EXHIBIT 1.1
2,067,500 Shares
METRO ONE TELECOMMUNICATIONS, INC.
Common Stock
UNDERWRITING AGREEMENT
November __, 1999
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxxxx & Company, Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule II attached hereto.
Ladies and Gentlemen:
Metro One Telecommunications, Inc., an Oregon corporation (the
"Company"), and the several shareholders of the Company listed in Schedule I
hereto (the "Selling Shareholders," each a "Selling Shareholder"), propose,
subject to the terms and conditions contained herein, to sell to you and the
other underwriters named on Schedule II to this Agreement (the "Underwriters"),
for whom you are acting as Representatives (the "Representatives"), an aggregate
of 2,067,500 shares (the "Firm Shares") of the Company's Common Stock, no par
value (the "Common Stock"). Of the 2,067,500 Firm Shares, 2,000,000 are to be
issued and sold by the Company and 67,500 are to be sold by the Selling
Shareholders. The respective amounts of the Firm Shares to be purchased by each
of the several Underwriters are set forth opposite their names on Schedule II
hereto. In addition, the Company proposes to grant to the Underwriters an option
to purchase up to an additional 310,125 shares (the "Option Shares") of Common
Stock from it for the purpose of covering over-allotments in connection with the
sale of the Firm Shares. The Firm Shares and the Option Shares are together
called the "Shares."
1. SALE AND PURCHASE OF THE SHARES.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
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(a) The Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a price of $_____ per share (the "Initial
Price"), the number of Firm Shares set forth opposite the name of such
Underwriter under the column "Number of Firm Shares to be Purchased
from the Company" on Schedule II to this Agreement, subject to
adjustment in accordance with Section 11 hereof. Each of the Selling
Shareholders agrees to sell to the Underwriters the number of Firm
Shares set forth opposite his name on Schedule I, and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Selling Shareholders, at the Initial Price, the number of Firm Shares
set forth opposite the name of such Underwriter under the column
"Number of Firm Shares to be Purchased from the Selling Shareholders"
on Schedule II to this Agreement, subject to adjustment in accordance
with Section 11 hereof.
(b) The Company grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The 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 from time to time
thereafter within 30 days after the date of this Agreement, in each
case upon written, facsimile or telegraphic notice, or verbal or
telephonic notice confirmed by written, facsimile 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 Shareholders of the Firm Shares to the Representatives for the
respective accounts of the Underwriters, and payment of the purchase price by
wire transfer of New York Clearing House (same day) funds to the Company for the
shares purchased from the Company and to each Selling Shareholder for the shares
purchased from that Selling Shareholder, against delivery of the respective
certificates therefor to the Representatives, shall take place at the offices of
CIBC World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 a.m., New York City time, on the third business day following the date
of this Agreement, 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").
In the event the option with respect to the Option Shares is
exercised in whole or in part on one or more occasions, delivery by the Company
of the Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price thereof in immediately available
funds by wire transfer of New York Clearing House (same day) funds to the
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Company shall take place at the offices of CIBC World Markets Corp. specified
above at the time and on the date (which may be the same date as, but in no
event shall be earlier than, the Firm Shares Closing Date) specified in the
notice referred to in Section 1(b) (such time and date of delivery and payment
are called the "Option Shares Closing Date"). The Firm Shares Closing Date and
the Option Shares Closing Date are called, individually, a "Closing Date" and,
together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request at
least two full business days before the Firm Shares Closing Date or, in the case
of Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared and filed 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 (as hereinafter
defined) on Form S-3 (No. 333-89493), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related Preliminary Prospectus (as hereinafter
defined) have heretofore been delivered by the Company to you. The term
"Preliminary Prospectus" means any preliminary prospectus (as described in Rule
430 of the Rules) included at any time as a part of the Registration Statement
or filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules. The term "Registration
Statement" as used in this Agreement means the initial registration statement
(including all exhibits, financial schedules and information deemed to be a part
of the Registration Statement through incorporation by reference or otherwise),
as amended at the time and on the date it becomes effective (the "Effective
Date") including the information (if any) deemed to be part thereof at the time
of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules.
The Company and the Selling Shareholders understand 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 and the
Selling Shareholders hereby confirm 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).
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby, represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any
post-effective amendment to the Registration Statement becomes
effective, the date any supplement or amendment to the Prospectus is
filed with the Commission and each Closing Date, the Registration
Statement and the Prospectus (and any amendment thereof or supplement
thereto) will comply, in all material respects, with the applicable
provisions of the Securities Act and the Rules and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the Effective Date and 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, none of the representations and
warranties in this Section 4(a) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus.
With respect to the preceding sentence, the Company acknowledges that
the only information furnished in writing by the Representatives on
behalf of the several Underwriters for use in the Registration
Statement or the Prospectus is the statements contained under the
caption "Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued and no proceedings for that
purpose have been instituted or are threatened under the Securities
Act. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules has been or will be made in the
manner and within the time period required by such Rule 424(b).
