EXHIBIT 1.1
[ ] Shares
ITXC Corp.
Common Stock
UNDERWRITING AGREEMENT
----------------------
[________], 1999
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
First Analysis Securities Corporation,
As Representatives of the several
Underwriters named in Schedule 1 hereto,
c/x Xxxxxx Brothers Inc.
Three World Financial Center
New York New York 10285
Xxxxxx Brothers International (Europe)
CIBC World Markets International Limited
First Analysis Securities Corporation,
As Representatives of the several
Underwriters named in Schedule 2 hereto,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
ITXC Corp., a Delaware corporation (the "Company"), proposes to sell
an aggregate of [ ] shares (the "Firm Stock") of the Company's Common
Stock, par value $0.001 per share (the "Common Stock").
It is understood that, subject to the conditions hereinafter stated,
an aggregate of [ ] shares of the Firm Stock (the "U.S. Firm Stock")
will be sold by the Company to the several U.S. Underwriters named in Schedule 1
hereto (the "U.S. Underwriters") in connection with the offering and sale of
such U.S. Firm Stock in the United States and Canada to United States and
Canadian Persons (as such terms are defined in the Agreement Between U.S.
Underwriters and International Underwriters of even date herewith), and
[ ] shares of the
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Firm Stock (the "International Firm Stock") will be sold by the Company to the
several International Underwriters named in Schedule 2 hereto (the
"International Underwriters") in connection with the offering and sale of such
International Firm Stock outside the United States and Canada to persons other
than United States and Canadian Persons. Xxxxxx Brothers Inc., CIBC World
Markets Corp. and First Analysis Securities Corporation shall act as
representatives (the "U.S. Representatives") of the several U.S. Underwriters,
and Xxxxxx Brothers International (Europe), CIBC World Markets International
Limited and First Analysis Securities Corporation shall act as representatives
(the "International Representatives") of the several International Underwriters.
The U.S. Underwriters and the International Underwriters are hereinafter
collectively referred to as the "Underwriters." The U.S. Representatives and the
International Representatives are hereinafter collectively referred to as the
"Representatives."
In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an aggregate of [ ] additional shares of the
Common Stock on the terms and for the purposes set forth in Section 2 (the
"Option Stock"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "Stock." This is to confirm the agreement
concerning the purchase of the Stock from the Company by the Underwriters.
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 and one or more amendments
thereto with respect to the Stock have (i) been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii) become
effective under the Securities Act. The registration statement contains two
prospectuses to be used in connection with the offering and sale of the Stock:
the U.S. prospectus, to be used in connection with the offering and sale of
Stock in the United States and Canada to United States and Canadian Persons, and
the international prospectus, to be used in connection with the offering and
sale of Stock outside the United States and Canada to persons other than United
States and Canadian Persons. The international prospectus is identical to the
U.S. prospectus except for the outside front cover page. Copies of such
registration statement and each of the amendments thereto have been delivered by
the Company to you. As used in this Agreement, "Effective Time" means the date
and the time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or amendments
thereof, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part of
the registration statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations; and "Prospectus" means the U.S. prospectus and the
international prospectus in the
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respective forms first used to confirm sales of Stock. If the Company has filed
an abbreviated registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein.
(c) The Company and each of its subsidiaries (as defined in Section
15) have (i) been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of incorporation,
(ii) are duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires such
qualification, and (iii) have all power and authority necessary to own or hold
their respective properties and to conduct the businesses in which they are
engaged, except, in the case of clauses (ii) and (iii), where the failure to so
qualify and be in good standing as a foreign corporation or have such power or
authority could not, singularly or in the aggregate, reasonably be expected to
have a material adverse effect on the general affairs, management, consolidated
financial position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"); the Company has no subsidiaries other than ITXC Data Transport
Services LLC, a Delaware limited liability company (the "Domestic Subsidiary"),
and ITXC Asia PTE Ltd., a Singapore company; and none of the subsidiaries of the
Company is a "significant subsidiary", as such term is defined in Rule 405 of
the Rules and Regulations.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform in all material respects to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock or membership
interests, as the case may be, of each subsidiary of the Company have been duly
and validly authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by the
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Company, free and clear of all liens, encumbrances, equities or claims, other
than liens securing the Credit Agreement, dated as of August 20, 1998 (the
"Credit Agreement"), between the Company and PNC Bank, National Association.
