EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
4,600,000 Shares
ITXC Corp.
Common Stock
UNDERWRITING AGREEMENT
----------------------
March __, 2000
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
PaineWebber Incorporated
First Analysis Securities Corporation
Xxxxxxx Bros., L.P.,
As Representatives of the several
Underwriters named in Schedule 1 hereto,
c/x Xxxxxx Brothers Inc.
Three World Financial Center
New York New York 10285
Dear Sirs:
ITXC Corp., a Delaware corporation (the "Company"), and certain
stockholders of the Company named in Schedule 2 hereto (the "Selling
Stockholders") propose to sell an aggregate of 4,000,000 shares (the "Firm
Stock") of the Company's Common Stock, par value $0.001 per share (the "Common
Stock"). Of the 4,000,000 shares of the Firm Stock, 2,000,000 shares are being
sold by the Company and 2,000,000 by the Selling Stockholders. In addition, the
Company and certain of the Selling Stockholders propose to grant to the
Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 600,000 shares of Common Stock on the terms and for
the purposes set forth in Section 3 (the "Option Stock"). Of the 600,000 shares
of the Option Stock, 129,743 shares are being sold by the Company and 470,257 by
certain Selling Stockholders. The Firm Stock and the Option Stock, if purchased,
are hereinafter collectively called the "Stock." This is to confirm the
agreement concerning the purchase of the Stock from the Company and the Selling
Stockholders by the Underwriters.
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 and one or more amendments
thereto with respect to the Stock have (i) been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the
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"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies of
such registration statement and each of the amendments thereto have been
delivered by the Company to you as the representatives (the "Representatives")
of the Underwriters. As used in this Agreement, "Effective Time" means the date
and the time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or amendments
thereof, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part of
the registration statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations; and "Prospectus" means the prospectus in the form first
used to confirm sales of Stock. If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement. The Commission has not issued
any order preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein.
(c) The Company and each of its subsidiaries (as defined in Section
17) have (i) been duly incorporated or organized and are validly existing as
corporations or limited liability companies in good standing under the laws of
their respective jurisdictions of incorporation or organization, (ii) are duly
qualified to do business and are in good standing as foreign corporations or
foreign limited liability companies in each jurisdiction in which their
respective ownership or lease of property or the conduct of their respective
businesses requires such qualification, and (iii) have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except, in the case of clauses (ii) and
(iii), where the failure to so qualify and be in good standing as a foreign
corporation or foreign limited liability companies or have such power or
authority would not,
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singularly or in the aggregate, reasonably be expected to have a material
adverse effect on the general affairs, management, consolidated financial
position, stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries taken as a whole (a "Material Adverse Effect");
the Company has no subsidiaries other than ITXC Data Transport Services LLC, a
Delaware limited liability company (the "Domestic Subsidiary"), ITXC, Ltd., a
[Xxxxxxxxxx to provide] company, and ITXC Asia PTE Ltd., a Singapore company;
and none of the subsidiaries of the Company is a "significant subsidiary", as
such term is defined in Rule 405 of the Rules and Regulations.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform in all material respects to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock or membership
interests, as the case may be, of each subsidiary of the Company have been duly
and validly authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims, other than liens securing the
Credit Agreement, dated as of August 20, 1998, as amended and/or restated
through the date hereof (the "Credit Agreement"), between the Company and PNC
Bank, National Association.
(e) The shares of the Stock to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein will be duly
and validly issued, fully paid and non-assessable; and the Stock will conform in
all material respects to the description thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law), and except insofar as
the indemnification and contribution provisions hereof may be limited by
considerations of public policy.