(c) The documents incorporated by reference in the
Registration Statement and the Prospectus, at the time they were filed
with the Commission, complied in all material respects with the
requirements of the Exchange Act and, when read together and with the
other information in the Registration Statement and the Prospectus, do
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or
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necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference in
the Registration Statement and Prospectus present fairly the financial
position, the results of operations, the statements of cash flows and
the statements of shareholders' equity and the other information
purported to be shown therein of the Company at the respective dates
and for the respective periods to which they apply; and such financial
statements and related schedules and notes have been prepared in
conformity with generally accepted accounting principles, consistently
applied throughout the periods involved, and all adjustments necessary
for a fair presentation of the results for such periods have been made.
The summary and selected financial data included in the Prospectus
present fairly the information shown therein as at the respective dates
and for the respective periods specified and the summary and selected
financial data have been presented on a basis consistent with the
consolidated financial statements so set forth in the Prospectus and
other financial information.
(e) 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.
(f) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon.
The Company has no subsidiary or subsidiaries and does not control,
directly or indirectly, any corporation, partnership, joint venture,
association or other business organization. The Company is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business
conducted by it or location of the assets or properties owned, leased
or licensed by it requires such qualification, 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 (a "Material Adverse
Effect"). Except as set forth on Schedule 4(h) to this Agreement, the
Company does not own, lease or license any asset or property or conduct
any business outside the United States of America. The Company has all
requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity (collectively, the "Permits"), to own, lease and
license its assets and properties and conduct its business, all of
which are valid and in full force and effect, as described in the
Registration Statement and the Prospectus, except where the lack of
such Permits, individually or in the aggregate, would not have a
Material Adverse Effect. The Company has fulfilled and performed in all
material respects all of its material obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the Company thereunder.
Except as may be required under the Securities Act and state and
foreign Blue Sky laws, no other Permits are required to enter into,
deliver and perform this Agreement and to issue and sell the Shares.
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(g) The Company owns or possesses adequate and enforceable
rights to use all patents, trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge
(collectively, "Intangibles") described in the Prospectus as being
owned by it necessary for the conduct of its business. The Company has
not received any notice of, or is not aware of, any infringement of or
conflict with asserted rights of others with respect to any
Intangibles.
(h) The Company owns no real property and has good and
marketable title to all personal property described in the Prospectus
as being owned by it. Any real property and buildings described in the
Prospectuses as being held under lease by the Company is held by it
under valid, existing and enforceable leases, free and clear of all
liens, encumbrances, claims, security interests and defects, except
such as are described in the Registration Statement and the Prospectus
or would not have a Material Adverse Effect.
(i) There are no litigation or governmental proceedings to
which the Company is subject or which is pending or, to the knowledge
of the Company, threatened, against the Company, which, individually or
in the aggregate, would have a Material Adverse Effect, affect the
consummation of this Agreement or which is required to be disclosed in
the Registration Statement and the Prospectus that is not so disclosed.
(j) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, (a) there has not been any material adverse change
with regard to the assets or properties, business, results of
operations or financial condition of the Company; (b) the Company has
not sustained any 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 which would have a Material Adverse Effect; and
(c) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein,
the Company has not (i) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(ii) entered into any transaction not in the ordinary course of
business or (iii) declared or paid any dividend or made any
distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its stock.
(k) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described, incorporated by reference or filed as required
by the Securities Act or the Rules. Each description of a contract,
document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all material respects the terms of
the underlying document, contract or agreement. Each agreement
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described in the Registration Statement and Prospectus or listed in the
Exhibits to the Registration Statement or incorporated by reference is
in full force and effect and is valid and enforceable by and against
the Company in accordance with its terms. Neither the Company, nor to
the Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by
it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any
such case which default or event, individually or in the aggregate,
would have a Material Adverse Effect. No default exists, and no event
has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company of any other agreement or
instrument to which the Company is a party or by which it or its
properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
(l) The Company is not in violation of any term or provision
of its charter or by-laws or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation, individually or in the aggregate, would
have a Material Adverse Effect.
(m) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or provision of,
or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or
waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company is a party or by
which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or violate any provision of the
charter or by-laws of the Company, except for (i) such rights to
terminate or accelerate, conflicts, breaches, defaults, executions,
impositions or violations which, in the aggregate, would not result in
a Material Adverse Effect and (ii) such consents or waivers which have
already been obtained and are in full force and effect or, if not
obtained, would not result in a Material Adverse Effect.
(n) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable. There are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any
such rights pursuant to its Third Restated Articles of Incorporation or
by-laws or any agreement or instrument to or by which the Company is a
party or bound, other than as disclosed in the Preliminary Prospectus
dated November 2, 1999. The Shares, when
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issued and sold pursuant to this Agreement, will be duly and validly
issued, fully paid and nonassessable and none of them will be issued
in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, or exercisable
or exchangeable for, such stock. The Common Stock and the Shares
conform in all material respects to all statements in relation thereto
contained in the Registration Statement and the Prospectus.
