Exhibit 1.1
3,350,000 Shares
XXXXX INTERNATIONAL NETWORKS, LTD.
Class A Common Stock
UNDERWRITING AGREEMENT
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March __, 1997
Xxxxxxxxxxx & Co., Inc.
Xxxxxxxxx & Xxxxx
X. Xxxx & Company, Inc.
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Xxxxx International Networks, Ltd., a Colorado corporation (the
"Company"), proposes to sell to you and the other underwriters named on Schedule
I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 3,350,000 shares (the "Firm Shares") of the
Company's Class A Common Stock, $0.01 par value (the "Class A Common Stock").
In addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 502,500 shares (the "Option Shares") of Class A
Common Stock from it solely 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
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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, at
$[ ] per share (the "Initial Price"), the total number of Firm Shares
(adjusted by the Representatives to eliminate fractions) which bears the
same proportion to the number of Firm Shares to be sold by the Company as
the number of Firm Shares set forth opposite the name of such Underwriter
on Schedule I to this Agreement bears to the total number of Firm Shares to
be sold by the Company.
(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 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 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
only once 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 12:00 noon, New York City time, on the business day
before the Firm Shares Closing Date or at least two business days before
the Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the time and
date (if other than the Firm Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery of the certificates for the
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Firm Shares shall be made by the Company to the Representatives for the
respective accounts of the Underwriters, and payment of the purchase price by
wire transfer of immediately available funds to the Company, shall take place at
the offices of Xxxxxxxxxxx & Co., Inc., at Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, on the
third business day following the date of this Agreement; provided, however, that
if the Shares sold hereunder are priced and this Agreement is entered into after
4:30 p.m., New York City time, on any business day, payment and delivery in
respect of the Firm Shares shall take place on the fourth business day following
the date of this Agreement; in either case unless some other time 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").
In the event the option with respect to the Option Shares is
exercised, delivery of the certificates for the Option Shares shall be made by
the Company to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price by wire transfer of immediately
available funds to the Company shall take place at the offices of Xxxxxxxxxxx &
Co., Inc. 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
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
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3. Registration Statement and Prospectus; Public Offering. The
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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. 333-
15657), 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 the preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement or filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the Rules and that is
delivered to prospective investors. 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).
If the Company files a registration statement to register a portion of the
Shares and relies on Rule 462(b) for such registration statement to become
effective upon filing with the Commission (the "Rule 462(b) Registration
Statement"), then any reference to the "Registration Statement" herein shall be
deemed to include both the registration statement referred to above (No. 333-
15657) and the Rule 462(b) Registration Statement, as each such registration
statement may be amended pursuant to the Securities Act.
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
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hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement and all other
registration statements and reports filed with the Commission by the
Company complied, and on the date of the Prospectus, on the date any post-
effective amendment to the Registration Statement shall become effective,
on the date any supplement or amendment to the Prospectus is filed with the
Commission, at all times that a prospectus must be delivered by the
Underwriters pursuant to the Securities Act and on each Closing Date, the
Registration Statement, the Prospectus (and any amendment thereof or
supplement
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thereto) and all other registration statements and reports filed with the
Commission by the Company 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 last paragraph of the
cover page of the Prospectus, the paragraph with respect to stabilization
on the inside front cover page of the Prospectus and the statements
contained under the caption "Underwriting" in the Prospectus (to the extent
such statements relate to the Underwriters). The Company acknowledges that
the statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of the
several Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus.
(b) The consolidated financial statements of the Company and its
Subsidiaries (as defined below) (including all notes and schedules thereto)
included in the Registration Statement and the Prospectus comply as to form
in all material respects with the requirements of the Securities Act and
present fairly on a consolidated basis the financial position, the results
of operations and cash flows and the shareholders' equity and the other
information purported to be shown therein of the Company and its
Subsidiaries 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; and the
other financial and statistical information and the supporting schedules
included in the Prospectus and in the Registration Statement present
fairly, in all material respects, the information required to be stated
therein.
(c) Xxxxxx Xxxxxxxx LLP, whose report is 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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(d) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Colorado.
