 10 hereof.
b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares at the
Initial Price. The maximum number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representatives to
eliminate fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares. Such option
may be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and may be exercised in whole or in part at any time on or
before 2:00 p.m. New York City time, on the business day before the Firm Shares
Closing Date (as defined below), and from time to time thereafter within 30 days
after the date of this Agreement, in each case upon written or facsimile notice,
or verbal or telephonic notice confirmed by written or facsimile notice, by the
Representatives to the Company no later than 2:00 p.m. New York City time, on
the business day before the Firm Shares Closing Date or at least two business
days before the Option Shares Closing Date (as defined below), as the case may
be, setting forth the number of Option Shares to be purchased and the time and
date (if other than the Firm Shares Closing Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm Shares to
the Representatives for the respective accounts of the Underwriters, and payment
of the purchase price by certified or official bank check or checks payable in
New York Clearing House (next day) funds drawn to the order of, or by wire
transfer to the account designated by, the Company for the shares purchased from
the Company against delivery of the respective certificates therefor to the
Representatives, shall take place at the offices of CIBC World Markets Corp. at
World Financial Center, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
a.m., New York City time, (a) on the third (3rd) full business day following the
date of this Agreement, (b) if this Agreement is executed and delivered after
4:30 p.m., New York City time, the fourth (4th) full business day following the
day that this Agreement is executed and delivered or (c) at such time on such
other date, not later than 10 business days after the date of this Agreement, as
shall be agreed upon by the Company and the Representatives (such time and date
of delivery and payment are called the "Firm Shares Closing Date"); provided,
however, that if the Company has not made available to the Representatives
copies of the Prospectus within the time provided in Section 6 hereof, the
Representatives may in their sole discretion, postpone the Firm Shares Closing
Date until no later than two (2) full business days following delivery of copies
of the Prospectus to the Representatives. If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full fast transfer to
the accounts at the Depository Trust Company designated by the Representative.
In the event the option with respect to the Option Shares is exercised, delivery
by the Company of the Option Shares to the Representatives for the respective
accounts of the Underwriters and payment of the purchase price by certified or
official bank check or checks payable in New York Clearing House (next day)
funds or by wire transfer to the Company shall take place at the
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offices of CIBC World Markets Corp. specified above at the time and on the date
(which may be the same date as, but in no event shall be earlier than, the Firm
Shares Closing Date) specified in the notice referred to in Section 1(b) (such
time and date of delivery and payment are called the "Option Shares Closing
Date"). The Firm Shares Closing Date and the Option Shares Closing Date are
called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names and shall
be in such denominations as the Representatives shall request at least two full
business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The Company
has prepared in conformity with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the published rules and regulations
thereunder (the "Rules") adopted by the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. _____________),
including a preliminary prospectus relating to the Shares, and has filed with
the Commission the Registration Statement (as hereinafter defined) and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and of
the related preliminary prospectus have heretofore been delivered by the Company
to you. The term "preliminary prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement. The Registration Statement as amended at the time and on
the date it becomes effective (the "Effective Date"), including all exhibits and
information, if any, deemed to be part of the Registration Statement pursuant to
Rule 424(b) and Rule 430A of the Rules, is called the "Registration Statement."
The term "Prospectus" means the prospectus in the form first used to confirm
sales of the Shares (whether such prospectus was included in the Registration
Statement at the time of effectiveness or was subsequently filed with the
Commission pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriters propose to make a public offering
of the Shares, as set forth in and pursuant to the Prospectus, as soon after the
Effective Date and the date of this Agreement as the Representatives deem
advisable. The Company hereby confirms that the Underwriters and dealers have
been authorized to distribute or cause to be distributed each preliminary
prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Underwriter as follows:
a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, on the date any post-effective amendment to
the Registration Statement
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becomes effective, on the date any supplement or amendment to the Prospectus is
filed with the Commission and on each Closing Date, the Registration Statement
and the Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the applicable provisions of the
Securities Act and the Rules and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
thereunder. The Registration Statement did not, as of the Effective Date,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and on the other dates referred to above neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus as amended or
supplemented complied in all material respects with the applicable provisions of
the Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
as to the statements contained under the caption "Underwriting" in the
Prospectus. The Company acknowledges that the only information furnished in
writing by the Representatives on behalf of the several Underwriters for use in
the Registration Statement or the Prospectus is the statements contained under
the caption "Underwriting" in the Prospectus.
b) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the Commission as
exhibits to the Registration Statement.
c) The financial statements of the Company (including all
notes and schedules thereto) included in the Registration Statement and
Prospectus present fairly the financial position, the results of operations,
cash flows and the stockholders' equity and the other information purported to
be shown therein of the Company at the respective dates and for the respective
periods to which they apply; and such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of the results for such periods have been made. The summary and
selected financial data included in the Prospectus present fairly the
information shown therein as at the respective dates and for the respective
periods specified and the summary and selected financial data have been
presented on a basis consistent with the financial statements so set forth in
the Prospectus and other financial information.
d) Deloitte & Touche LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the periods
covered by their reports, were independent public accountants as required by the
Securities Act and the Rules.