(o) No holder of any security of the Company has a right
(other than a right which has been waived) to have any security owned
by such holder included in the Registration Statement (other than the
shares included in the Registration Statement) or to cause the Company
to initiate registration of any security owned by such holder during
the period ending 90 days after the date of this Agreement. Each
director of the Company, each officer of the Company at or above the
vice president level, and each Selling Shareholder has delivered to the
Representatives his enforceable written lock-up agreement in the form
attached to this Agreement ("Lock-Up Agreement").
(p) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
by the Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will
constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(q) The Company is not involved in any labor dispute nor, to
the knowledge of the Company, is any such dispute threatened, which
dispute would have a Material Adverse Effect. The Company is not aware
of any threatened or pending litigation between the Company and any of
its executive officers which, if adversely determined, could have a
Material Adverse Effect.
(r) No transaction has occurred between or among the Company
and any of its officers, directors or 5% shareholders or any affiliate
or affiliates of any such officer, director or 5% shareholders that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which would reasonably be
expected to cause or result in, or which has constituted or which would
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.
(t) 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
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same are material and have become due. There are no tax audits or
investigations pending, which if adversely determined would have a
Material Adverse Effect; nor are there any material proposed additional
tax assessments against the Company.
(u) The Shares have been duly authorized for quotation on the
Nasdaq National Market, subject to official Notice of Issuance. A
registration statement has been filed on Form 8-A pursuant to Section
12 of the Exchange Act, which registration statement complies in all
material respects with the Exchange Act.
(v) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(w) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which it is engaged or propose to engage
after giving effect to the transactions described in the Prospectus;
all policies of insurance and fidelity or surety bonds insuring the
Company or its business, assets, employees, officers and directors are
in full force and effect; the Company is in compliance with the terms
of such policies and instruments in all material respects; and the
Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect. To the best of the Company's knowledge, Company has not been
denied any insurance coverage which it has sought or for which it has
applied.
(x) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed
by the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
(y) There are no affiliations with the NASD among the
Company's officers, directors or, to the best of the knowledge of the
Company, any five percent or greater shareholder of the Company, except
as set forth in the Registration Statement or otherwise disclosed in
writing to the Representatives.
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(z) To the Company's knowledge, (i) the Company is in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental
Law") which are applicable to its business; (ii) the Company has not
received any notice from any governmental authority or third party of
an asserted claim under Environmental Laws; (iii) the Company has
obtained all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in
compliance with all terms and conditions of any such permit, license or
approval; (iv) no facts currently exist that will require the Company
to make future material capital expenditures to comply with
Environmental Laws; and (v) no property which is or has been owned,
leased or occupied by the Company has been designated as a Superfund
site pursuant to the Comprehensive Environmental Response, Compensation
of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.)
("CERCLA") or otherwise designated as a contaminated site under
applicable state or local law. The Company has not been named as a
"potentially responsible party" under CERCLA.
(aa) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof
as described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(bb) None of the Company, any director, officer or employee of
the Company or, to the Company's knowledge, any other person associated
with or acting on behalf of the Company has, directly or indirectly,
while acting on behalf of the Company, (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
(cc) The Company has reviewed its operations to evaluate the
extent to which the business or operations of the Company will be
affected by the Year 2000 Problem (that is, any significant risk that
computer hardware or software applications used by the Company will
not, in the case of dates or time periods occurring after December 31,
1999, function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000); as a result of such
review, (i) the Company has no reason to believe, and does not believe,
that (A) there are any issues related to the Company's preparedness to
address the Year 2000 Problem that are of a character required to be
described or referred to in the Registration Statement or Prospectus
which have not been accurately described in the Registration Statement
or Prospectus and (B) the Year 2000 Problem will have a Material
Adverse Effect, or result in any material loss or interference with the
business or operations of the Company; and (ii) the Company reasonably
believes, after due inquiry, that the suppliers, vendors, customers or
other material third parties used or served by the Company are
addressing or will address the Year 2000 Problem in a timely manner,
except to the extent that a failure to
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address the Year 2000 Problem by a supplier, vendor, customer or
material third party would not have a Material Adverse Effect.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder hereby represents and warrants, severally and not
jointly, to each Underwriter as follows:
(a) The Selling Shareholder has caused certificates for the
number of Shares to be sold by such Selling Shareholder hereunder to be
delivered to ChaseMellon Shareholder Services, L.L.C. (the
"Custodian"), endorsed in blank or with blank stock powers duly
executed, with a signature appropriately guaranteed, such certificates
to be held in custody by the Custodian for delivery, pursuant to the
provisions of this Agreement and an agreement dated November ___, 1999
among the Custodian and the Selling Shareholders (the "Custody
Agreement").
(b) The Selling Shareholder has granted an irrevocable power
of attorney (the "Power of Attorney") to the person named therein, on
behalf of the Selling Shareholder, to execute and deliver this
Agreement and any other document necessary or desirable in connection
with the transactions contemplated hereby and to deliver the shares to
be sold by the Selling Shareholder pursuant hereto.