(e) The shares of the Stock to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein will be duly
and validly issued, fully paid and non-assessable; and the Stock will conform in
all material respects to the description thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(g) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of (i) the certificate of incorporation (or other
equivalent organizational document) or by-laws (or other equivalent
organizational document) of the Company or any of its subsidiaries or (ii) any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets; and except for the registration of the Stock under
the Securities Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and applicable state or foreign securities laws
or by the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby.
(i) Except as set forth in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right (other than rights which have been waived or
satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
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securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(j) Except as set forth in the Registration Statement, the Company
has not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act other than shares issued
pursuant to employee benefit plans, stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(k) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since such date, there
has not been any material change in the capital stock or long-term debt of the
Company and its subsidiaries on a consolidated basis or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(l) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The other financial information and data filed as part of the
Registration Statement or included in the Prospectus is fairly presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(m) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who have
delivered the initial letter referred to in Section 7(g) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(n) The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects, except such as are described in the Prospectus or such
as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; all assets held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries taken as a whole.
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(o) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar businesses in similar
industries.
(p) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service xxxx registrations,
copyrights and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective businesses
will conflict with, and have not received any notice of any claim of conflict
with, any such rights of others, in each case except as could not reasonably be
expected to have a Material Adverse Effect.
(q) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries could reasonably
be expected to have a Material Adverse Effect; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(r) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement.
(s) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, shareholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus which is not so described.
(t) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is imminent, which could reasonably be expected
to have a Material Adverse Effect.
(u) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any material liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and,
to the best of the Company's knowledge, nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
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(v) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes due thereon, and no tax deficiency has been determined adversely to
the Company or any of its subsidiaries which has had (nor does the Company have
any knowledge of any tax deficiency which, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to have) a
Material Adverse Effect.
(w) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities (other than
shares of Common Stock issued upon the exercise of options described in the
Prospectus), (ii) incurred any material liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred in the
ordinary course of business, (iii) entered into any material transaction not in
the ordinary course of business or (iv) declared or paid any dividend on its
capital stock.
(x) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(y) Neither the Company nor any of its subsidiaries (i) is in
violation of its certificate of incorporation (or other equivalent
organizational document) or by-laws (or other equivalent organizational
document), (ii) is in default in any respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in any respect of any
law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business except, in
the case of clauses (ii) and (iii), for such defaults, violations and failures
which could not, singularly or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(z) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
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(aa) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably expected to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(bb) Neither the Company nor any subsidiary is, or upon application
of the net proceeds from the sale of the Stock as set forth in the Prospectus,
will be, an "investment company" as defined in the Investment Company Act of
1940, as amended.
(cc) Any reprogramming required to permit the proper functioning, in
and following the year 2000, of (i) the Company's computer systems and (ii)
equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Company's systems interface) and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by September 30, 1999. The cost to the Company of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Company (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Material Adverse Effect.
Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of the Company
and its subsidiaries are and, with ordinary course upgrading and maintenance,
will continue to be, sufficient to permit the Company to conduct its business
without a Material Adverse Effect.
SECTION 2. Purchase of the Stock by the Underwriters. On the basis
of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell [___________] shares
of the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set forth opposite that Underwriter's name in Schedule 1 and 2 hereto.
The respective purchase obligations of the Underwriters with respect to the Firm
Stock
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shall be rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to [_________] shares of the Option Stock. Such options are granted
solely for the purpose of covering over-allotments in the sale of Firm Stock and
are exercisable as provided in Section 4 hereof. Shares of Option Stock shall
be purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set forth opposite the name of such Underwriters
in Schedule 1 hereto. The respective purchase obligations of each Underwriter
with respect to the Option Stock shall be adjusted by the Representatives so
that no Underwriter shall be obligated to purchase Option Stock other than in
100 share amounts.
The price of both the Firm Stock and any Option Stock shall be
$[________] per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), except upon payment for
all the Stock to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Stock by the Underwriters. Upon authorization
by the Representatives of the release of the Firm Stock, the several
Underwriters propose to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.