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e) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of
the Registration Statement or suspending or preventing the use of the Prospectus
has been issued and no proceedings for that purpose have been instituted or are
threatened under the Securities Act; any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules has been or will be
made in the manner and within the time period required by such Rule 424(b).
f) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware. The
Company has no subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or other
business organization. The Company is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased or licensed) or
the nature of its business makes such qualification necessary. The Company has
all requisite corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity (collectively,
the "Permits"), to own, lease and license its assets and properties and conduct
its business as now being conducted and as described in the Registration
Statement and the Prospectus, all of which are valid and in full force and
effect; no such Permit contains a materially burdensome restriction other than
as disclosed in the Registration Statement and the Prospectus; the Company has
fulfilled and performed in all material respects all its material obligations
with respect to such Permits and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Company
thereunder. Except as may be required under the Securities Act and state and
foreign Blue Sky laws, the Company has all such corporate power and authority,
and all such Permits as are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
g) Except as disclosed in the Prospectus, the Company owns or
is licensed, or otherwise possesses adequate and enforceable rights to use all
patents, patent applications, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") and all trademarks, trademark applications, trade names and
service marks (collectively, the "Trademarks") necessary for the conduct of its
business as currently conducted and as described in the Registration Statement
and the Prospectus. Other than as described in the Registration Statement and
the Prospectus, the Company has not received any notice of, and is not aware of,
any infringement of or conflict with asserted rights of others with respect to
any Intangibles or Trademarks.
h) The Company has good title to each of the items of personal
property which are reflected in the financial statements referred to in Section
4(c) or are referred to in the Registration Statement and the Prospectus as
being owned by it and valid and enforceable leasehold interests in each of the
items of real and personal property which are referred to in the Registration
Statement and the Prospectus as being leased by it, in each case free and clear
of all liens, encumbrances, claims, security interests and defects, other than
those described in the Registration Statement and the Prospectus and those which
do not and will not have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition
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(financial or otherwise) of the Company (a "Material Adverse Effect"). Nothing
in this Section 4(h) shall be interpreted as limiting the Company's
representation in Section 4(f) above.
i) Other than as described in the Registration Statement and
the Prospectus, there is no litigation or governmental or other proceeding or
investigation before any court or before any public body or board pending or, to
the Company's knowledge, threatened (and the Company does not know of any basis
therefore) against, or involving the Company or its assets, properties or
business, which might have a Material Adverse Effect, affect the consummation of
this Agreement or which is required to be disclosed in the Registration
Statement and the Prospectus that is not so disclosed.
j) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as described
therein, (a) there has not been any material adverse change with regard to the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company, whether or not arising from
transactions in the ordinary course of business; (b) the Company has not
sustained any material loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree; and
(c) since the date of the latest balance sheet included in the Registration
Statement and the Prospectus, except as reflected therein, the Company has not
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations incurred
in the ordinary course of business and securities issued or issuable to
employees, directors, consultants and other service providers in the ordinary
course of business, (ii) entered into any transaction not in the ordinary course
of business or (iii) declared or paid any dividend or made any distribution on
any shares of its stock or redeemed, purchased or otherwise acquired or agreed
to redeem, purchase or otherwise acquire any shares of its stock.
k) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement which is not
described or filed as required by the Securities Act or Rules. Each description
of a contract, document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all respects the terms of the underlying
document, contract or agreement. Each agreement described in the Registration
Statement and Prospectus or listed in the Exhibits to the Registration Statement
is in full force and effect and, to its knowledge, is valid and enforceable by
and against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles. Neither the Company, nor to the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default.