(c) This Agreement, the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement have each been duly authorized,
executed and delivered by or on behalf of the Selling Shareholder and,
assuming due authorization, execution and delivery by the other parties
hereto, constitutes the valid and legally binding agreement of the
Selling Shareholder, enforceable against the Selling Shareholder in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
(d) The execution and delivery by the Selling Shareholder of
this Agreement and the performance by the Selling Shareholder of his or
her obligations under this Agreement (i) will not contravene any
provision of applicable law, statute, regulation or filing or any
agreement or other instrument binding upon the Selling Shareholder or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Selling Shareholder, (ii) does not require
any consent, approval, authorization or order of or registration or
filing with any court or governmental agency or body having
jurisdiction over it, except such as may be required by the Blue Sky
laws of the various states in connection with the offer and sale of the
Shares which have been or will be effected in accordance with this
Agreement, and (iii) does not and will not violate any statute, law,
regulation or filing or judgment, injunction, order or decree
applicable to the Selling Shareholder.
(e) The Selling Shareholder has, and on the Firm Shares
Closing Date will have, valid and marketable title to the Shares to be
sold by the Selling Shareholder free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation,
any restriction on transfer, except as otherwise described in the
Registration Statement and Prospectus.
-11-
(f) The Selling Shareholder has, and on the Firm Shares
Closing Date will have, full legal right, power and authorization, and
any approval required by law to sell, assign, transfer and deliver the
Shares to be sold by the Selling Shareholder in the manner provided by
this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by
the Selling Shareholder pursuant to this Agreement, the several
Underwriters will receive valid and marketable title to such Shares
free and clear of any lien, claim, security interest or other
encumbrance.
(h) All information relating to the Selling Shareholder
furnished in writing by the Selling Shareholder expressly for use in
the Registration Statement and Prospectus is, and on each Closing Date
will be, true, correct, and complete, and does not, and on each Closing
Date will not, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information not
misleading.
(i) If the Selling Shareholder is an executive officer or
director of the Company (a "Management Shareholder"), the Selling
Shareholder has reviewed the Registration Statement and Prospectus and,
although such Selling Shareholder has not independently verified the
accuracy or completeness of all the information contained therein,
nothing has come to the attention of such Selling Shareholder that
would lead such Selling Shareholder to believe that (i) on the
Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein in order to make the statements made
therein not misleading and (ii) on the Effective Date the Prospectus
contained and, on each Closing Date contains, an untrue statement of a
material fact or omitted or omits to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) The sale of Shares by the Selling Shareholder pursuant to
this Agreement is not prompted by the Selling Shareholder's knowledge
of any material information concerning the Company which is not set
forth in the Prospectus.
(k) If the Selling Shareholder is a Management Shareholder,
the Selling Shareholder does not have any actual knowledge that any
representation or warranty of the Company set forth in Section 4 above
is untrue or inaccurate in any material respect.
(l) The representations and warranties of the Selling
Shareholder in the Custody Agreement are and on each Closing Date will
be, true and correct.
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:
-12-
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 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 Commission and the
Representatives.
(c) The representations and warranties of the Company and the
Selling Shareholders contained in this Agreement and 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. The Company and the Selling Shareholders shall have performed all
covenants and agreements and satisfied all the conditions contained in
this Agreement required to be performed or satisfied by them at or
before such Closing Date.
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial officer or chief accounting officer of the Company to
the effect that (i) the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement
and that the representations and warranties of the Company in this
Agreement are true and correct on and as of such Closing Date with the
same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by it
at or prior to such Closing Date, and (ii) no stop order suspending the
effectiveness of the Registration Statement has been issued and to the
best of their knowledge, no proceedings for that purpose have been
instituted or are pending under the Securities Act.
(e) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of each Selling Shareholder, to the effect that the
Selling Shareholder has carefully examined the Registration Statement,
the Prospectus and this Agreement and that the representations and
warranties of the Selling Shareholder in this Agreement are true and
correct on and as of such Closing Date with the same effect as if made
on such Closing Date and the Selling Shareholder has performed all
covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to
such Closing Date.