It is understood that [_______] shares of the Firm Stock will
initially be reserved by the several Underwriters for offer and sale upon the
terms and conditions set forth in the Prospectus and in accordance with the
rules and regulations of the National Association of Securities Dealers, Inc. to
employees and persons having business relationships with the Company and its
subsidiaries who have heretofore delivered to the Representatives offers or
indications of interest to purchase shares of Firm Stock in form satisfactory to
the Representatives, and that any allocation of such Firm Stock among such
persons will be made in accordance with timely directions received by the
Representatives from the Company; provided, that under no circumstances will the
Representatives or any Underwriter be liable to the Company or to any such
person for any action taken or omitted in good faith in connection with such
offering to employees and persons having business relationships with the Company
and its subsidiaries. It is further understood that any shares of such Firm
Stock which are not purchased by such persons will be offered by the
Underwriters to the public upon the terms and conditions set forth in the
Prospectus.
Each U.S. Underwriter agrees that, except to the extent permitted by
the Agreement Between U.S. Underwriters and International Underwriters, it will
not offer or sell any of the Stock outside the United States.
SECTION 4. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx Xxx Xxxx 00000, at 10:00 A.M., New York
City time, on the [third] [fourth]
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full business day following the date of this Agreement or at such other date or
place as shall be determined by agreement between the Representatives and the
Company. This date and time are sometimes referred to as the "First Delivery
Date." On the First Delivery Date, the Company shall deliver or cause to be
delivered certificates representing the Firm Stock to the Representatives for
the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in such
names and in such denominations as the Representatives shall request in writing
not less than two full business days prior to the First Delivery Date. For the
purpose of expediting the checking and packaging of the certificates for the
Firm Stock the Company shall make the certificates representing the Firm Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to the First
Delivery Date.
The option granted in Section 2 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date".
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock owned by
it to the Representatives for the account of each Underwriter against payment to
or upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to such Second
Delivery Date.
SECTION 5. Further Agreements of the Company. The Company agrees:
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(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Stock or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Representatives and, upon their request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the Representatives, be
required by the Securities Act or requested by the Commission;
12
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing, which consent shall not be unreasonably
delayed or withheld;
(f) As soon as practicable after the Effective Date (it being
understood that the Company shall have until at least November 14, 2000), to
make generally available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 1l(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) Upon the request of the Representatives, for a period of two
years following the Effective Date, to furnish to the Representatives copies of
all materials furnished by the Company to its shareholders generally and all
public reports and all reports and financial statements furnished by the Company
to the principal national securities exchange upon which the Common Stock may be
listed pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of the
Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation, to submit
to general taxation or to file a general consent to service of process in any
jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than (v) the Stock, (w) shares issued pursuant to
employee benefit plans, stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights, (x) shares issued upon conversion of the Company's
outstanding preferred stock (provided that any holder of such shares shall
furnish to the Representatives at or prior to the time of such issuance a letter
in the form of Exhibit A hereto), (y) shares issued upon exercise by the Company
of its call rights under its agreements relating to ITXC Comunicacoes Ltda.
(provided, that any holder of shares of Common Stock or substantially similar
securities or securities convertible or exchangeable for Common Stock or
substantially similar securities, in each case issuable upon the exercise of
such rights, shall furnish to the Representatives at or prior to the time of
such issuance a letter in the form of Exhibit A hereto) or (z) shares issued in
a private placement transaction (provided, that such shares shall not be
publicly resold during the period of 180 days after the date of the Prospectus;
provided, further, that the holder of shares issued in such a transaction shall
furnish to the Representatives at or prior to the time of such
13
issuance a letter in the form of Exhibit A hereto) or substantially similar
securities, or sell or grant options, rights or warrants with respect to any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock or substantially similar securities (other than the grant of options
pursuant to option plans existing on the date hereof), or (2) enter into any
swap or other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of Xxxxxx Brothers
Inc. on behalf of the Underwriters; and to cause each shareholder of the Company
owning at least [_______] shares of Common Stock or common stock equivalents and
each officer and director of the Company, to furnish to the Representatives,
prior to the First Delivery Date, a letter or letters, substantially in the form
of Exhibit A hereto.
