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EXHIBIT 1.1
______________ Shares
CRL NETWORK SERVICES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
March___, 1999
CIBC Oppenheimer Corp.
Xxxxxx Brothers, Inc.
c/o CIBC Oppenheimer Corp.
CIBC 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:
CRL Network Services, Inc., a Delaware corporation (the
"Company"), and Xxxxx Xxxxx, the Chief Executive Officer and a Shareholder of
the Company (the "Selling Stockholder"), 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 ____________ shares (the
"Firm Shares") of the Company's Common Stock, (the "Common Stock"). The Company
proposes to issue and sell ____ shares of its authorized and unissued Common
Stock (the "Company Shares") and the Selling Stockholder proposes to sell in
aggregate of _____ shares of the Company's authorized and outstanding Common
Stock (the "Selling Stockholder Shares") to the Underwriters. In addition, the
Selling Stockholder and the Company propose to grant, jointly and severally, to
the several Underwriters an option to purchase severally and not jointly, up to
an additional ___________ shares (the "Option Shares") of Common Stock from them
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 $_____
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per share (the "Initial Price"), the number of Company Shares set forth opposite
the name of such Underwriter on Schedule I to this Agreement.
(b) The Selling Stockholder agrees to sell to each of the
Underwriters, and each of the Underwriters agree, severally and not jointly, to
purchase from the Selling Stockholder at the Initial Price, the number of
Selling Stockholder Shares set forth opposite the name of such Underwriter on
Schedule I to this Agreement.
(c) The Selling Stockholder and the Company grants,
jointly and severally, 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 Selling Stockholder shall have the first option to grant to the
Underwriters an option to purchase all or any part of the Option Shares at the
Initial Price. In the event the Selling Stockholder elects not to sell any
Option Shares or elects to sell less than all of the Option Shares, then in such
event the Company ________________ Underwriters an Option _________________ 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 on one or more
occasions thereafter within 30 days after the date of this Agreement, in each
case upon written or telegraphic notice, or verbal or telephonic notice
confirmed by written or telegraphic 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 by the Company and the Selling
Stockholders 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 next day funds to the Company, shall
take place at the offices of CIBC Xxxxxxxxxxx Corp., at CIBC Xxxxxxxxxxx Xxxxx,
Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City
time, on the third full business day following the first day the Shares are
traded, or 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 7 hereof the Representative may in their sole discretion,
postpone the 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 buy credit
through full fast transfer to the accounts at the Depository Trust Company
designate 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
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Underwriters and payment of the purchase price by certified or official bank
check or checks payable in next day funds to the Selling Stockholder and/or the
Company shall take place at the offices of CIBC Xxxxxxxxxxx Corp. specified
above at the time and on the date or dates (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(c) (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(c) 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.
333-_____), 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
thereto) to and of the related preliminary prospectus have heretofore been
delivered by the Company to you.