(f) The Representatives shall have received, 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 date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives,
-13-
confirming that they are independent accountants within the meaning of
the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Prospectus Summary-Summary Financial Data"
and "Selected Financial Data," carrying out certain procedures
(but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter, a reading of the minutes of the meetings of the
shareholders and directors of the Company, and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(A) the amounts in "Prospectus
Summary-Summary Financial Data," and "Selected
Financial Data" included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited and unaudited
financial statements from which such amounts were
derived; or
(B) with respect to the Company, there were,
at a specified date not more than three business days
prior to the date of the letter, any increases in the
current liabilities and long-term liabilities of the
Company or any decreases in net income or in working
capital or the shareholders' equity in the Company,
as compared with the amounts shown on the Company's
audited balance sheet for the nine months ended
September 30, 1999 included in the Registration
Statement;
(iii) they have performed certain other procedures as
may be permitted under Generally Acceptable Auditing Standards
as a result of which they determined that certain information
of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company)
set forth in the Registration Statement and the Prospectus and
reasonably specified by the Representatives agrees with the
accounting records of the Company; and
(iv) based upon the procedures set forth in clauses
(ii) and (iii) above and a reading of the amounts included in
the Registration Statement under the headings
-14-
"Prospectus Summary-Summary Financial Data" and "Selected
Financial Data" included in the Registration Statement and
Prospectus and a reading of the financial statements from
which certain of such data were derived, nothing has come to
their attention that gives them reason to believe that the
"Prospectus Summary-Summary Financial Data" and "Selected
Financial Data" included in the Registration Statement and
Prospectus do not comply as to the form in all material
respects with the applicable accounting requirements of the
Securities Act and the Rules or that the information set forth
therein is not fairly stated in relation to the financial
statements included in the Registration Statement or
Prospectus from which certain of such data was derived are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included in the Registration
Statement and Prospectus.
References to the Registration Statement and the
Prospectus in this Section 6(f) are to such documents as
amended and supplemented at the date of the letter.
(g) The Representatives shall have received on each Closing
Date from Xxxxxx Xxxxxx White & XxXxxxxxx, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date,
and stating in effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Oregon. The Company is qualified to
business and in good standing as a foreign corporation in the
states of ________, ________ and ________. To such
counsel's knowledge, the Company does not have a subsidiary
or record ownership of any interest in any corporation,
partnership, joint venture, association or other business
organization in excess of 50% of the equity interests of
that entity.
(ii) The Company 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 to enter into, deliver and perform this Agreement and to
issue and sell the Shares.
(iii) The Company has authorized and issued capital
stock as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization"; the
certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the
Company. 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
contained in the Company's Third Restated Articles of
Incorporation or by-laws or any other document listed as an
exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 or otherwise identified by the
Company on a schedule as material to the Company
(collectively, the "Material Documents"). To the best of such
counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there are no preemptive or other
rights to subscribe for or to purchase or any restriction upon
the voting or transfer of any securities of the Company
pursuant to the Material Documents
-15-
To such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, the Material
Documents do not provide for any outstanding option,
warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company.
The Common Stock and the Shares conform in all material
respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(iv) Each of the Lock-Up Agreements executed by the
Company's directors and officers 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 binding
obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles.
(vi) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any
of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or
constitute a default (or any event which with notice or lapse
of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of
trust, note or other agreement or instrument of which such
counsel is aware and to which the Company is a party or by
which it or any of its properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of which such counsel is aware or
violate any provision of the charter or by-laws of the
Company.
(vii) To 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 of any indenture, mortgage, deed
of trust, note or any other
-16-
agreement or instrument to which the Company is a party
or by which it or any of its assets or properties or
businesses may be bound or affected, where the consequences of
such default, individually or in the aggregate, would have a
Material Adverse Effect.
(viii) To such counsel's knowledge, the Company is
not in violation of any term or provision of its charter or
by-laws or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the
consequences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.
(ix) No consent, approval, authorization or order
of any court or governmental agency or regulatory body is
required for the execution or delivery of this Agreement by
the Company 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 such counsel's knowledge, there is no
litigation or governmental or other proceeding or
investigation, before any court or before or by any public
body or board pending or threatened against, or involving
the assets, properties or businesses of, the Company which
would have a Material Adverse Effect.
(xi) The statements in the Prospectus under the
captions "Risk Factors--We have a limited number of contracts
with a small number of carrier customers. If we fail to extend
or replace these contracts, or if these contracts are
terminated prior to their expiration, our business could be
adversely affected," "Management's Discussion and Analysis of
Financial Conditions and Results of Operations--Liquidity and
Capital Resources," "Business--Customers" and "Certain
Transactions," and the description of the Common Stock
incorporated by reference into the Prospectus 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. Accurate copies of
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.
-17-
(xiii) The Registration Statement is effective under
the Securities Act, and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose have been instituted or are threatened, pending or
contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the
time period required by such Rule 424(b).
(xiv) The Shares have been approved for quotation on
the Nasdaq National Market.
(xv) The Common Stock of the Company conforms in all
material respects to the description thereof incorporated by
reference into the Prospectus.
(xvi) The Company is not an "investment company" or
an entity controlled by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
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 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 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 with respect to the financial statements and notes and schedules
thereto and other financial and statistical data, as to which such counsel
need express no belief) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus as
amended or supplemented (except with respect to the financial statements,
notes and schedules thereto and other financial and statistical 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.
(h) The Representatives shall have received on the Closing
Date an opinion (satisfactory to the Representatives and counsel for
the Underwriters), dated the Closing Date, of _________________, patent
counsel for the Company, to the effect that:
-18-
(i) The Company is listed on the records of the
United States Patent and Trademark Office as the sole holder
of record of the patents for the Company's "StarBack" and
point-by-point directions service technology (the "Patents").