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l) The Company is not in violation of any term or provision of
its charter or by-laws or of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation.
m) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or require any
consent or waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company pursuant to
the terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which it or any of its
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or violate
any provision of the charter or by-laws of the Company, except for such consents
or waivers which have already been obtained and are in full force and effect.
n) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of Common Stock and preferred stock of the Company have been
duly and validly issued and are fully paid and nonassessable and none were
issued in violation of any preemptive or other similar right. There are no
statutory preemptive or other similar rights to subscribe for or to purchase or
acquire any shares of Common Stock of the Company or any such rights pursuant to
its Certificate of Incorporation or by-laws or any agreement or instrument to or
by which the Company is a party or bound. The Shares, when issued and sold
pursuant to this Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any preemptive or
other similar right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right calling for
the issuance of, and there is no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into, or exercisable
or exchangeable for, such stock. The Common Stock, the preferred stock of the
Company, the 13% notes of the Company and the Shares conform in all material
respects to all statements in relation thereto contained in the Registration
Statement and the Prospectus.
o) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any security of the Company has the right to have any
security owned by such holder included in the Registration Statement or to
demand registration of any security owned by such holder during the period
ending 180 days after the date of this Agreement. Each director, executive
officer and each beneficial owner of one percent (1%) or more of the shares of
Common Stock of the Company has delivered to the Representatives his or her
enforceable written lock-up agreement in the form attached to this Agreement
("Lock-Up Agreement").
p) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Agreement and the
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issuance and sale of the Shares by the Company. This Agreement has been duly and
validly authorized, executed and delivered by the Company and constitutes and
will constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (ii) to the extent that rights
to indemnity or contribution under this Agreement may be limited by Federal and
state securities laws or the public policy underlying such laws.
q) All of the Employee Benefit Plans are in substantial
compliance with all applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations issued thereunder, as well as
with all applicable laws, and have been administered, operated and managed in
substantial accordance with their terms and the applicable governing documents.
All Employee Benefit Plans that are intended to qualify under Section 401(a) of
the Code are so qualified. All returns, reports, notices and other documents
required to be filed with the Internal Revenue Service, the Department of Labor
or any other governmental agency or entity (a "Governmental Entity") or
distributed to plan participants or beneficiaries (including, but not limited
to, annual reports, summary annual reports, or tax returns) with respect to each
Employee Benefit Plan have been timely filed or distributed. Neither the
Company, nor any other person, has incurred any material excise tax, fine or
penalty with respect to any Employee Benefit Plan under the Code or ERISA, or
has engaged in any "prohibited transaction", within the meaning of Section 4975
of the Code or Section 406 of ERISA, with respect to any Employee Benefit Plan.
No Governmental Entity has initiated any examination or audit, or to the best
knowledge of the Company, any investigation of any Employee Benefit Plan which
has not been completed. There are no claims, suits or actions pending or, to the
knowledge of the Company, threatened which relate to or arise out of any
Employee Benefit Plan. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, will not cause any payment
(whether of severance pay or otherwise) not otherwise due from becoming due from
any Employee Benefit Plan, or from the Company with respect to any Employee
Benefit Plan, to any individual, or cause the vesting, acceleration of payment,
or increase in the amount of benefit payable under any Employee Benefit Plan to
any individual. No Employee Benefit Plan is a defined benefit or money purchase
pension plan, a "multiemployer plan", within the meaning of Section 3(37) of
ERISA, a "multiple employer plan", as described in Section 413(c) of the Code,
or a "multiple employer welfare arrangement", within the meaning of Section
3(40) of ERISA. Any health or medical, life insurance, death benefit or similar
benefit coverage provided under any Employee Benefit Plan is provided solely
through insurance policies. No Employee Benefit Plan provides for health or
medical, life insurance, death or any other welfare benefit for retired or
former employees, officers or directors of the Company, except as required by
Section 4980B of the Code or Sections 601 to 608 of ERISA. For purposes of this
subsection, the term "Employee Benefit Plan" means any "employee benefit plan",
within the meaning Section 3(3) or ERISA, which has ever been sponsored,
maintained or contributed to by the Company, or with respect to which the
Company has ever had an obligation to make any contribution to.
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r) The Company is not involved in any labor dispute nor, to
the knowledge of the Company, is any such dispute threatened. The Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its principal suppliers or contractors which would have a Material Adverse
Effect. The Company is not aware of any threatened or pending litigation between
the Company and any of its executive officers and has no reason to believe that
such officers will not remain in the employment of the Company.
s) No transaction has occurred between or among the Company
and any of its officers or directors or five percent shareholders or any
affiliate or affiliates of any such officer or director or five percent
shareholders that is required to be described in and is not described in the
Registration Statement and the Prospectus.
t) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
u) The Company has filed all Federal, state, local and foreign
tax returns which are required to be filed through the date hereof, or has
received extensions therefor, and has paid, or is contesting in good faith, all
taxes shown on such returns and all assessments received by it to the extent
that the same are material and have become due, and there are no tax audits or
investigations pending; nor are there any material proposed additional tax
assessments against the Company.
v) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, and a registration statement has been filed on Form 8-A
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which registration statement complies in all material respects
with the Exchange Act.
w) The Company has complied with all of the provisions of
Florida Statutes Section 517.075.
x) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
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y) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which it is engaged or propose to engage after
giving effect to the transactions described in the Prospectus; and the Company
has no 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 not materially in excess of current costs. The Company has not been denied
any insurance coverage which it has sought or for which it has applied.
z) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company (except such
additional steps as may be required by the National Association of Securities
Dealers, Inc. (the "NASD") or may be necessary to qualify the Shares for public
offering by the Underwriters under the state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
aa) There are no affiliations with the NASD among the
Company's officers, directors or, to the best of the knowledge of the Company,
any five percent or greater stockholder of the Company.
bb) (i) The Company is in compliance in all respects with all
rules, laws and regulation relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("Environmental
Law") which are applicable to its business; (ii) the Company has not received
any notice from any governmental authority or third party of an asserted claim
under Environmental Laws; (iii) the Company has received all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business and is in compliance with all terms and conditions of any such
permit, license or approval; (iv) to the Company's knowledge, no facts currently
exist that will require the Company to make future material capital expenditures
to comply with Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation of Liability
Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) or otherwise
designated as a contaminated site under applicable state or local law.
cc) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof as
described in the Prospectus, will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
dd) The Company is in compliance in all respects with all
rules, laws and regulations relating to the provision of telecommunications
services, including the Communications Act of 1934 (the "1934 Act"), the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Communications Policy
Act of 1984 (the "1984 Act"), the Cable Television
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Consumer Protection Act of 1992 (the "1992 Act"), and the Telephone Operator
Consumer Services Improvement Act of 1990 ("TOCSIA") and with the rules,
regulations, and court decisions promulgated thereunder (the "Federal
Communications Law"), and any state law, rule, or regulation of any state
governmental or regulatory agency ("State Communications Law"), or body or
arbitrator dealing with telecommunications carriers having jurisdiction over the
Company or any of its respective properties or assets (the "Communications
Authorities")(all together, "Communications Laws").
ee) Except as disclosed in the Registration Statement and
Prospectus, the issuance, sale and delivery of the Securities and the
consummation of the transactions herein and therein contemplated, do not, as of
the date hereof, constitute or result in a breach or violation by the Company of
any Communications Laws.
ff) The Company or any other person associated with or acting
on behalf of the Company, including, without limitation, any director, officer,
agent or employee of the Company has not, directly or indirectly, while acting
on behalf of the Company (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the Prospectus
shall have been timely filed with the Commission in accordance with Section 6(a)
of this Agreement.
b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in effect
and no order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information on the
part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
the Commission and the Representatives.
c) The representations and warranties of the Company contained
in this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as if
made on such date and the Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement required
to be performed or satisfied by it at or before such Closing Date.
12
d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such Closing
Date, of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that (i) the
signatories of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations and
warranties of the Company in this Agreement are true and correct on and as of
such Closing Date with the same effect as if made on such Closing Date and the
Company has performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by it at or
prior to such Closing Date, and (ii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending under the Securities Act.
e) The Representatives shall have received on the Effective
Date, at the time this Agreement is executed and on each Closing Date a signed
letter from Deloitte & Touche LLP addressed to the Representatives and dated,
respectively, the Effective Date, the date of this Agreement and each such
Closing Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants within the
meaning of the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them 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 Securities Act and the Rules;
ii) on the basis of a reading of the amounts included
in the Registration Statement and the Prospectus under the headings "Summary
Financial and Operating Data" and "Selected Financial and Operating Data,"
carrying out certain 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 and directors of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest audited financial
statements, except as disclosed in the Registration Statement and the
Prospectus, nothing came to their attention which caused them to believe that:
A) the amounts in "Summary Financial and Operating Data," and
"Selected Financial and Operating Data" included in the
Registration Statement and the Prospectus do not agree with
the corresponding amounts in the audited and unaudited
financial statements from which such amounts were derived; or
B) with respect to the Company, there were, at a specified date
not more than five business days prior to the date of the
letter, any increases in the current liabilities and long-term
liabilities of the Company or any decreases in net
13
income or in working capital or the stockholders' equity in
the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended
____________ and the ___ months ended included in the
Registration Statement; and
iii) they have performed certain other procedures as
may be permitted under Generally Acceptable Auditing Standards 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) set
forth in the Registration Statement and the Prospectus and reasonably specified
by the Representatives agrees with the accounting records of the Company.
iv) based upon the procedures set forth in clauses
(ii) and (iii) above and a reading of the amounts included in the Registration
Statement under the headings "Summary Financial and Operating Data" and
"Selected Financial and Operating Data" included in the Registration Statement
and Prospectus and a reading of the financial statements from which certain of
such data were derived, nothing has come to their attention that gives them
reason to believe that the "Summary Financial and Operating Data" and "Selected
Financial and Operating Data" included in the Registration Statement and
Prospectus do not comply as to the form in all material respects with the
applicable accounting requirements of the Securities Act and the Rules or that
the information set forth therein is not fairly stated in relation to the
financial statements included in the Registration Statement or Prospectus from
which certain of such data were derived 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 Prospectus.