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 and the Selling
Stockholder. The Company and the Selling Stockholder hereby, jointly and
severally, represent, warrant and covenant to each Underwriter as follows:
(a) If the registration statement relating to the Shares
has been declared effective under the Securities Act by the Commission, the
Company will prepare and promptly file with the Commission the information
omitted from the registration statement pursuant to Rule 430A(a) or, if the
Representatives, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules, the information required to be included in
any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules
pursuant to subparagraph (1), (4) or (7) of Rule 424(b) of the Rules or as part
of a post-effective amendment to the registration statement (including a final
form of prospectus). If the registration statement relating to the Shares has
not been declared effective under the Securities Act by the
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Commission, the Company will prepare and promptly file an amendment to the
registration statement, including a final form of prospectus, or, if the
Representatives, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules, the information required to be included in
any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the
Rules. The term "Registration Statement" as used in this Agreement shall mean
such registration statement, including consolidated financial statements,
schedules and exhibits, in the form in which it became or becomes, as the case
may be, effective (including, if the Company omitted information from the
registration statement pursuant to Rule 430A(a) or files a term sheet pursuant
to Rule 434 of the Rules, the information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
or Rule 434(d) of the Rules) and, in the event of any amendment thereto or the
filing of any abbreviated registration statement pursuant to Rule 462(b) of the
Rules relating thereto after the effective date of such registration statement
(the "Effective Date"), shall also mean (from and after the effectiveness of
such amendment or the filing of such abbreviated registration statement) such
registration statement as so amended, together with any such abbreviated
registration statement. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) of the
Rules, the information deemed to be a part of the Registration Statement at the
time it became effective pursuant to Rule 430A(b) of the Rules); provided,
however, that if in reliance on Rule 434 of the Rules and with the consent of
the Representatives, on behalf of the several Underwriters, the Company shall
have provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c),
as applicable, prior to the time that a confirmation is sent or given for
purposes of Section 2(10)(a) of the Securities Act, the term "Prospectus" shall
mean the "prospectus subject to completion" (as defined in Rule 434(g) of the
Rules) last provided to the Underwriters by the Company and circulated by the
Underwriters to all prospective purchasers of the Shares (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Rules). Notwithstanding the
foregoing, if any revised prospectus shall be provided to the Underwriters by
the Company for use in connection with the offering of the Shares that differs
from the prospectus referred to in the immediately preceding sentence (whether
or not such revised prospectus is required to be filed with the Commission
pursuant to Rule 424(b) of the Rules), the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the
Underwriters for such use. If in reliance on Rule 434 of the Rules and with the
consent of the Representatives, on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Securities Act, the Prospectus and
the term sheet, together, will not be materially different from the prospectus
in the Registration Statement.
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 shall become 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
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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 and the Selling Stockholder make no representation or warranty as to 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. The Company and the Selling Stockholder acknowledge 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) 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 consolidated financial statements of the Company
and its subsidiaries (including all notes and schedules thereto) included in the
Registration Statement and Prospectus present fairly the financial position, the
results of operations and cash flows and the stockholders' 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. The selected and summary consolidated financial
and operational data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
audited financial statements. No other financial statements or schedules are
required to be included in the Registration Statement.
(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.
(e) The Company has been duly incorporated and is validly
existing as corporation in good standing under the laws of the State of Delaware
and the Company's subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of California. The
Company has no subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or other
business organization other than the subsidiaries listed on Exhibit 21 to the
Registration
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Statement. Each of the Company and its subsidiary are duly qualified and in good
standing as foreign corporations in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or the nature
of its businesses 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 or financial
condition of the Company or its subsidiary. Except as disclosed in the
Registration Statement and the Prospectus, neither the Company nor its
subsidiary own, lease or license any asset or property or conduct any businesses
outside the United States of America. Each of the Company and its subsidiary 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, 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, material licenses,
certificates and permits the failure to so obtain would not have a material
adverse effect upon the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company or its subsidiary
and each of the Company and its subsidiary 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 (except as may be required under the Securities Act
and state and foreign Blue Sky laws).
(f) Each of the Company and its subsidiary owns or
possesses adequate rights to use all patents, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names and copyrights which
are necessary to conduct its businesses as described in the Registration
Statement and Prospectus; the expiration of any patents, patent rights, trade
secrets, trademarks, service marks, trade names or copyrights would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or its subsidiary.
Neither the Company, its subsidiary nor the Selling Stockholder have received
any notice of, and neither the Company, its subsidiary nor the Selling
Stockholder has any knowledge of, any infringement of or conflict with asserted
rights of the Company or its subsidiary by others with respect to any patent,
patent rights, inventions, trade secrets, know-how, trademarks, service marks,
trade names or copyrights; and each of the Company and its subsidiary has not
received any notice of, and neither the Company, its subsidiary nor the Selling
Stockholder has any knowledge of, any infringement of or conflict with asserted
rights of others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
or its subsidiary.
(g) Each of the Company and its subsidiary 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
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not and will not have a material adverse effect upon the assets or properties,
business, results of operations or financial condition of the Company or its
subsidiary.