(j) To apply for the inclusion of the Stock in the National Market
System, and to use its best efforts to complete that process, subject only to
official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock as set forth
in the Prospectus;
(l) To take such steps as shall be necessary to ensure that neither
the Company nor any subsidiary shall become an "investment company" as defined
in the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder; and
(m) During the period of 180 days from the date of the Prospectus,
(i) to obtain from each person that exercises options to purchase shares of
Common Stock an executed letter in the form of Exhibit A hereto and a stock
option exercise notice in the form of Exhibit B hereto and (ii) to not amend
such stock option exercise notice in a manner adverse to the Representatives
without the prior consent of Xxxxxx Brothers Inc.
SECTION 6. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of reproducing and
distributing this Agreement, the Agreement Between U.S. Underwriters and
International Underwriters, any Supplemental Agreement Among U.S. Underwriters
and any other related documents in connection with the offering, purchase, sale
and delivery of the Stock; (e) the filing fees incident to securing the review
by the National Association of Securities Dealers, Inc. of the terms of sale of
the Stock; (f) any applicable listing or other fees; (g) the fees and expenses
of qualifying the Stock under the securities laws of the several jurisdictions
as provided in Section 5(h) and of preparing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the
14
Underwriters); (h) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Stock including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show and (i) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement; provided that, except as provided in this Section
6 and in Section 11, the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the Underwriters.
SECTION 7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject (x) to the accuracy when
made and on each Delivery Date, of the representations and warranties of the
Company contained herein (provided that, in the case of this clause (x), the
obligations of the Underwriters hereunder shall be subject to the accuracy in
all material respects of those representations and warranties that are not
qualified as to materiality), (y) to the performance by the Company of its
obligations hereunder and (z) to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 5(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
(d) Xxxxxxxxxx Xxxxxxx PC shall have furnished to the Representatives
its written opinion, as counsel to the Company, addressed to the Underwriters
and dated such Delivery Date, in form and substance reasonably satisfactory to
the Representatives, to the effect that:
15
(i) Each of the Company and the Domestic Subsidiary (A) has been duly
organized and is validly existing as a corporation (in the case of the
Company) or limited liability company (in the case of the Domestic
Subsidiary) in good standing under the laws of its jurisdiction of
organization, (B) is duly qualified to do business and is in good standing
as a foreign corporation (in the case of the Company) or limited liability
company (in the case of the Domestic Subsidiary) in each jurisdiction in
which its ownership or lease of property or the conduct of its business
requires such qualification and (C) has all power and authority necessary
to own or hold its properties and conduct the business in which it is
engaged, except, in the case of clauses (B) and (C), where the failure to
be so qualified and to be in good standing as a foreign corporation or to
have such power or authority could not, singularly or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the shares of Stock being delivered on such Delivery Date) have
been duly and validly authorized and issued, are fully paid and non-
assessable and conform in all material respects to the description thereof
contained in the Prospectus; the Company is the sole member of the Domestic
Subsidiary, which is organized as a limited liability company, and the
Company holds such membership interest free and clear of all liens,
encumbrances, equities or claims, other than liens securing the Credit
Agreement;
(iii) There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any shares of
the Stock pursuant to the Company's charter or by-laws or any agreement or
other instrument known to such counsel;
(iv) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse
Effect; and, to the best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(v) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion; the
Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) of the Rules and Regulations specified in such opinion on the
date specified therein and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceeding for that purpose is pending or threatened by the
Commission;
(vi) The Registration Statement, as of its effective date, and the
Prospectus, as of its date, and any further amendments or supplements
thereto made by the Company prior
16
to such Delivery Date (except for the financial statements, the notes
thereto, supporting schedules and other financial or statistical data
included therein or omitted therefrom, as to which such counsel need
express no opinion) complied as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations;
(vii) The statements contained in the Prospectus under the captions
"Certain U.S. Federal Income Tax Considerations to Non-U.S. Holders",
insofar as they describe federal statutes, rules and regulations,
constitute a fair summary thereof;
(viii) The statements contained in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute
summaries of the terms of the Company's capital stock (including the Stock)
constitute accurate summaries of the terms of such capital stock in all