Except as disclosed in the Prospectus, such counsel knows of
no claims of third parties to any ownership interest or lien
with respect to any of the Patents.
(ii) Such counsel has no knowledge of any facts that
(a) would preclude the Company from having clear, exclusive
rights to the Patents or (b) would lead such counsel to
conclude that any of the Patents are invalid or unenforceable.
Such counsel has knowledge of no facts that would preclude the
Company from using the Patents against third parties to
prevent such third parties from engaging in infringing
conduct.
(iii) Such counsel has reviewed the statements under
the Registration Statement/Prospectuses captions "Risk
Factors--If we are unable to protect our intellectual
property, we may be unable to provide enhanced directory
assistance services or profitably operate our business,"
"Business-- Technology" and "--Intellectual Property"
(collectively, the "Intellectual Property Portion") of the
Registration Statement and the Prospectus. Insofar as such
statements constitute a summary of the Company's patents and
applications for patents and the rights derived therefrom, and
matters related thereto, such counsel believes them to fairly,
accurately and completely summarize the legal matters,
documents and proceedings relating to such patents and
applications described therein. Nothing has come to the
attention of such counsel which causes it to believe that the
information in the Intellectual Property Portion contains any
untrue statement of a material fact or omits to state a
material fact which is required to be stated therein or
necessary to make the statements therein not misleading.
(i) The Representatives shall have received on the Firm Shares
Closing Date from Xxxxxx Xxxxxx White & XxXxxxxxx an opinion, addressed
to the Representatives and dated such Closing Date, and stating in
effect that:
(i) This Agreement has been duly and validly
executed and delivered by or on behalf of each Selling
Shareholder.
(ii) This Agreement, the Custody Agreement, the Power
of Attorney and the Lock-Up Agreement each constitute the
legal, valid and binding obligation of each Selling
Shareholder enforceable against the Selling Shareholder in
accordance with its terms except 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 each Selling Shareholder has full legal right
and authority to enter into this Agreement and to sell,
transfer and deliver in the manner provided in this Agreement,
the Shares to be sold by the Selling Shareholder hereunder.
-19-
(iii) The transfer and sale by the Selling
Shareholders of the Shares to be sold by the Selling
Shareholders as contemplated by this Agreement will not
conflict with, result in a breach of, or constitute a default
under any agreement or instrument known to such counsel to
which any Selling Shareholder is a party or by which any
Selling Shareholder or any of its properties may be bound, or
any franchise, license, permit, judgment, decree, order,
statute, rule or regulation.
(iv) All of the Selling Shareholders' rights in the
Shares to be sold by the Selling Shareholders pursuant to this
Agreement, have been transferred to the Underwriters who have
severally purchased such Shares pursuant to this Agreement,
free and clear of adverse claims, assuming for purposes of
this opinion that the Underwriters purchased the same in good
faith without notice of any adverse claims.
(v) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or
regulatory agency, authority or body or financial institution
is required in connection with the performance of this
Agreement by the Selling Shareholders or the consummation of
the transactions contemplated hereby, including the delivery
and sale of the Shares to be delivered and sold by the Selling
Shareholders, except 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.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of each Selling Shareholder 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 or 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.
(j) All proceedings taken in connection with the sale of the
Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives,
and their counsel and the Underwriters shall have received from Xxxxxx
& Xxxxxxx a favorable opinion, addressed to the Representatives and
dated such Closing Date, with respect to the Shares, the Registration
Statement and the Prospectus, and such other related matters, as the
Representatives may reasonably request, and the Company shall have
furnished to Xxxxxx & Xxxxxxx such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(k) The Representatives shall have received copies of the
Lock-up Agreements executed by each entity or person described in
Section 4(o).
(l) The Company and the Selling Shareholders shall have
furnished or caused to be furnished to the Representatives such further
certificates or documents as the Representatives shall have reasonably
requested.
-20-
7. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees as follows:
(i) The Company will use its commercially reasonable
efforts to cause the Registration Statement, if not effective
at the time of execution of this Agreement, and any amendments
thereto, to become effective as promptly as possible. The
Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the
Representatives in writing (i) when any amendment to the
Registration Statement shall have become effective, (ii) of
any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional
information, (iii) of the prevention or suspension of the use
of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution
or threatening of any proceeding for that purpose and (iv) of
the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and
shall not file any such proposed amendment or supplement to
which the Representatives reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Securities
Act and the Rules, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of Section
7(a)(ii), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such
compliance.
(iv) The Company shall make generally available to
its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90 days
if such 12-month period coincides
-21-
with the Company's fiscal year), an earnings statement (which
need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a)
of the Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, copies of
the Registration Statement (including all exhibits thereto and
amendments thereof) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and all
amendments thereof and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Securities Act
or the Rules, as many copies of any preliminary prospectus and
the Prospectus and any amendments thereof and supplements
thereto as the Representatives may reasonably request.
(vi) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representatives
may designate and shall maintain such qualifications in effect
so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service
of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction.