(h) There is not any pending or, to the best of the
Company's and the Selling Stockholder or its subsidiaries' knowledge, threatened
action, suit, claim or proceeding against the Company, any of its respective
officers or any of its respective properties, assets or rights before any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its subsidiary, or over its respective officers
or properties or otherwise which (i) might result in any material adverse change
in the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company or its subsidiary or might materially and
adversely affect its properties, assets or rights, (ii) might prevent
consummation of the transactions contemplated hereby or (iii) is required to be
disclosed in the Registration Statement or Prospectus and is not so disclosed.
(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 material adverse change in the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise), of the Company or its subsidiary, whether or not
arising from transactions in the ordinary course of business; (ii) neither the
Company nor its subsidiary has 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 (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 its subsidiary 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 redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its stock.
(j) There is no document or contract 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. Each agreement listed in the Exhibits to the Registration Statement is
in full force and effect and is valid and enforceable by and against the Company
or its subsidiaries in accordance with its terms, assuming the due
authorization, execution and delivery thereof by each of the other parties
thereto. Neither the Company nor its subsidiary, nor to the best of the
Company's and its subsidiary'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, in any such case which default or event
would have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company or its subsidiary. 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
its subsidiary of any other agreement or instrument to which the Company or its
subsidiary 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
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adverse effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company or its
subsidiary.
(k) Neither the Company nor its subsidiary is 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, where the
consequences of such violation would have a material adverse effect on the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company or its subsidiary.
(l) Neither the execution, delivery and performance of
this Agreement by the Company or its subsidiary 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 its subsidiary pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or its
subsidiary 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 its subsidiary or violate any
provision of the charter or by-laws of the Company or its subsidiary, except for
such consents or waivers which have already been obtained and are in full force
and effect.
(m) The Company has an authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus. All of
the outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable were not issued in violation of or subject to any
preemptive rights 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, fully paid and nonassessable, were
not issued in violation of or subject to any preemptive rights and none of them
will be issued in violation of any preemptive or other similar rights. 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 and the Shares conform in all material respects to
all statements in relation thereto contained in the Registration Statement and
the Prospectus. The description of the Company's stock option, stock bonus and
other stock plans or arrangements set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to such plans,
arrangements, options and rights. All the outstanding shares of capital stock of
the Company's subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the subsidiary are owned
by the Company free and clear of any security interests, claims, liens or
encumbrances.
(n) Each officer and director of the Company, the Selling
Stockholder and each beneficial owner of [10,000] or more shares of Common Stock
has agreed in writing that such person will not, for a period of 180 days from
the date that the Registration Statement
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is declared effective by the Commission (the "Lock-up Period"), offer to sell,
contract to sell, or otherwise sell, dispose of, loan, pledge or grant any
rights with respect to (collectively, a "Disposition") any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock
(collectively, "Securities") now owned or hereafter acquired directly by such
person or with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction, (ii)
as a distribution to partners or shareholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of the Representatives. The
foregoing restriction has been expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities.
Furthermore, such person has also agreed and consented to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Securities held by such person except in compliance with this restriction.
The Company has provided to counsel for the Underwriters a complete and accurate
list of all securityholders of the Company and the number and type of securities
held by each securityholder. The Company has provided to counsel for the
Underwriters true, accurate and complete copies of all of the agreements
pursuant to which its officers, directors and shareholders have agreed to such
or similar restrictions (the "Lock-up Agreements") presently in effect or
effected hereby. The Company hereby represents and warrants that it will not
release any of its officers, directors or other shareholders from any Lock-up
Agreements currently existing or hereafter effected without the prior written
consent of the Representatives.
(o) 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 by the
Company. This Agreement has been duly and validly authorized, executed and
delivered by the Company and will constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (A) 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 (B) 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.
(p) The Company is not involved in any labor dispute nor,
to the knowledge of the Company and the Selling Stockholder, is any such dispute
threatened, which dispute would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company.