Except for the Company's subsidiaries listed in Exhibit 21.1 to the
Registration Statement and the Prospectus (the "Subsidiaries"), the Company
has no subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or
other business organization. Each of the Subsidiaries has been duly
organized and is validly existing as a corporation or partnership in good
standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries is duly qualified and in good standing as
a foreign corporation in each jurisdiction in which the location of the
properties owned or leased by it or in which the character of the business
conducted by it makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole (a "Material Adverse Effect").
Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries owns, leases or licenses
any asset or property or conducts any business outside the United States of
America. Each of the Company and its Subsidiaries has all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies, including without limitation the Federal
Communications Commission, or any other person or entity, to own, lease and
license its assets and properties and conduct its businesses as now being
conducted and as described in the Registration Statement and the
Prospectus, except for such authorizations, approvals, consents, orders,
licenses, certificates and permits the failure to so obtain would not have
a Material Adverse Effect; no such authorization, approval, consent, order,
license, certificate or permit contains a materially burdensome restriction
other than as disclosed in the Registration Statement and the Prospectus;
and the Company has all such corporate power and authority, and such
authorizations, approvals, consents, orders, licenses, certificates and
permits to enter into, deliver and perform this Agreement and to issue and
sell the Shares to be issued and sold by the Company (except as may be
required under the Securities Act, the Exchange Act or the National
Association of Securities Dealers, Inc. ("Nasdaq") National Market and
state and foreign Blue Sky laws).
(e) Neither the Commission nor the Blue Sky or securities authorities
of any jurisdiction has issued an order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any preliminary
prospectus, the Prospectus, the Registration Statement, or any amendment or
supplement thereto, refusing to permit the effectiveness of the
Registration Statement or suspending the registration or qualification of
the Shares, nor to the Company's knowledge has any of such authorities
instituted or threatened to institute any proceedings with respect to such
an order in any jurisdiction in which the Shares are to be sold.
(f) Each of the Company and its Subsidiaries owns, or possesses
adequate and enforceable rights to use, all licenses or other rights to
use, all patents, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications,
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technology, know-how and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its business as
described in the Registration Statement and the Prospectus. Neither the
Company nor any Subsidiary has received any notice of, or is aware of, any
infringement of or conflict with asserted rights of others with respect to
any Intangibles which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect. Except as set forth in the Registration Statement or the
Prospectus, the discoveries, inventions, products or processes of the
Company and its Subsidiaries referred to in the Registration Statement or
the Prospectus do not to the Company's knowledge infringe or conflict with
any right or patent of any third party, or any discovery, invention,
product or process which is the subject of a patent application filed by
any third party which would have a Material Adverse Effect.
(g) Each of the Company and its Subsidiaries has good title to each of
the items of real and personal property that are reflected in the financial
statements referred to in Section 4(b) 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 that 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.
(h) 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, to the knowledge of the Company, threatened (and the Company
does not know of any basis therefor) against, or involving the Company or
any of its Subsidiaries which would have a Material Adverse Effect or which
would prevent the consummation of the transactions contemplated by this
Agreement or is required to be disclosed in the Prospectus.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (i) there has not been any event which has resulted in or may
result in a Material Adverse Effect on the Company and its Subsidiaries,
whether or not arising from transactions in the ordinary course of
business; (ii) neither the Company nor any of its Subsidiaries, has
sustained any loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake,
hurricane, 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 that would have a Material Adverse Effect; and
(iii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein,
neither the Company nor any of its Subsidiaries has (A) issued any
securities or incurred any liability or obligation, direct or contingent,
for borrowed money, except such liabilities or obligations incurred in the
ordinary course of business, (B) entered into any transaction not in the
ordinary course of business or (C) declared or paid any dividend or made
any distribution on any shares of its stock or
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redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its stock or other securities.
(j) There is no document or contract of a character required to be
described in the Registration Statement and the Prospectus or to be filed
as an exhibit to the Registration Statement which is not described or filed
as required. Each agreement to which the Company or any of its
Subsidiaries is a party which is described in the Prospectus or is filed as
an Exhibit to the Registration Statement is in full force and effect and is
valid and enforceable by and against the Company or one or more of its
Subsidiaries, as the case may be, in accordance with its terms, assuming
the due authorization, execution and delivery thereof by each of the other
parties thereto except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, 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. Neither the Company nor any of its Subsidiaries, nor, to the best
knowledge of the Company, any other party is in default in the observance
or performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default, in any such case which
default or event would have a Material Adverse Effect. No default exists,
and no event has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any term,
covenant or condition, by the Company or any of its Subsidiaries, of any
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which it or its properties or business may be
bound or affected which default or event would have a Material Adverse
Effect.