References to the Registration Statement and the Prospectus in this paragraph
(e) are to such documents as amended and supplemented at the date of the letter.
f) The Representatives shall have received on each Closing
Date from Xxxxxxxxxx Xxxxxxxx LLP, counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, and stating in
effect that:
i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware. The Company has no subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or other
business organization. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or location of
its
14
assets or properties (owned, leased or licensed) or the nature of its businesses
makes such qualification necessary.
ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and conduct its
business as described in the Registration Statement and the Prospectus; and the
Company has all requisite corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses, certificates and permits
to enter into, deliver and perform this Agreement and to issue and sell the
Shares other than those required under the Securities Act and state and foreign
Blue Sky laws.
iii) The Company has authorized and issued capital
stock as set forth in the Registration Statement and the Prospectus; the
certificates evidencing the Shares are in due and proper legal form and have
been duly authorized for issuance by the Company; all of the outstanding shares
of Common Stock and preferred stock of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. The Shares when
issued and sold pursuant to this Agreement will be duly and validly issued,
outstanding, fully paid and nonassessable and none of them will have been issued
in violation of any preemptive or other similar right. Except as disclosed in
the Registration Statement and the Prospectus, there are no preemptive rights or
any restriction upon the voting or transfer of any securities of the Company
pursuant to the Company's Certificate of Incorporation or by-laws or other
governing documents or any other instrument to which the Company is a party or
by which it may be bound. Except as disclosed in the Registration Statement and
the Prospectus, there is no outstanding option, warrant or other right calling
for the issuance of, and no commitment, plan or arrangement to issue, any share
of stock of the Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock, the preferred stock of
the Company, the 13% notes of the Company and the Shares conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus. The form of certificate for the Shares conforms to the
requirements of Delaware law.
iv) Each of the Lock-Up Agreements executed by the
Company's stockholders, directors and officers has been duly and validly
delivered by such persons.
v) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares. This
Agreement has been duly and validly authorized, executed and delivered by the
15
Company and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
vi) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default) under, or require
consent or waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company pursuant to
the terms of any indenture, mortgage, deed trust, note or other agreement or
instrument to which the Company is a party or by which it or any of its
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation or violate any provision of the
charter or by-laws of the Company.
vii) No default exists, and no event has occurred
which with notice or lapse of time, or both, would constitute a default, in the
due performance and observance of any term, covenant or condition by the Company
of any indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the Company is a party or by which it or any of its assets
or properties or businesses may be bound or affected.
viii) The Company is not in violation of any term or
provision of its charter or by-laws or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation.
ix) No consent, approval, authorization or order of
any court or governmental agency or regulatory body is required for the
performance of this Agreement by the Company or the consummation of the
transactions contemplated thereby, except such as have been obtained under the
Securities Act and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
several Underwriters.
x) Other than as stated in the Prospectus, to such
counsel's knowledge, there is no litigation or governmental or other proceeding
or investigation, before any court or before or by any public body or board
pending or threatened against, or involving the assets, properties or businesses
of, the Company.
xi) The statements in the Prospectus under the
captions "Description of our Capital Stock - Anti-take over Effects of Various
16
Provisions of Delaware Law and our Certificate of Incorporation and By-laws,"
"Shares Eligible for Future Sale," "Management -Employment Severance and Other
Arrangements, "Management-Bonus Plan," "Management-Stock Option Plan,"
"Management-401(k) Plan," "Management-Stock Incentive Plan," and "Certain
Transactions," insofar as such statements constitute a summary of documents
referred to therein or matters of law, are fair summaries in all material
respects and accurately present the information called for with respect to such
documents and matters and all contracts and other documents known to such
counsel which are required to be filed as exhibits to, or described in, the
Registration Statement have been so filed with the Commission or are fairly
described in the Registration Statement, as the case may be.
xii) The Registration Statement is effective under
the Securities Act, and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are threatened, pending or contemplated. Any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b).
xiii) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for financial statements and
notes thereto) comply as to form in all material respects with the requirements
of the Securities Act and the Rules.