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(q) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or affiliates of
any such officer or director that is required to be described in and is not
described in the Registration Statement and the Prospectus.
(r) 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.
(s) 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 thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are material and
have become due.
(t) The Shares have been duly authorized for quotation on
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System.
(u) The Company has complied with all of the requirements
and filed the required forms as specified in Florida Statutes Section 517.075.
(v) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiary is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, (ii) neither the Company nor its
subsidiary has received notice from any governmental authority or third party of
an asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus, (iii) neither the
Company nor its subsidiary will be required to make future material capital
expenditures to comply with Environmental Laws and (iv) no property which is
owned, leased or occupied by the Company or its subsidiary has been designated
as a Superfund site pursuant to the Comprehensive Response, Compensation, and
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.
(w) Each of the Company and its subsidiary 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 recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
5. The Selling Stockholder represents and warrants to and agrees
with each Underwriter and the Company that:
(a) The Selling Stockholder now has and on the Firm Share
Closing Date will have valid marketable title to the Shares to be sold by such
Selling Stockholder, free
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and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest other than pursuant to this Agreement; and upon delivery of
such Shares hereunder and payment of the purchase price as herein contemplated,
each of the Underwriters will obtain valid marketable title to the Shares
purchased by it from such Selling Stockholder, free and clear of any pledge,
lien, security interest pertaining to such Selling Stockholder or such Selling
Stockholder's property, encumbrance, claim or equitable interest, including any
liability for estate or inheritance taxes, or any liability to or claims of any
creditor, devisee, legatee or beneficiary of such Selling Stockholder.
(b) All consents, approvals, authorizations and orders
required for the execution and delivery by or on behalf of such Selling
Stockholder of this Agreement and the sale and delivery of the Selling
Stockholder Shares under this Agreement (other than, at the time of the
execution hereof (if the Registration Statement has not yet been declared
effective by the Commission), the issuance of the order of the Commission
declaring the Registration Statement effective and such consents, approvals,
authorizations or orders as may be necessary under state or other securities or
Blue Sky laws) have been obtained and are in full force and effect; such Selling
Stockholder, if other than a natural person, has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization as the type of entity that it purports to be; and such Selling
Stockholder has full legal right, power and authority to enter into and perform
its obligations under this Agreement and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Stockholder under this Agreement.
(c) Such Selling Stockholder will not, during the Lock-up
Period, effect the Disposition of any Securities now owned or hereafter acquired
directly by such Selling Stockholder or with respect to which such Selling
Stockholder has or hereafter acquires the power of disposition, otherwise than
(i) as a bona fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this restriction, (ii) as a distribution to partners or
shareholders of such Selling Stockholder, provided that the distributees thereof
agree in writing to be bound by the terms of this restriction, or (iii) with the
prior written consent of the Representatives. The foregoing restriction is
expressly agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which is designed to or reasonably expected to lead
to or result in a Disposition of Securities during the Lock-up Period, even if
such Securities would be disposed of by someone other than the Selling
Stockholder. Such prohibited hedging or other transactions would including,
without limitation, any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation, any put or
call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from Securities. Such Selling
Stockholder also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent against the transfer of the securities held by
such Selling Stockholder except in compliance with this restriction.
(d) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
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(e) Such Selling Stockholder has not distributed and will
not distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(f) All information furnished by or on behalf of such
Selling Stockholder relating to such Selling Stockholder and the Selling
Stockholder Shares that is set forth in the Registration Statement or the
Prospectus is, and at the time the Registration Statement became or becomes, as
the case may be, effective and at all times subsequent thereto up to and on the
Closing Date was or will be, true, correct and complete, and does not, and at
the time the Registration Statement became or becomes, as the case may be,
effective and at all times subsequent thereto up to and on the Closing Date will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make such information not
misleading.
(g) Such Selling Stockholder will review the Prospectus
and will comply with all agreements and satisfy all conditions on its part to be
complied with or satisfied pursuant to this Agreement on or prior to the Closing
Date and will advise the Representatives prior to the Closing Date if any
statement to be made on behalf of such Selling Stockholder in the certificate
contemplated by Section 6 would be inaccurate if made as of the Closing Date.