(k) Neither the Company nor any of its Subsidiaries is in violation of
any term or provision of its articles of incorporation, certificate,
charter or by-laws, as applicable, or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse Effect.
(l) 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 or any of its Subsidiaries, pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries, or any of their respective properties
or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any
of its Subsidiaries, or violate any
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provision of the articles of incorporation, certificate, charter or by-laws
of the Company or any of its Subsidiaries, as applicable, except for such
consents or waivers which have already been obtained and are in full force
and effect.
(m) The Company has authorized and outstanding capital stock as set
forth under the captions "Capitalization" and "Description of Capital
Stock" in the Prospectus. All of the outstanding shares of Class A Common
Stock and of the Company's Class B Common Stock, $.01 par value per share
(the "Class B Common Stock" and together with the Class A Common Stock, the
"Common Stock"), have been duly and validly issued and are fully paid and
nonassessable, and none of them was issued in violation of any preemptive
or other similar right. The Company owns all of its shares of capital
stock or other beneficial interests of the Subsidiaries, free and clear of
all liens, charges, claims, security interests, encumbrances, shareholders'
agreements, voting trusts and any other restrictions whatsoever. 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 of its Subsidiaries or any security convertible into,
or exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus.
(n) Except as described 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.
(o) Each Shareholder listed on Schedule II hereto, and each director
and executive officer of the Company has delivered to the Representatives
his or her written agreement that he or she will not, for a period of 180
days after the date of this Agreement, directly or indirectly, offer, sell
(including "short sales"), assign, encumber or otherwise transfer or
dispose of (collectively, "Transfer"), or contract to Transfer, any shares
of Common Stock or any other securities convertible into or exchangeable
for shares of Common Stock, or any other equity securities of the Company
owned by him or her, without the prior written consent of the
Representatives, except for (i) sales to the several Underwriters pursuant
to this Agreement or (ii) pursuant to will or the laws of intestate
succession.
(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 issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
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except (i) as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, 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) Neither the Company nor any of its Subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a Material Adverse Effect and the
Company is not aware of any existing or imminent labor disturbances by the
employees of any of its principal suppliers, manufacturers or contractors
who provide network programming materials, scripts or the like to the
Company which would have a Material Adverse Effect.
(r) No transaction has occurred between or among the Company or any of
its Subsidiaries and any of its or their officers, directors or
shareholders, or any affiliate or affiliates of any such officer, director
or shareholder that is required under item 404 of Regulation S-K of the
Rules to be described in and is not described in the Registration Statement
and the Prospectus.
(s) Neither the Company nor any of its Subsidiaries has taken, nor
will any of them 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 Class A Common Stock to
facilitate the sale or resale of any of the Shares in violation of Rule
10b-6 or Rule 10b-7 or Regulation M under the Exchange Act.
(t) The Shares have been duly authorized for quotation on the Nasdaq
National Market, subject to official notice of issuance.
(u) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as each such term is defined in the Investment Company Act of
1940, as amended.
(v) Each of the Company and its Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the business in which it is engaged; and
neither the Company nor its Subsidiaries has 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, except as described in or contemplated by the
Prospectus.
(w) Neither the Company nor any of its Subsidiaries has, directly or
indirectly, paid or delivered any fee, commission or other sum of money or
item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which
is in any manner related to the business or operations of the Company or a
Subsidiary, which the Company knows or has reason to
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believe have been illegal under any federal, state or local laws of the
United States or any other country having jurisdiction; and neither the
Company nor its Subsidiaries has participated, directly or indirectly, in
any boycotts or other similar practices in contravention of law affecting
any of its actual or potential customers.
(x) Each of the Company and its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the accounting records for
assets are compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) Each of the Company and its Subsidiaries (i) is 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 (collectively, "Environmental Laws"), (ii) has received all
permits, licenses or other approvals required under applicable
Environmental Laws to conduct business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a Material Adverse Effect.