(vii) Without the prior written consent of CIBC World
Markets Corp., for a period of 90 days after the date of this
Agreement, the Company shall not issue, sell or register with
the Commission (other than on Form S-8 or on any successor
form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company), except for the issuance of Shares
pursuant to the Registration Statement and the issuance of
shares pursuant to the Company's existing stock option plan
or stock purchase plan as described in the Registration
Statement and the Prospectus.
(viii) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including
any required registration under the Exchange Act).
(ix) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements
to the Registration Statement and the Prospectus, and the printing,
filing and distribution of this Agreement; (ii) the
-22-
preparation and delivery of certificates for the Shares to the
Underwriters; (iii) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the
various jurisdictions referred to in Section 7(a)(vi), including the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs
of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus
and all amendments or supplements to the Prospectus, and of the
several documents required by this Section to be so furnished, as may
be reasonably requested for use in connection with the offering and
sale of the Shares by the Underwriters or by dealers to whom Shares
may be sold; (v) the filing fees of the NASD in connection with its
review of the terms of the public offering and reasonable fees and
disbursements of counsel for the Underwriters in connection with such
review; (vi) inclusion of the Shares for quotation on the Nasdaq
National Market; and (vii) 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 untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or in any
Blue Sky application or other information or other documents executed
by the Company filed in any state or other jurisdiction to qualify any
or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a
"Blue Sky Application") or arise out of or are based upon any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (ii) in whole or in part upon any breach of the
representations and warranties set forth in Section 4 hereof, or (iii)
in whole or in part upon any failure of the Company to perform any of
its obligations hereunder or under law; provided, however, that such
indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares to any
person by such Underwriter if such untrue statement or omission
-23-
or alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement thereto, or in any Blue Sky Application 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; provided, further, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter who failed to deliver a
Prospectus (as then amended or supplemented, provided by the Company to
the several Underwriters in the requisite quantity and on a timely
basis to permit proper delivery on or prior to the Closing Date) to the
person asserting any losses, claims, damages and liabilities and
judgments caused by any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus, or caused by
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, if such material misstatement or omission or
alleged material misstatement or omission was cured in such Prospectus
and such Prospectus was required by law to be delivered at or prior to
the written confirmation of sale to such person. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Management Shareholder agrees, severally in
proportion to the total number of shares to be sold by the Management
Shareholders hereunder and not jointly, to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement 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, and (ii) in whole or in part upon
any breach of the representations and warranties of such Management
Shareholder set forth in Section 5 hereof; 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; provided,
further, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any
Underwriter who failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery
on or prior to the Closing Date) to
-24-
the person asserting any losses, claims, damages and liabilities and
judgments caused by any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, or caused
by 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, if such material misstatement or omission or
alleged material misstatement or omission was cured in such Prospectus
and such Prospectus was required by law to be delivered at or prior to
the written confirmation of sale to such person. Notwithstanding the
foregoing, (i) the Underwriters agree that any claim for indemnity
pursuant to this Section 8(b) shall be first sought to be satisfied
by the Company and shall be only then sought to be satisfied by each
Management Shareholder in accordance with this Section 8(b) if, and
to the extent that, such claim for indemnity has not been satisfied
in full by the Company within 60 days; provided, however, that the
Underwriters shall not be required to effect such initial demand upon
the Company and wait such 60-day period if it would prejudice their
right to indemnification from such Management Shareholder hereunder,
and (ii) the liability of each Management Shareholder pursuant to the
provisions of this Section 8(b) shall be limited to an amount equal
to the net proceeds received by such Management Shareholder from the
sale of the Shares sold by such Management Shareholder hereunder.
This indemnity agreement will be in addition to any liability which
each Management Shareholder may otherwise have.
(c) Each Selling Shareholder who is not a Management
Shareholder agrees, severally and not jointly, to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any and all losses, claims,
damages and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other Federal or state
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement 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, in each case to the extent,
and only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished in writing by or on behalf of
such Selling Shareholder specifically for use therein and (ii) in whole
or in part upon any breach of the representations and warranties of
such Selling Shareholder set forth in Section 5 hereof; provided,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any
Underwriter who failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery
on or prior to the Closing Date) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements
-25-
therein not misleading, if such material misstatement or omission or
alleged material misstatement or omission was cured in such Prospectus
and such Prospectus was required by law to be delivered at or prior
to the written confirmation of sale to such person. Notwithstanding
the foregoing, the liability of each such Selling Shareholder pursuant
to the provisions of this Section 8(c) shall be limited to an amount
equal to the net proceeds received by such Selling Shareholder from
the sale of the Shares sold by such Selling Shareholder hereunder.
This indemnity agreement will be in addition to any liability which
each such Selling Shareholder may otherwise have.
(d) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Shareholders and
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,
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 Shareholders to each
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment thereof or supplement thereto, contained in the (i)
concession and reallowance figures appearing under the caption
"Underwriting" and (ii) the stabilization information contained under
the caption "Underwriting" in the Prospectus; provided, however, that
the obligation of each Underwriter to indemnify the Company or the
Selling Shareholders (including any controlling person, director or
officer thereof) shall be limited to the net proceeds received by the
Company from such Underwriter.