material respects;
(ix) To the best of such counsel's knowledge, there are no contracts
or other documents which are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations which have not been described or filed as
exhibits to the Registration Statement;
(x) This Agreement has been duly authorized, executed and delivered
by the Company;
(xi) The issue and sale of the shares of Stock being delivered on
such Delivery Date by the Company pursuant to this Agreement, and the
execution, delivery and compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument identified on the schedule annexed to such
counsel's opinion furnished to such counsel by the Company and which the
Company has represented lists all material agreements and instruments to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of (i) the
certificate of incorporation (as amended through such Delivery Date) or by-
laws (as amended through such Delivery Date) of the Company or the
organizational documents of the Domestic Subsidiary or (ii) any statute,
rule or regulation or any order known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets; and except for the
registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state or foreign securities
laws or by the NASD in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the
17
transactions contemplated hereby, other than such consents, approvals,
authorizations, orders, filings and registrations as have been made or
obtained;
(xii) To the best of such counsel's knowledge, except as otherwise
disclosed in the Registration Statement, there are no contracts, agreements
or understandings between the Company and any person granting such person
the right (other than rights which have been waived or satisfied) to
require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act; and
(xiii) Neither the Company nor the Domestic Subsidiary is an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New Jersey and the General Corporation Law of the State
of Delaware and that such counsel is not admitted in the State of Delaware. The
opinion of Xxxxxxxxxx Xxxxxxx PC shall also be to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis (other than with
respect to certain regulatory matters), has acted as counsel to the Company in
connection with previous financing transactions and has acted as counsel to the
Company in connection with the preparation of the Registration Statement, (y)
such counsel has participated in conferences with officials and other
representatives of the Company, the Representatives, counsel to the Underwriters
and the Company's independent certified public accountants, at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and (z) based on the foregoing, together with such counsel's
examination of the Registration Statement and the Prospectus and its
investigations made in connection with the preparation of the Registration
Statement and the Prospectus, no facts have come to the attention of such
counsel which lead it to believe that, as of the Effective Date, the
Registration Statement (other than the financial statements, the notes thereto,
supporting schedules and other financial or statistical data included therein or
omitted therefrom, as to which such counsel need express no opinion) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that, as of its date and the applicable Delivery
Date, the Prospectus (other than the financial statements, the notes thereto,
supporting schedules and other financial or statistical data included therein or
omitted therefrom, as to which such counsel need express no opinion) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as set forth in clauses
(vii) and (viii) above).
18
(e) Xxxxxxx Berlin Shereff Xxxxxxxx, LLP shall have furnished to the
Representatives its written opinion, as special regulatory counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect that the
statements contained in the Prospectus under the captions "Our Business --
Government Regulation" and "Risk Factors -- We may be subject to government
regulation and legal uncertainties which could harm us", to the extent such
statements constitute a summary of the United States federal laws, rules and
regulations referred to therein, have been reviewed by such counsel and
accurately describe in all material respects such United States federal laws,
rules and regulations.
(f) The Representatives shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(h) With respect to the letter of Ernst & Young LLP referred to in
the preceding paragraph and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii) confirming
in all material respects the conclusions and findings set forth in the initial
letter.
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board and its
chief financial officer stating that:
19
(i) The representations, warranties and agreements of the Company in
Section 1 are true and correct as of such Delivery Date (provided that such
representations, warranties and agreements that are not qualified as to
materiality shall be true in all material respects); the Company has
complied with all its agreements contained herein; and the conditions set
forth in Sections 7(a) and 7(j) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and the Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (B) since the Effective Date no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(j) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus (i) any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii) since such date
there shall not have been any change in the capital stock or long-term debt of
the Company and its subsidiaries on a consolidated basis or any adverse change,
or any development involving a prospective adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
20
(l) The National Market System shall have approved the Stock for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.