(z) The Company meets, and on the Effective Date of the Registration
Statement and on each Closing Date will meet, the conditions for use of
Form S -1 under the Securities Act and the Rules.
5. Conditions of the Underwriters' Obligations. The obligations of
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the Underwriters under this Agreement are several and not joint. The
Representatives hereby confirm that they are authorized to act on behalf of the
Underwriters. The respective obligations of the Underwriters to purchase the
Shares are subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(A)(a) of this Agreement. The Registration
Statement shall have become effective no later than 3:00 p.m., New York
City time, on the date of this Agreement or such later time and date as
shall be consented to in writing by the Representatives.
(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
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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 Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificate 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 or them at or before such
Closing Date.
(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
or chief accounting officer of the Company to the effect that the signers
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.
(e) The Representatives shall have received on the Effective Date, at
the time this Agreement is executed and on each Closing Date:
(i) A signed letter from Xxxxxx Xxxxxxxx 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
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:
(A) in their opinion the audited financial statements and the
schedules to the financial statements 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;
(B) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Consolidated Financial Data," "Selected Consolidated Financial Data,"
"Capitalization," "Dilution" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," 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
shareholders and directors of the Company and its Subsidiaries
(including
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committees thereof), and inquiries of certain officials of the Company
and its Subsidiaries who have responsibility for financial and
accounting matters of the Company and its Subsidiaries, 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:
(1) the amounts in "Summary Consolidated Financial Data",
"Selected Consolidated Financial Data," "Capitalization,"
"Dilution" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," included in the
Registration Statement and the Prospectus do not agree with the
corresponding amounts in the audited financial statements from
which such amounts were derived; and
(2) (x) there were, at a specified date not more than five
business days prior to the date of the letter, any changes in the
short-term or long-term debt of the Company and its Subsidiaries
or capital stock of the Company or its Subsidiaries or any
decreases in net income or in working capital or the
Shareholders' equity in the Company, or its Subsidiaries, as
compared with the amounts shown on the Company's audited
September 30, 1996 balance sheet included in the Registration
Statement or (y) for the period from September 30, 1996 to such
specified date not more than five business days prior to the date
of the letter, there were any decreases, as compared with the
corresponding period in the preceding year, in net revenues or in
the total per share amounts of net income in which case the
Company shall deliver to the Representatives a letter containing
an explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives or is set forth in or contemplated by the
Registration Statement;
(C) on the basis of a reading of the pro forma financial
statements included in the Registration Statement and the Prospectus,
carrying out certain procedures that would not necessarily reveal
matters of significance with respect to the comments set forth in this
clause (C), inquiries of certain officials of the Company and its
Subsidiaries who have responsibility for financial and accounting
matters and proving the arithmetic accuracy of the application of the
pro forma adjustments to the historical amounts in the pro forma
financial statements, nothing came to their attention that caused them
to believe that the pro forma financial statements included in the
Prospectus do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X, or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements; and
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(D) they have performed certain other procedures as a result of
which they have 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.
References to the Registration Statement and the Prospectus
in this paragraph 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 Xxxxx, Xxxxxx & Xxxxxx, LLP, counsel for the Company, an
opinion, addressed to the Representatives, dated such Closing Date,
and stating in effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Colorado. Based solely on a review of the Company's minute books
and otherwise to such counsel's knowledge, except for the
Subsidiaries, the Company has no other subsidiary and does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization. Each of the
Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization. The Company and its Subsidiaries is duly qualified and
in good standing as a foreign corporation or partnership in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its businesses
make such qualification necessary, except for such jurisdictions where
the failure to so qualify would not have a Material Adverse Effect.
(ii) Each of the Company and its Subsidiaries has all
requisite corporate or partnership power and authority 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; and the Company has all requisite corporate power and
authority and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits, other than those required
under or by the Securities Act, the Exchange Act and the Nasdaq
National Market and state and foreign Blue Sky laws, to enter into,
deliver and perform this Agreement and to authorize, issue and sell
the Shares.