(g) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of (i) the certificate of
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incorporation (or other equivalent organizational document) or by-laws (or other
equivalent organizational document) of the Company or any of its subsidiaries or
(ii) any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties or assets; and except for the registration of the
Stock under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and applicable state or foreign
securities laws or by the National Association of Securities Dealers, Inc. (the
"NASD") in connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(i) Except as set forth in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right (other than rights which have been waived or
satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(j) Except as set forth in the Registration Statement, the Company
has not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act other than shares issued
pursuant to employee benefit plans, stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(k) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since such date, there
has not been any material change in the capital stock or long-term debt of the
Company and its subsidiaries on a consolidated basis or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(l) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The other financial information and data filed as part of the
Registration Statement or included in
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the Prospectus is fairly presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(m) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who have
delivered the initial letter referred to in Section 9(h) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(n) The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects, except such as are described in the Prospectus or such
as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; all assets held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries taken as a whole.
(o) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar businesses in similar
industries.
(p) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service xxxx registrations,
copyrights and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective businesses
will conflict with, and have not received any notice of any claim of conflict
with, any such rights of others, in each case except as could not reasonably be
expected to have a Material Adverse Effect.
(q) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries would reasonably
be expected to have a Material Adverse Effect; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(r) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement or incorporated by reference as exhibits as permitted by the Rules and
Regulations.
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(s) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, shareholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus which is not so described.
(t) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is imminent, which would reasonably be expected
to have a Material Adverse Effect.
(u) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any material liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and,
to the best of the Company's knowledge, nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(v) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof (except where
the failure to file would not reasonably be expected to have a Material Adverse
Effect) and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which has had
(nor does the Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of its subsidiaries, would reasonably
be expected to have) a Material Adverse Effect.
(w) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities (other than
shares of Common Stock issued upon the exercise of options described in the
Prospectus), (ii) incurred any material liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred in the
ordinary course of business, (iii) entered into any material transaction not in
the ordinary course of business or (iv) declared or paid any dividend on its
capital stock.
(x) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
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(y) Neither the Company nor any of its subsidiaries (i) is in
violation of its certificate of incorporation (or other equivalent
organizational document) or by-laws (or other equivalent organizational
document), (ii) is in default in any respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in any respect of any
law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business except, in
the case of clauses (ii) and (iii), for such defaults, violations and failures
which would not, singularly or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(z) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(aa) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or would not be reasonably expected to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
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(bb) Neither the Company nor any subsidiary is, or upon application
of the net proceeds from the sale of the Stock as set forth in the Prospectus,
will be, an "investment company" as defined in the Investment Company Act of
1940, as amended.
SECTION 2. Representations, Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder (or in the case of Section 2(f), each
Management Selling Stockholder, as defined below) severally represents, warrants
and agrees that:
(a) The Selling Stockholder has, and immediately prior to the First
Delivery Date (as defined in Section 5 hereof) the Selling Stockholder will
have, good and valid title to the shares of Stock to be sold by the Selling
Stockholder hereunder on such date, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of such shares and payment therefor
pursuant hereto, good and valid title to such shares, free and clear of all
liens, encumbrances, equities or claims, will pass to the several Underwriters.
(b) The Selling Stockholder has placed in custody under a custody
agreement (the "Custody Agreement" and, together with all other similar
agreements executed by the other Selling Stockholders, the "Custody Agreements")
with Continental Stock Transfer & Trust Company, as custodian (the "Custodian"),
for delivery under this Agreement, certificates in negotiable form representing
the shares of Stock to be sold by the Selling Stockholder hereunder.
(c) The Selling Stockholder has duly executed and delivered an
irrevocable power of attorney (the "Power of Attorney" and, together with all
other similar agreements executed by the other Selling Stockholders, the "Powers
of Attorney") appointing Xxx X. Xxxxxx and Xxxxxx X. Xxxxxx as attorneys-in-
fact, with full power of substitution, and with full authority (exercisable by
any one or more of them) to execute and deliver this Agreement and to take such
other action as may be necessary or desirable to carry out the provisions hereof
on behalf of the Selling Stockholder.