To the extent deemed advisable by such counsel, they may rely as to matters of
fact on certificates of responsible officers of the Company and public officials
and on the opinions of other counsel satisfactory to the Representatives as to
matters which are governed by laws other than the laws of the State of Florida,
the General Corporation Law of the State of Delaware and the Federal laws of the
United States; provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions. Copies of
such certificates and other opinions shall be furnished to the Representatives
and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration
17
Statement at the time it became effective (except with respect to the financial
statements and notes and schedules thereto and other financial data, as to which
such counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements, notes and schedules thereto and other financial data, as to which
such counsel need make no statement) on the date thereof contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
xiv) The Representatives shall have received on each
Closing Date from Xxxxx X.X. Xxxxxxxxx, telecommunications regulatory counsel
for the Company, an opinion, addressed to the Representatives and dated such
Closing Date, substantially in the form attached hereto as Exhibit A.
xv) All proceedings taken in connection with the sale
of the Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives, and their
counsel and the Underwriters shall have received from Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP a favorable opinion, addressed to the Representatives and dated
such Closing Date, with respect to the Shares, the Registration Statement and
the Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to Xxxxxxx Berlin
Shereff Xxxxxxxx, LLP such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
xvi) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives, and dated such
Closing Date, of an executive officer of the Company, to the effect that the
signatory of such certificate has reviewed and understands the provisions of
Section 517.075 of the Florida Statutes, and represents that the Company has
complied, and at all times will comply, with all provisions of Section 517.075
and further, that as of such Closing Date, neither the Company nor any of its
affiliates does business with the government of Cuba or with any person or
affiliate located in Cuba.
xvii) The Representatives shall have received copies
of the Lock-up Agreements executed by each entity or person described in Section
4(o).
xviii) The Company shall have furnished or caused to
be furnished to the Representatives such further certificates or documents as
the Representatives shall have reasonably requested.
6. COVENANTS OF THE COMPANY.
18
a) The Company covenants and agrees as follows:
i) The Company shall prepare the Prospectus in a form
approved by the Representatives and file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act.
ii) The Company shall promptly advise the
Representatives in writing (1) when any amendment to the Registration Statement
shall have become effective, (2) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any additional
information, (3) of the prevention or suspension of the use of any preliminary
prospectus or the Prospectus or 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 (4) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the Prospectus unless
the Company has furnished the Representatives a copy for its review prior to
filing and shall not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its reasonable efforts
to prevent the issuance of any such stop order and, if issued, to use its best
efforts to obtain as soon as possible the withdrawal thereof.
iii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Securities Act and the Rules,
any event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the Securities
Act or the Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of this Section
6(a), an amendment or supplement which shall correct such statement or omission
or an amendment which shall effect such compliance.
iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs (or 90
days if such 12-month period coincides with the Company's fiscal year), an
earning statement (which need not be audited) of the Company, covering such
12-month
19
period, which shall satisfy the provisions of Section 10(a) of the Securities
Act or Rule 158 of the Rules.
v) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments thereof)
and to each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Securities Act or
the Rules, as many copies of any preliminary prospectus and the Prospectus and
any amendments thereof and supplements thereto as the Representatives may
reasonably request.
vi) The Company shall cooperate with the
Representatives and their counsel to qualify the Shares for offer and sale in
connection with the offering under the laws of such jurisdictions as the
Representatives may designate and shall maintain such qualifications in effect
so long as required for the distribution of the Shares.
vii) For a period of five years after the date of
this Agreement, the Company shall supply to the Representatives, and to each
other Underwriter who may so request in writing, copies of such financial
statements and other periodic and special reports as the Company may from time
to time distribute generally to the holders of any class of its capital stock
and to furnish to the Representatives a copy of each annual or other report it
shall be required to file with the Commission.
viii) Without the prior written consent of CIBC World
Markets Corp., for a period of 180 days after the date of this Agreement, the
Company and each of its individual directors and executive officers shall not
issue, sell or register with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or indirectly, any equity
securities of the Company (or any securities convertible into, exercisable for
or exchangeable for equity securities of the Company), except for the issuance
of the Shares pursuant to the Registration Statement and the issuance of shares
pursuant to the Company's existing stock option plan or purchase plan as
described in the Registration Statement and the Prospectus. In the event that
during this period, (i) any shares are issued pursuant to the Company's existing
stock option plan or purchase plan or (ii) any registration is effected on Form
S-8 or on any successor form, the Company shall obtain the written agreement of
such grantee or purchaser or holder of such registered securities that, for a
period of 180 days after the date of this Agreement, such person will not,
without the prior written consent of CIBC World Markets Corp., offer for sale,
sell, distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities
20
convertible into, exercisable for, or exchangeable for any shares of Common
Stock) owned by such person.