(m) The Representatives shall have received from each shareholder of
the Company owning at least [______] shares of Common Stock or common stock
equivalents and from each officer and director of the Company, an executed
letter in the form of Exhibit A pursuant to Section 5(i) hereto.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter,
its officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky application, any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter and each
such officer, employee or controlling person promptly upon demand for any legal
or other expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section 8(e);
21
and provided further that as to any Preliminary Prospectus, this indemnity
agreement shall not inure to the benefit of any Underwriter, its officers or
employees, or any person controlling that Underwriter, on account of any loss,
claim, damage, liability or action arising from the sale of Stock to any person
by that Underwriter if that Underwriter failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to that person within
the time required by the Securities Act, and the untrue statement or alleged
untrue statement of any material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in the Prospectus,
unless such failure resulted from non-compliance by the Company with Section
5(c). The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to any Underwriter or to any officer, employee or
controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Representatives by or on behalf of that
Underwriter specifically for inclusion therein, and shall reimburse the Company
and any such director, officer or controlling person for any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate
22
therein and, to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgement of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the Representatives if the
indemnified parties under this Section 8 consist of any Underwriter or any
Underwriter's officers, employees or controlling persons, or by the Company, if
the indemnified parties under this Section consist of the Company or any of the
Company's directors, officers, employees or controlling persons. No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise, consent or judgment includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding, or (ii) be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably withheld),
but if settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the
23
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Stock or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the shares of the Stock purchased under this Agreement on the other
hand bear to the total gross proceeds from the offering of the shares of the
Stock under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section were to be
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 into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth in the third sentence of the first paragraph and in the
last paragraph of the cover page of and contained in paragraphs 3, 6, 7, 8, 13,
14, 15, 16, 17 and 18 under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus.
24
SECTION 9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1 or
Schedule 2 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting Underwriters in Schedule
1 or Schedule 2 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the foregoing maximums are exceeded and the remaining
Underwriters or other underwriters satisfactory to the Representatives do not
elect to purchase the shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such Delivery Date, this Agreement (or, with
respect to the Second Delivery Date, the obligation of the Underwriters to
purchase, and of the Company to sell, the Option Stock) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 6 and 11. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 or 2 hereto who, pursuant
to this Section 9, purchases Firm Stock which a defaulting Underwriter agreed
but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 7(j) or 7(k), shall
have occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
25
SECTION 11. Reimbursement of Underwriters' Expense. If the Company
shall fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
incurred by the Underwriters in connection with this Agreement and the proposed
purchase of the Stock and upon demand the Company shall pay the full amount
thereof to the Representatives. If this Agreement is terminated pursuant to
Section 9 by reason of the default of one or more Underwriters, the Company
shall not be obligated to reimburse any defaulting Underwriter on account of
those expenses.
SECTION 12. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to Xxxxxx Brothers Inc., Three World Financial Center,
New York New York 10285, Attention: Syndicate Department (Fax: 000-000-0000),
with a copy, in the case of any notice pursuant to Section 8(c), to the Director
of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., Three World
Financial Xxxxxx, 00xx Xxxxx, Xxx Xxxx XX 00000;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxxxx X. Xxxxxx, (Fax: (609) 419-15ll),
with a copy to Xxxxx X. Xxxxxxxxx, Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 (fax: 000-000-0000);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Xxxxxx Brothers Inc. on behalf of the
Representatives.
SECTION 13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
and their respective representatives and successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of Section 15 of the Securities Act and (B) the indemnity agreement of
the Underwriters contained in Section 8(b) of this Agreement shall be deemed to
be for the benefit of directors, officers and employees of the Company, and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
26
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
SECTION 14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
SECTION 15. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 17. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
27
If the foregoing correctly sets forth the agreement among the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
ITXC Corp.
By
---------------------------------
Name:
Title:
Accepted:
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
First Analysis Securities Corporation
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By Xxxxxx Brothers Inc.
By
------------------------------
Authorized Representative
Xxxxxx Brothers International (Europe)
CIBC World Markets International Limited
First Analysis Securities Corporation
For themselves and as Representatives
of the several Underwriters name
in Schedule 2 hereto
By Xxxxxx Brothers International (Europe)
By
------------------------------
Authorized Representative
SCHEDULE 1
U.S. Underwriters
----------------- Number of Shares of Firm
Stock to be Purchased
------------------------
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
First Analysis Securities Corporation
[Names of other U.S. Underwriters]
Total
===========
SCHEDULE 2
International Underwriters
-------------------------- Number of Shares of
International
Firm Stock to be Purchased
-------------------------------
Xxxxxx Brothers International (Europe)
CIBC World Markets International Limited
First Analysis Securities Corporation
[Names of other International Underwriters]
Total
===========