(d) The Selling Stockholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody Agreement; the
execution, delivery and performance of this Agreement, the Power of Attorney and
the Custody Agreement by the Selling Stockholder and the consummation by the
Selling Stockholder of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Selling
Stockholder is a party or by which the Selling Stockholder is bound or to which
any of the property or assets of the Selling Stockholder is subject, nor will
such actions result in any violation of the provisions of applicable
organizational documents of the Selling Stockholder (unless an individual) or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Selling Stockholder or the property or
assets of the Selling Stockholder; and, except for the registration of the Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and
applicable state and foreign securities laws and by the NASD in connection with
the purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or
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registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Power of Attorney
or the Custody Agreement by the Selling Stockholder and the consummation by the
Selling Stockholder of the transactions contemplated hereby and thereby.
(e) The Registration Statement and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
do not and will not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing date (as to
the Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided that no representation or warranty is made as to information contained
in or omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information furnished to the Company (i) through
the Representatives by or on behalf of any Underwriter specifically for
inclusion therein or (ii) by or on behalf of any other Selling Stockholder
specifically for inclusion therein; provided further that except for Xxx X.
Xxxxxx, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxx (collectively, the "Management
Selling Stockholders"), the Selling Stockholder shall have no liability under
this Section 2(e) except to the extent that the untrue statement or omission is
or will be made in reliance upon and in conformity with information concerning
such Selling Stockholder furnished to the Company in writing by or on behalf of
that Selling Stockholder specifically for inclusion therein.
(f) Each Management Selling Stockholder has no reason to believe that
the representations and warranties of the Company contained in Section 1 hereof
are not materially true and correct, is familiar with the Registration Statement
and the Prospectus (as amended or supplemented) and has no knowledge of any
material fact, condition or information not disclosed in the Registration
Statement, as of the Effective Date, or the Prospectus (or any amendment or
supplement thereto), as of the applicable filing date, which has had or may have
a Material Adverse Effect and is not prompted to sell shares of Common Stock by
any information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
(g) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the shares of the Stock.
SECTION 3. Purchase of the Stock by the Underwriters. On the basis
of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 2,000,000 shares of
the Firm Stock and each Selling Stockholder agrees to sell the number of shares
of the Firm Stock set forth opposite his, her or its name on Schedule 2 hereto,
severally and not jointly, to the several Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase the number of shares
of the Firm Stock set forth opposite that Underwriter's name in Schedule 1
hereto. Each Underwriter shall be obligated to purchase from the Company, and
from each Selling Stockholder, that number of shares of the Firm Stock which
represents the same proportion of the number of
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shares of the Firm Stock to be sold by the Company, and by each Selling
Stockholder, as the number of shares of the Firm Stock set forth opposite the
name of such Underwriter in Schedule 1 represents of the total number of shares
of the Firm Stock to be purchased by all of the Underwriters pursuant to this
Agreement. The respective purchase obligations of the Underwriters with respect
to the Firm Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Company and the Selling Stockholders identified as
"Option Stockholders" in Schedule 2 hereto (collectively, the "Option
Stockholders") grant, severally and not jointly, to the Underwriters an option
to purchase up to an aggregate of 600,000 shares of the Option Stock. Such
options are granted solely for the purpose of covering over-allotments in the
sale of Firm Stock and are exercisable as provided in Section 5 hereof. Shares
of Option Stock shall be purchased from the Company and the Option Stockholders
in the priority described in Section 5 severally for the account of the
Underwriters in proportion to the number of shares of Firm Stock set forth
opposite the name of such Underwriters in Schedule 1 hereto. The respective
purchase obligations of each Underwriter with respect to the Option Stock shall
be adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock shall be $_____
per share.
The Company and the Selling Stockholders shall not be obligated to
deliver any of the Stock to be delivered on any Delivery Date (as hereinafter
defined), except upon payment for all the Stock to be purchased on such Delivery
Date as provided herein.
SECTION 4. Offering of Stock by the Underwriters. Upon authorization
by the Representatives of the release of the Firm Stock, the several
Underwriters propose to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.