ix) Notwithstanding any agreement between any holder
of the Company's securities and the Company, the Company agrees that it will not
allow any holder of the Company's securities who has entered into a "Lock-up"
agreement to transfer such securities prior to 180 days after the date of this
Agreement without CIBC World Market Corp.'s prior written consent.
x) On or before completion of this offering, the
Company shall make all filings required under applicable securities laws and by
the Nasdaq National Market (including any required registration under the
Exchange Act).
xi) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
xii) The Company shall cause to be prepared and
delivered, at its expense, within one business day from the effective date of
this Agreement, to the Representatives an "electronic Prospectus" to be used by
the Underwriters in connection with the offering and sale of the Shares. As used
herein, the term "electronic Prospectus" means a form of Prospectus, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in an electronic format, satisfactory to the
Representatives, that may be transmitted electronically by the Representatives
to offerees and purchasers of the Common Shares for at least the Prospectus
delivery period; (ii) it shall disclose the same information as the paper
Prospectus and Prospectus filed pursuant to XXXXX, except to the extent that
graphic and image material cannot be disseminated electronically, in which case
such graphic and image material shall be replaced in the electronic Prospectus
with a fair and accurate narrative description or tabular representation of such
material, as appropriate; and (iii) it shall be in or convertible into a paper
format or an electronic format, satisfactory to the Representatives, that will
allow investors to store and have continuously ready access to the Prospectus at
any future time, without charge to investors (other than any fee charged for
subscription to the system as a whole and for on-line time). Such electronic
Prospectus may consist of a Rule 434 preliminary prospectus, together with the
applicable term sheet, provided that it otherwise satisfies the format and
conditions described in the immediately preceding sentence. The Company hereby
confirms that it has included or will include in the Prospectus filed pursuant
to XXXXX or otherwise with the Commission and in the Registration Statement at
the time it was declared effective an undertaking that, upon receipt of a
request by an investor or his or her representative within the Prospectus
delivery period, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
21
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.
xiv) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on their respective parts to be performed
hereunder or to fulfill any condition of the Underwriters' obligations
hereunder, or if the Underwriters shall terminate this Agreement pursuant to
Section 9, the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including fees and disbursements of Underwriters'
Counsel) incurred by the Underwriters in investigating or preparing to market or
marketing the Shares.
xv) If at any time during the ninety (90) day period
after the Registration Statement becomes effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of which in
your opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses relating to:
(i) the preparation, printing, filing and distribution of the Registration
Statement including all exhibits thereto, each preliminary prospectus, the
electronic Prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the various jurisdictions referred to in Section 6(a)(vi), including the
fees and disbursements of counsel for the Underwriters in connection with such
registration and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv) the
furnishing (including costs of shipping and mailing) to the Representatives and
to the Underwriters of copies of each preliminary prospectus, the Prospectus and
all amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of
22
the public offering and fees and disbursements of counsel for the Underwriters
in connection with such review; (vi) the furnishing (including costs of a
shipping and mailing) to the Representatives and to the Underwriters of copies
of all reports and information required by Section 6(a)(vii); (vii) inclusion of
the Shares for quotation on the Nasdaq National Market; and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. Subject to the provisions of Section 6(a)(xiv) and
Section 9, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of counsel
for the Underwriters.
7. INDEMNIFICATION.
a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement, the electronic Prospectus or the
Prospectus or any amendment thereof or supplement thereto, or arise out of or
are based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) in whole or in part upon any breach of the representations and
warranties set forth in Section 4 hereof, or (iii) in whole or in part upon any
failure of the Company to perform any of its obligations hereunder or under law;
provided, however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Shares to
any person by such Underwriter if such untrue statement or omission or alleged
untrue statement or omission was made in such preliminary prospectus, the
Registration Statement or the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with information furnished in writing to the
Company by the Representatives on behalf of any Underwriter specifically for use
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company and each person, if any, who controls
23
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, each director of the Company, and each officer of the
Company who signs the Registration Statement, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only insofar as
such losses, claims, damages or liabilities arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which was
made in any preliminary prospectus, electronic Prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contained in the last paragraph of the cover page, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus and the
statements contained under the caption "Underwriting" in the Prospectus;
provided, however, that the obligation of each Underwriter to indemnify the
Company (including any controlling person, director or officer thereof)d shall
be limited to the net proceeds received by the Company from such Underwriter.