(h) Such Selling Stockholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares that are to be sold
by the Company to the Underwriters pursuant to this Agreement; such Selling
Stockholder does not have, or has waived prior to the date hereof, any
registration right or other similar right to participate in the offering made by
the Prospectus, other than such rights of participation as have been satisfied
by the participation of such Selling Stockholder in the transactions to which
this Agreement relates in accordance with the terms of this Agreement; and such
Selling Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company, other
than those described in the Registration Statement and the Prospectus.
6. 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) The Prospectus shall have been timely filed with the
Commission in accordance with Section 7(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 counsel to the Representatives.
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(c) The representations and warranties of the Company and
its subsidiary and the Selling Stockholder contained in this Agreement and the
representations and warranties of the Company and its subsidiary in the
certificates delivered pursuant to Section 6(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.
(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,
and you shall be satisfied that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of the Closing Date
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus, and any amendments
or supplements thereto, contained all material information required to be
included therein by the Securities Act and the Rules and in all material
respects conformed to the requirements of the Securities Act and the Rules, the
Registration Statement, and any amendment or supplement thereto, did not and
does not include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, the Prospectus, and any amendment or supplement thereto,
did not and does not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been so set forth; and (iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company, (b) any
transaction that is material to the Company except transactions entered into in
the ordinary course of business, (c) any obligation, direct or contingent, that
is material to the Company, incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (d) any change in the
capital stock or outstanding indebtedness of the Company that is material to the
Company, (e) any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company, or (f) any loss or damage (whether or not
insured) to the property of the Company which has been
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sustained or will have been sustained which has a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company.
(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, and shall:
(i) represent, to the extent true, that they are
independent auditors with respect to the Company within the meaning of the
Securities Act and the applicable published Rules;
(ii) set forth their opinion with respect to their
examination of the balance sheet of the Company as of December 31, 1998 and
related statements of operations, shareholders' equity, and cash flows for the
twelve (12) months ended December 31, 1998;
(iii) state that Deloitte & Touche LLP has performed
the procedures set out in Statement on Auditing Standards No. 71 ("SAS 71") for
a review of interim financial information and providing the report of Deloitte &
Touche LLP as described in SAS 71 on the financial statements for the
first-quarter period ended March 31, 1998 (the "Quarterly Financial
Statements");
(iv) state that in the course of such review, nothing
came to their attention that leads them to believe that any material
modifications need to be made to any of the Quarterly Financial Statements in
order for them to be in compliance with generally accepted accounting principles
consistently applied across the periods presented; and
(v) address other matters agreed upon by Deloitte &
Touche LLP and you. In addition, you shall have received from Deloitte & Touche
LLP a letter addressed to the Company and made available to you for the use of
the Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as of December
31, 1998, did not disclose any weaknesses in internal controls that they
considered to be material weaknesses.
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 Xxxxxx, Xxxx and Xxxxxxxx LLP, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date, and
stating in effect that:
(i) Each of the Company and its subsidiary has been
duly organized and is validly existing as a corporation in good standing under
the laws of its state of organization. To the best of such counsel's knowledge,
the Company has no subsidiary and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other
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business organization other than the subsidiary set forth in Exhibit 21 to the
Registration Statement. Each of the Company and its subsidiary is duly qualified
and 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 businesses 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 or its subsidiary.
(ii) Each of the Company and its subsidiary has all
requisite corporate 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 each of the Company and its
subsidiary 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) Each of the Company and its subsidiary 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 each of the Company and
its subsidiary; all of the outstanding shares of capital stock of each of the
Company and its subsidiary have been duly and validly authorized and 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 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. To the best
of 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, the Shares
conform in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(iv) The agreement of the Company's stockholders,
directors and officers stating that for a period of 180 days from the date of
this Agreement they will not, without the Representatives' prior written
consent, sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares of Common
Stock) owned by them has been duly and validly 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,
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 this Agreement constitutes the legal, valid and
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binding obligation of the Company enforceable against the Company in accordance
with their respective terms except (A) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles and (B) 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 each of the Company and its subsidiary 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 each of the Company and its subsidiary pursuant to the terms of any
indenture, mortgage, deed trust, note or other agreement or instrument of which
such counsel is aware and to which the Company or its subsidiary 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 of which
such counsel is aware or violate any provision of the charter or by-laws of the
Company or its subsidiary.