(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 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,
under the Company's articles of incorporation, by-laws, Colorado law,
any document filed as an exhibit to the Registration Statement or
otherwise to such
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counsel's knowledge. The Company owns all of the shares of capital
stock or other beneficial interests of the Subsidiaries, free and
clear of any perfected security interest or to such counsel's
knowledge, liens, charges, claims, security interests, encumbrances,
shareholders' agreements, voting trusts and any other restrictions
whatsoever, except as disclosed in the Prospectus and except for such
restrictions that would not have a Material Adverse Effect. The
Shares, when issued and sold pursuant to this Agreement, will be duly
and validly issued, outstanding, fully paid and nonassessable, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity and none of them will have been issued in
violation of any preemptive or other similar right, under the
Company's articles of incorporation, by-laws, Colorado law, any
document filed as an exhibit to the Registration Statement or
otherwise to such counsel's knowledge. To such counsel's knowledge,
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 and the Shares conform in all material respects to the
descriptions thereof contained in the Prospectus under the caption
"Description of Capital Stock."
(iv) The lock-up agreements of the Company's Shareholders and
directors and officers have been duly and validly executed and
delivered by such persons and constitutes the legal, valid and binding
obligation of each such person enforceable against each such person in
accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(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 Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be
limited by applicable usury, bankruptcy, insolvency, fraudulent
conveyance, 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 or
state securities laws or the public policy underlying such laws.
(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
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payment due under, or violate 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 or any of its Subsidiaries
pursuant to the terms of any document filed as an exhibit to the
Registration Statement or otherwise to such counsel's knowledge, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation of which such counsel is aware or violate any provision
of the articles of incorporation or by-laws, as the case may be, of
the Company or, any of the Subsidiaries.
(vii) To such counsel's knowledge, neither the Company nor any
of its Subsidiaries is in violation of any term or provision of its
articles of incorporation, charter, certificate or by-laws, as the
case may be, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, where the consequences of such
violation would have a Material Adverse Effect.
(viii) 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 otherwise involving the assets, properties or businesses of, the
Company or any of its Subsidiaries, that have a Material Adverse
Effect.
(ix) The statements in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale,"
"Management," "Risk Factors," and "Certain Relationships and Related
Transactions," insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair summaries in
all material respects of such documents and matters of law. All
contracts and other documents required to be filed as exhibits to the
Registration Statement pursuant to Item 601 of Regulation S-K of the
Rules, or described in the Registration Statement, have been so filed.
(x) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel expresses
no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
(xi) The Registration Statement has become effective under the
Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
threatened, pending or contemplated.
To the extent deemed advisable by such counsel, counsel
may rely as to matters of fact on certificates of responsible officers
of the Company and public officials as to matters which are governed
by laws other than the laws of the State of Colorado, the General
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Corporation Law of the State of Delaware and the Federal laws of the United
States. Copies of such certificates shall be furnished to the Representatives
and counsel for the Underwriters. Such counsel shall also state that Xxxxxxx
Xxxx & Xxxxx LLP, in rendering its opinion to the Underwriters pursuant to
Section 5(g), may rely on the opinion of such counsel as to all matters which
are governed by Colorado law.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, at which conferences representatives of the Representatives, counsel to
the Underwriters, and representatives of the independent certified public
accountants of the Company were present, and 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 that caused a such counsel to believe that the
Registration Statement at the time it became effective (except with respect to
the financial statements and notes and schedules thereto and other financial and
statistical 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 and notes and schedules thereto and other financial data,
as to which such counsel need express no belief), 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 not misleading.
(g) 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 Xxxx & Xxxxx LLP a favorable
opinion, addressed to the Representatives and dated each 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 Xxxx & Xxxxx LLP such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters. In rendering its opinion to the Underwriters, Xxxxxxx Xxxx & Xxxxx LLP
may rely on the opinion of Xxxxx, Xxxxxx & Xxxxxx, LLP, as to all matters that
are governed by Colorado law.
(h) The Representatives shall have received from each of the
Shareholders listed on Schedule II hereto and each director and executive
officer of the Company his or her enforceable written agreement as described in
Section 4(o).
(i) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates and documents as the Representatives
shall have reasonably requested.
(j) At each Closing Date, the Shares shall have been approved for
quotation
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on the Nasdaq National Market, subject to official notice of issuance.