c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 7(a) or 7(b) shall be available to any party who shall
fail to give notice as provided in this Section 7(c) if the party to whom notice
was not given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice but the omission
so to notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability that it may have to any indemnified
party for contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties
24
shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. An indemnifying
party shall not be liable for any settlement of any action, suit, proceeding or
claim effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) or 7(b) is due in accordance with its terms but for any reason is
held to be unavailable to or insufficient to hold harmless an indemnified party
under Section 7(a) or 7(b), then each indemnifying party shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares or, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 7 hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts but before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, bear to
(y) the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company or
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact related to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter (except
as may be provided in the Agreement Among Underwriters)
25
be liable or responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder; and (ii) the
Company shall be liable and responsible for any amount in excess of such
underwriting discount; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriter's
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint.
9. TERMINATION. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company at any time:
a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Representatives will in the future materially disrupt, the
securities markets; (ii) if there has occurred any new outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, inadvisable to proceed with the offering; (iii) if there
shall be such a material adverse change in general financial, political or
economic conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of the
Representatives, inadvisable or impracticable to market the Shares; (iv) if
trading in the Shares has been suspended by the Commission or trading generally
on the New York Stock Exchange, Inc., on the American Stock Exchange, Inc. or
the Nasdaq National Market has been suspended or limited, or
26
minimum or maximum ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities have been required, by said exchanges
or by order of the Commission, the National Association of Securities Dealers,
Inc., or any other governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority; or (vi) if, in
the judgment of the Representatives, there has occurred a Material Adverse
Effect, or
b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the Company
shall not be under any liability to any Underwriter, and no Underwriter shall be
under any liability to the Company, except that (y) if this Agreement is
terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date:
a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then each of
the nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to
27
this Section 10 by more than one-ninth of such number of Shares without the
written consent of such Underwriter; or
b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
shall be entitled to one additional business day within which it may, but is not
obligated to, find one or more substitute underwriters reasonably satisfactory
to the Representatives to purchase such Shares upon the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company shall have the right
to postpone the applicable Closing Date for a period of not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or Prospectus)
may be effected by the Representatives and the Company. If the number of Shares
to be purchased on such Closing Date by such defaulting Underwriter or
Underwriters shall exceed 10% of the Shares that all the Underwriters are
obligated to purchase on such Closing Date, and none of the nondefaulting
Underwriters or the Company shall make arrangements pursuant to this Section
within the period stated for the purchase of the Shares that the defaulting
Underwriters agreed to purchase, this Agreement shall terminate with respect to
the Shares to be purchased on such Closing Date without liability on the part of
any nondefaulting Underwriter to the Company and without liability on the part
of the Company, except in both cases as provided in Sections 6(b), 7, 8 and 9.
The provisions of this Section shall not in any way affect the liability of any
defaulting Underwriter to the Company or the nondefaulting Underwriters arising
out of such default. A substitute underwriter hereunder shall become an
Underwriter for all purposes of this Agreement.
11. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(b), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters, the
Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not
28
include any purchaser of Shares from any Underwriter merely because of such
purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., CIBC Xxxxxxxxxxx Xxxxx,
Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: __________, with a
copy to __________ and (b) if to the Company, to its agent for service as such
agent's address appears on the cover page of the Registration Statement with a
copy to __________.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without regard to principles of conflict of laws.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among us.
Very truly yours,
PNV. NET, INC.
By ______________________________
Title: __________________________
Confirmed:
CIBC WORLD MARKETS CORP.
XXXXX & COMPANY INCORPORATED
XXXXX XXXXX XXXXXX & COMPANY LLC
XXXXXXX XXXXX & COMPANY
Acting severally on behalf of itself and as representative of
the several Underwriters named in Schedule I annexed hereto.
29
By CIBC WORLD MARKETS CORP.
By __________________________________
Title: ______________________________
30
SCHEDULE I
Number of Firm Shares
Name to be Purchased from the Company
----------------------------------------------------------------------------
CIBC World Markets Corp.
Xxxxx & Company Incorporated
Xxxxx Xxxxx Xxxxxx & Company LLC
Xxxxxxx Xxxxx & Company ________________________
Total
========================
31
SCHEDULE B
STATE COMMISSION LICENSES, PERMITS AND AUTHORIZATIONS OF
XXX.XXX, INC.
STATE AUTHORIZATIONS
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STATE DATE DOCKET NO.
GRANTED
================================= ============= ==========================
================================= ============= ==========================
================================= ============= ==========================