(vii) To the best of such counsel's knowledge, 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 its subsidiary of any indenture,
mortgage, deed of trust, note or any other agreement or instrument to which the
Company or its subsidiary is a party or by which it or any of its assets or
properties or businesses may be bound or affected, where the consequences of
such default would have a material and adverse effect on the assets, properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company or its subsidiary.
(viii) To the best of such counsel's knowledge, the
Company nor its subsidiary is 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, where the consequences of such violation would have
a material and adverse effect on the assets or properties, businesses, results
of operations, prospects or condition (financial or otherwise) of the Company or
its subsidiary.
(ix) No consent, approval, authorization or order of
any court or governmental agency or body is required for the performance of this
Agreement by the Company or its subsidiary or the consummation of the
transactions contemplated hereby or 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) To the best of 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
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businesses of, the Company or its subsidiary which would have a material adverse
effect upon the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company or its subsidiary.
(xi) The statements in the Prospectus under the
captions "Description of Capital Stock," "Liquidity and Capital Resources,"
"Business," "Shares Eligible for Future Sale," "Management-_____,"
"Management-_____" ["__________"], ["__________"] 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.
All contracts and other documents 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, 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.
(xiii) The Selling Stockholder has full right, power
and authority to enter into and to perform its obligations under this Agreement
and to sell, transfer, assign and deliver the Shares to be sold by such Selling
Stockholder hereunder.
(xiv) The Registration Statement has become 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.
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 New York, 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 Statement at the time it became effective (except
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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 and notes 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.
(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.
(h) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representative, and dated such
Closing Date, of an executive officer of the Company to the effect that the
signer 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.
(i) The Representative shall have received on each Closing
Date, a certificate addressed to each representative and ___________________
officer of the __________ to the effect that the financial statement of Inkngral
Networking Corporation __________.
7. Covenants of the Company and the Selling Stockholder.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause
the Registration Statement and any amendment thereof, if not effective at the
time and date that this Agreement is executed and delivered by the parties
hereto, to become effective as promptly as possible; the Company will use its
best efforts to cause any abbreviated registration statement pursuant to Rule
462(b) of the Rules as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules, the
Company will provide evidence satisfactory to you that the Prospectus contains
such information and has been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules or as
part of a post-effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission; if the Company
files a term sheet pursuant to Rule 434 of the Rules, the Company will provide
evidence satisfactory to you that the Prospectus and term sheet meeting the
requirements of Rule 434(b) or
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(c), as applicable, of the Rules, have been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (7) of Rule 424(b) of
the Rules; if for any reason the filing of the final form of Prospectus is
required under Rule 424(b)(3) of the Rules, it will provide evidence
satisfactory to you that the Prospectus contains such information and has been
filed with the Commission within the time period prescribed; it will notify you
promptly of any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information;
promptly upon your request, it will prepare and file with the Commission any
amendments or supplements to the Registration Statement or Prospectus which, in
the opinion of counsel for the several Underwriters, may be necessary or
advisable in connection with the distribution of the Shares by the Underwriters;
it will promptly prepare and file with the Commission, and promptly notify you
of the filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be delivered
under the Securities Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in effect
would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale of
the Shares, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and such
prospectus or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act; and it will file no
amendment or supplement to the Registration Statement or Prospectus which shall
not previously have been submitted to you a reasonable time prior to the
proposed filing thereof or to which you shall reasonably object in writing,
subject, however, to compliance with the Securities Act and the Rules and the
provisions of this Agreement. The Company shall use its best efforts to prevent
the issuance of any stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) The Company will advise you, promptly after it
shall receive notice or obtain knowledge, of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat of any proceeding for that purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued
(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 this Section 7, an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance.