6. Covenants of the Company. (A) The Company covenants and
------------------------
agrees as follows:
(a) 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, and shall promptly advise the Representatives (i)
when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional information,
(iii) 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 (iv)
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 their 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 best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) 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 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 (a) of this Section 6(A), an amendment or supplement
which shall correct such statement or omission or an amendment which shall
effect such compliance.
(c) 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
earnings statement (which need not be audited) of the Company, covering
such 12-month period, which shall satisfy the provisions of Section 11(a)
of the Securities Act or Rule 158 of the Rules.
(d) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including all
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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.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale 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; provided, however, that the Company shall not
be required in connection therewith, as a condition thereof, to qualify as
a foreign corporation or to execute a general consent to service of process
in any jurisdiction or subject itself to taxation as doing business in any
jurisdiction.
(f) For a period of four 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 on a non-confidential basis.
(g) Without the prior written consent of the Representatives, for a
period of 180 days after the date of this Agreement, the Company shall not
directly or indirectly, offer, sell (including "short sales"), assign,
encumber or Transfer, or contract to Transfer, any shares of Common Stock,
or any other securities convertible into or exchangeable for shares of
Common Stock, or any other equity securities of the Company, except for (i)
the issuance of the Shares pursuant to the Registration Statement; (ii) the
issuance of shares of Common Stock pursuant to stock options outstanding on
the date hereof or the issuance of shares of Common Stock or stock options
thereon pursuant to the Company's 1996 Stock Plan (the "1996 Plan"); (iii)
the issuance of shares of Common Stock in connection with the "Pre-Offering
Transactions" (as contemplated in the Prospectus); and (iv) the issuance of
shares of Common Stock in connection with acquisitions or carriage
incentive programs provided that the recipients of such shares of Common
Stock agree to be "locked-up" as contemplated by this paragraph for the
greater of 120 days or the balance of the "lock-up" period as contemplated
by this paragraph. In the event that during this period, any shares of
Common Stock are issued in connection with (i) the 1996 Plan or (ii) any
registration effected on Form S-8 or any successor form, the Company shall
obtain the enforceable written agreement of such grantee or purchaser or
holder of such securities that, for a period of 180 days after the date of
this Agreement, such person will not directly or indirectly, without the
prior written consent of the Representatives, offer, sell (including "short
sales"), assign, encumber or Transfer, or contract to Transfer or exercise
any registration rights with respect to, any shares of Common Stock (or any
other securities convertible into or exchangeable for any shares of Common
Stock, or any other equity securities) owned by such person.
-18-
(h) The Company shall cause each director and executive officer
of the Company, and each shareholder to deliver to the Representatives his
or her written agreement that pursuant to the Registration Statement, he or
she will not, for a period of 180 days after the date of this Agreement,
directly or indirectly, without the prior written consent of the
Representatives, offer, sell (including "short sales"), assign, encumber or
Transfer, or contract to Transfer any shares of Common Stock or any other
securities convertible into or exercisable or exchangeable for, shares of
Common Stock, or any other equity securities of the Company except for (i)
sales to the several Underwriters pursuant to this Agreement or (ii)
pursuant to will or the laws of intestate succession.
(i) 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).
(j) The Company intends to apply the net proceeds from the offering of
the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(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
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement, the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the fees and disbursements of counsel
for the Company and of the Company's independent public accountants; (iii)
the preparation and delivery of certificates for the Shares to the
Underwriters; (iv) 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)(e), including the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
registration and qualification and the preparation, printing, distribution
and shipment of preliminary and supplementary Blue Sky memoranda; (v) 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;
(vi) the filing fees of the National Association of Securities Dealers,
Inc. in connection with its review of the terms of the public offering;
(vii) the furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 6(A)(f); (viii) inclusion of the Common
Stock for quotation on the Nasdaq National Market; and (ix) 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 9, the
Underwriters agree to pay, whether or not the transactions contemplated
hereby are consummated or this Agreement
-19-
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 any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement, 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; provided, however, that
(i) 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,
the Prospectus, or such amendment or supplement, and was contained in the last
paragraph of the cover page of the Prospectus, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus or under the
caption "Underwriting" in the Prospectus (to the extent such statements relate
to the Underwriters) or (ii) such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) and, if required by law, a copy of the Prospectus (as so
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Shares to such person.