(e) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served. No indemnification provided for in Section 8(a),
8(b), 8(c) or 8(d) shall be available to any party who shall fail to
give notice as provided in this Section 8(e) if the party to whom
notice was not given was unaware of the proceeding to which such notice
would have related and was prejudiced by the failure to give such
notice but the omission so to notify such indemnifying party of any
such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses, except as provided below and except for
the reasonable costs of investigation subsequently incurred by such
indemnified party in
-26-
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 been advised by counsel that there may
be one or more legal defenses available to it which are different
from or in addition to those available to the indemnifying party (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, which consent shall not be unreasonably withheld or delayed.
9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8(a), 8(b), 8(c) or 8(d) is due in accordance with its terms but for
any reason is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a), 8(b), 8(c) or 8(d), then each
indemnifying party shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting
any contribution received by any person entitled hereunder to contribution
from any person who may be liable for contribution) to which the indemnified
party may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders 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 Shareholders 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, the Selling Shareholders 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 or the Selling Shareholders, 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 Shareholders 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
and the Selling Shareholders 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 Shareholders 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
-27-
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; (ii) the Company shall be liable and responsible
for any amount in excess of such underwriting discount; and (iii) in no case
shall a Selling Shareholder be liable and responsible for any amount in
excess of the aggregate net proceeds of the sale of Shares received by such
Selling Shareholder; 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 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 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.
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 and the Selling Shareholders at any
time:
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if on or prior to such date, any domestic
or international event or act or occurrence has materially disrupted,
or in the opinion of the Representatives will in the future materially
disrupt, the securities markets; (ii) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representatives,
inadvisable to proceed with the offering; (iii) if there shall be such
a material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of
the Representatives, inadvisable or impracticable to market the Shares;
(iv) if trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock Exchange, Inc., on the American
Stock Exchange, Inc. or the Nasdaq National Market has been suspended
or limited, or 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
-28-
been declared by any state or Federal authority; or (vi) if, in the
judgment of the Representatives, there has occurred a Material Adverse
Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Shareholders shall 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 or the Selling Shareholders 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, the Selling Shareholders 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,
(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 one additional business day
within which it may, but is not obligated to, find one or more
substitute underwriters reasonably satisfactory to the Representatives
to purchase such Shares upon the terms set forth in this Agreement.
-29-
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 or the Selling
Shareholders and without liability on the part of the Company, except in both
cases as provided in Sections 7(b), 8, 9 and 10. The provisions of this Section
shall not in any way affect the liability of any defaulting Underwriter to the
Company, the Selling Shareholders 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, of
the Selling Shareholders and of the Underwriters set forth in or made pursuant
to this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or the
Selling Shareholders 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(b), 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 Company and the Selling Shareholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Representatives, c/o CIBC World Markets Corp., Xxx
Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: , with a copy to
Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx
00000 Attention: Xxxx X. Xxxxx, (b) if to the Company, to its agent for service
as such agent's address appears on the cover page of the Registration Statement
with a copy to Xxxxxx Xxxxxx White & XxXxxxxxx, 000 Xxxxx Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000 Attention: Xxxx Xxxxxxxxxx, and (c) if to the
Selling Shareholder to with a copy to Xxxxxx Xxxxxx White & XxXxxxxxx,
000 Xxxxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000 Attention:
Xxxx Xxxxxxxxxx.
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.
-30-
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
were upon the same instrument.
-31-
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
METRO ONE TELECOMMUNICATIONS, INC.
By:
---------------------------------
Name:
Title:
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE I HERETO, ACTING
SEVERALLY
By:
---------------------------------
Attorney-in-fact
Confirmed:
CIBC WORLD MARKETS CORP.
U.S. BANCORP XXXXX XXXXXXX INC.
XXXXXXX & COMPANY, INC.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule II annexed
hereto.
By: CIBC WORLD MARKETS CORP.
By:
--------------------------------
Name:
Title:
-32-
SCHEDULE I
SELLING SHAREHOLDERS
Shares to be Sold to the
Name Underwriters
------------------------------------ --------------------------
Xxxxxxx X. Xxxxxxxxxx 15,000
Xxxxx Xxxxxxxx 3,000
Xxxxxxx X. Xxxxxxx 15,000
Xxxxxxxx X. Xxxxxxx, Xx. 7,500
Xxxxx X. Xxxxxxx 7,500
Xxxxxx X. Xxxx 2,500
Xxxx X. Xxxxxxxx 3,000
Xxxxxxx X. Xxxxxx 10,000
Xxxxxx X. XxXxxxxx 4,000
--------------------------
Total.................... 67,500
-33-
SCHEDULE II
Number of Firm Shares to be
Number of Firm Shares to be Purchased from the Selling
Name Purchased from the Company Shareholders
---------------------------- ------------------------------------ ------------------------------------
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxxxx & Company, Inc.
Total.........................