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(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 period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(v) The Company will furnish to you, as soon as
available, and, in the case of the Prospectus and any term sheet or abbreviated
term sheet under Rule 434, in no event later than the first (1st) full business
day following the first day that Shares are traded, copies of the Registration
Statement (three of which will be signed and which will include all exhibits),
each Preliminary Prospectus, the Prospectus and any amendments or supplements to
such documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the Securities Act, all in such quantities as you may from
time to time reasonably request. Notwithstanding the foregoing, if the
Representatives, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules, the Company shall provide to you copies of
a Preliminary Prospectus updated in all respects through the date specified by
you in such quantities as you may from time to time reasonably request.
(vi) The Company will use its best efforts to qualify
the Shares for offering and sale under the securities laws of such jurisdictions
as you may designate and to continue such qualifications in effect for so long
as may be required for purposes of the distribution of the Shares, except that
the Company shall not be required in connection therewith or as a condition
thereof to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction in which it is not otherwise required to
be so qualified or to so execute a general consent to service of process. In
each jurisdiction in which the Shares shall have been qualified as above
provided, the Company will make and file such statements and reports in each
year as are or may be required by the laws of such jurisdiction.
(vii) During a period of five (5) years after the
date hereof, the Company will furnish to its shareholders as soon as practicable
after the end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year, and will furnish to you and the other several Underwriters
hereunder, upon request (i) concurrently with furnishing such reports to its
shareholders, statements of operations of the Company for each of the first
three (3) quarters in the form furnished to the Company's shareholders, (ii)
concurrently with furnishing to its shareholders, a balance sheet of the Company
as of the end of such fiscal year, together with statements of operations, of
shareholders' equity, and of cash flows of the Company for such fiscal year,
accompanied by a copy of the certificate or report thereon of independent
certified public accountants, (iii) as soon as they are available, copies of all
reports (financial or other) mailed to shareholders, (iv) as soon as they are
available, copies of all reports and financial statements furnished to or filed
with the Commission, any securities exchange or the National Association of
Securities Dealers, Inc. ("NASD"), (v) every material press release and every
material news item or article in respect of the Company or its affairs which was
generally released to shareholders or prepared by the Company or any of its
subsidiaries, and (vi) any additional information of a public nature
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concerning the Company or its subsidiaries, or its business which you may
reasonably request. During such five (5) year period, if the Company shall have
active subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and its
subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary which is not so consolidated.
(viii) Without the prior written consent of the
Representatives, for a period of 180 days after the date of this Agreement, the
Company shall not issue, sell or register with the Commission, (except for any
registration 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 or exercisable 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 bonus plan. In the event that during this period, (i) any shares
are issued pursuant to the Company's existing stock option plan or bonus 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 the Representatives, 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 convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by such person.
(ix) On or before completion of this offering, the
Company shall make all filings required under applicable securities laws and by
the NASDAQ National Market System (including any required registration under the
Exchange Act).
(x) 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 Common 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
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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.
(xi) The Company will apply the net proceeds from the
sale of the Shares being sold by it in the manner set forth under the caption
"Use of Proceeds" in the Prospectus.
(xii) 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.
(xiii) If the transactions contemplated hereby are
not consummated by reason of any failure, refusal or inability on the part of
the Company or any Selling Stockholder 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 10, 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.
(xiv) 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 and the Selling Stockholder 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 electronic Prospectus, the Prospectus, all
amendments and supplements to the Registration Statement and the Prospectus, and
the printing, filing and distribution of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Underwriter's Questionnaire and
Power of Attorney and any instruments related to any of the foregoing; (ii) the
issuance and delivery of the Shares hereunder to the several Underwriters,
including transfer taxes, if any, and the cost of all certificates representing
the Shares and transfer agents' and registrars' fees; (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 7(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
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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 National Association of Securities
Dealers, Inc. in connection with its review of the terms of the public offering;
(vi) 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 7(A)(f); (vii) inclusion of the Shares for quotation on the
NASDAQ National Market System; (viii) the fees and disbursements of counsel for
the Company; (ix) all fees and other charges of the Company's independent
certified public accountants and (x) 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 10, 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.