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, each person, if any, who controls the Company
within the meaning of either 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
indemnities from the Company to each Underwriter, but only insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i) any
untrue statement or omission or alleged untrue statement or omission which was
made in any preliminary prospectus, the Registration Statement, the Prospectus,
or any amendment thereof or supplement
-20-
thereto, and was contained in the last paragraph of the cover page of the
Prospectus, in the paragraph relating to stabilization on the inside front cover
page of the Prospectus or under the caption "Underwriting" in the Prospectus (to
the extent such statements relate to the Underwriters) or (ii) an alleged or
actual untrue statement or omission made in a preliminary prospectus, if such
alleged or actual statement or omission is eliminated or remedied in the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) and, if required by law, a copy of the
Prospectus (as so amended or supplemented) shall not have been furnished to such
person at or prior to the written confirmation of the sale of such Shares to
such person; provided, however, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or officer
thereof), as the case may be, shall be limited to the net proceeds received by
the Company, as the case may be, 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 (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 materially 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 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, as provided above, 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. In no event shall the indemnifying parties be liable for
the fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or
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separate but similar or related actions in the same jurisdictions arising out of
the same general allegations or circumstances. An indemnifying party shall not
be liable for any settlement of any action, suit, proceeding or claim effected
without its written consent.
8. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 7(a) or (b) for any reason is unavailable to or insufficient to hold
harmless an indemnified party under Section 7(a) or (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) 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, 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) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder less the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission which was made in any
preliminary prospectus, the Registration Statement, the Prospectus or any
amendment thereof or supplement thereto; and (ii) the Company shall be liable
and responsible for any amount in excess of the amount set forth in clause (i)
of this sentence; 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 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
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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
Underwriters' 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 notifying
the Company at any time:
(a) in the sole 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 the Company or any of its Subsidiaries,
shall have sustained a loss or interference with its business by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which is material to the Company and the Subsidiaries,
taken as a whole, whether or not said loss shall have been insured, or by
court or governmental action, order or decree which will, in the opinion of
the Representatives, make it inadvisable or impractical to proceed with the
offering; (iii) if there has been, since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole, whether or not arising in the ordinary course of
business; (iv) 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 or impractical to proceed with
the offering; (v) if there shall be such a material adverse change in
general financial, political or economic conditions in the United States or
elsewhere 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 impractical to proceed with the offering;
(vi) 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 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 automated quotation system or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (vii) if a banking
moratorium has been declared by the States of Colorado and New York state
or Federal authority, or
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(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 be under any liability to any Underwriter (except as otherwise
provided in Section 6(B)), and no Underwriter shall be under any liability to
the Company except that (y) if this Agreement is terminated by the
Representatives 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, however, 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 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 an 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
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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 to 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 directors or
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 constitutes the full and entire understanding and
agreement between the parties with regard to the subject matters hereof, and may
be amended only with the written consent of all parties hereto.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters and the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone, telex or facsimile transmission if
subsequently confirmed in writing, (a) if to the Representatives, c/o
Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial Center, New York,
New York 10281 Attention: Xxxxxxx Xxxxxxx; (b) if to the Company, to the
Company's agent for service as such agent's address appears on the cover page of
the Registration Statement.
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.
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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,
XXXXX INTERNATIONAL NETWORKS, LTD.
By:
----------------------------------
Name:
Title:
XXXXXXXXXXX & CO., INC.
XXXXXXXXX & XXXXX
X. XXXX & COMPANY, INC.
Acting severally on behalf of themselves
and as representatives of the several
Underwriters named in Schedule I annexed
hereto.
By: XXXXXXXXXXX & CO., INC.
By:
------------------------------
Name:
Title:
XXXXXXXXX & XXXXX
By:
------------------------------
Name:
Title:
X. XXXX & COMPANY, INC.
By:
------------------------------
Name:
Title:
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- -------------
Xxxxxxxxxxx & Co., Inc. _____________
Xxxxxxxxx & Xxxxx _____________
X. Xxxx & Company, Inc. _____________
[ ] _____________
[ ] _____________
Total 3,350,000
=============
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