8. 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 breach of any
representation, warranty, agreement or covenant of the Company herein or (ii)
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; 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 and the Selling Stockholder may
otherwise have.
(b) The Selling Stockholder 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,
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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 breach of any representation, warranty,
agreement or covenant of the Company herein or (ii) 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; 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 and the Selling Stockholder may otherwise have.
The liability of the Selling Stockholder under the representations, warranties
and agreements contained herein and under the indemnity agreements contained in
the provisions of this Section 8 shall be limited to an amount equal to the
initial public offering price of the Shares, if any, sold by the Selling
Stockholder to the Underwriters minus the amount of the underwriting discount
paid thereon to the Underwriters by the Selling Stockholder. The Company and the
Selling Stockholder may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
(c) 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 Section 15 of the Securities Act or Section 20 of
the Exchange Act, the Selling Stockholder and 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 and the Selling Stockholder
to each Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon (i) any breach of any representation,
warranty, agreement or covenant of the Company herein or (ii) 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) shall be limited to the net
proceeds received by the Company from such Underwriter.
(d) Any party that proposes to assert the right to be
indemnified under this Section 8 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
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such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 8(a) or 8(b) shall be available to any
party who shall fail to give notice as provided in this Section 8(d) 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 8. 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 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.
(e) The parties to this Agreement hereby acknowledge
that they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 8, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the Securities Act
and the Exchange Act.
9. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 8(a) is due in accordance with its terms but for any reason is
held to be unavailable from the Company or the Selling Stockholder, the Company,
the Selling Stockholder, and the Underwriters 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 the Company or the Selling Stockholder
from persons other than the Underwriters, such as persons who control the
Company within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement and directors of the Company, who may also be
liable for contribution) to which the Company, the Selling Stockholder and one
or more of the
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Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder 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 8 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 and the Selling Stockholder 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 and the Selling Stockholder 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 Selling Stockholder or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 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 9, (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, and (ii) the Company and the Shareholder 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 9, 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 9. 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 9 are several in proportion
to their respective underwriting commitments and not joint.
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10. 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. or on the American Stock Exchange, Inc. 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 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
(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.
11. 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 10) 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:
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(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 this Section 11 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 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 7, 8, 9
and 10. 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.
12. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers, the
Selling Stockholder 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, the Selling Stockholder
or the Company or any of the officers, directors or controlling persons referred
to in Sections 8 and 9 hereof, and shall survive delivery of and payment for the
Shares. The provisions of Sections 7, 8, 9 and 10 shall survive the termination
or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Selling Stockholder 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, 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.
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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 or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC Xxxxxxxxxxx Corp., CIBC
Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
Xxxxxxx X. Xxxxx, (b) if to the Selling Stockholder, to the Company as the
Company's address appears on the cover page of the Registration Statement and
(c) if to the Company, to its 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.
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
CRL Network Services, Inc.
By:
-------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
Confirmed:
------------------------------------------------------------------------------
CIBC Xxxxxxxxxxx Corp. Xxxxxx Brothers, Inc.
----------------------------------- ---------------------------------
Acting severally on behalf of itself Acting severally on behalf of itself
and as a representative of the several and as a representative of the several
Underwriters named in Schedule I Underwriters named in Schedule I annexed
annexed hereto. hereto.
CIBC Xxxxxxxxxxx Corp. Xxxxxx Brothers, Inc.
By By
-------------------------------- ---------------------------------
Title: Title:
------------------------------------------------------------------------------
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- ------------
CIBC Xxxxxxxxxxx Corp.
Xxxxxx Brothers, Inc.
------------
Total
------------
31