SECTION 5. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx Xxx Xxxx 00000, at 10:00 A.M., New York
City time, on the fourth full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to
as the "First Delivery Date." On the First Delivery Date, the Company and the
Selling Stockholders shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company and the Selling
Stockholders of the purchase price by wire transfer in immediately available
funds to bank accounts designated by the Company and the Selling Stockholders at
least two business days prior to the First Delivery Date. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
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expediting the checking and packaging of the certificates for the Firm Stock the
Company and the Selling Stockholders shall make the certificates representing
the Firm Stock available for inspection by the Representatives in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date".
The priority of purchases and sales of any such shares of Option Stock
shall be determined as follows:
(i) In the event the Underwriters exercise the option granted in
Section 3 in full, then (A) each of the Option Stockholders
agrees to sell the number of shares of Option Stock set forth in
Schedule 2 opposite his, her or its name and (B) the Company
agrees to sell the number of shares of Option Stock set forth in
the first paragraph of this Agreement.
(ii) In the event the Underwriters exercise the over-allotment option
for a number of shares of Option Stock (the "Actual Exercise
Amount") which is less than 600,000 but greater than 470,257,
then each of the Option Stockholders and the Company agrees,
severally and not jointly, to sell the number of shares of Option
Stock determined as follows:
(A) first, each Option Stockholder agrees to sell the number of
shares of Option Stock set forth in Schedule 2 opposite his,
her or its name; and
(B) second, the Company agrees to sell the number of shares of
Option Stock which, when added to the number of shares of
Option Stock sold by the Option Stockholders pursuant to
clause (A) above, equals the Actual Exercise Amount.
(iii) In the event the Actual Exercise Amount is less than or equal to
470,257 shares of Option Stock, then each of the Option
Stockholders agrees, severally and not jointly, to sell the
number of shares of Option Stock equal to the number of shares of
Option Stock granted by such Option
12
Stockholder that bears the same proportion to the Actual Exercise
Amount as the number of shares of Option Stock set forth in
Schedule 2 opposite his, her or its name bears to the total
number of shares of Option Stock granted by such Option
Stockholders collectively, and the Company shall not sell any
shares of Option Stock.
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company and the Option
Stockholders shall deliver or cause to be delivered the certificates
representing the Option Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company and the Option
Stockholders of the purchase price by wire transfer in immediately available
funds to bank accounts designated by the Company and the Option Stockholders at
least two business days prior to the Second Delivery Date. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Option Stock shall be registered in such names and in such
denominations as the Representatives shall request in the aforesaid written
notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company and the Option Stockholders shall
make the certificates representing the applicable Option Stock available for
inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to such Second Delivery
Date.
SECTION 6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
13
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Stock or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Representatives and, upon their request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the Representatives, be
required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing, which consent shall not be unreasonably
delayed or withheld;
(f) As soon as practicable after the Effective Date (it being
understood that the Company shall have until at least June 15, 2001), to make
generally available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 1l(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) Upon the request of the Representatives, for a period of two
years following the Effective Date, to furnish to the Representatives copies of
all materials furnished by the Company to its shareholders generally and all
public reports and all reports and financial statements furnished by the Company
to the principal national securities exchange upon which the Common Stock may be
listed pursuant to requirements of or agreements with such exchange
14
or to the Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation, to submit
to general taxation or to file a general consent to service of process in any
jurisdiction;
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than (w) the Stock, (x) shares of Common Stock issued
pursuant to employee benefit plans, stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights, or (y) shares of Common Stock or
securities convertible into or exchangeable for Common Stock issued in a private
placement transaction (provided that such shares shall not be publicly resold
during the period of 90 days after the date of the Prospectus; provided,
further, that the holder of shares issued in such a transaction shall furnish to
the Representatives at or prior to the time of such issuance a letter in the
form of Exhibit A hereto)) or substantially similar securities, or sell or grant
options, rights or warrants with respect to any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or substantially
similar securities (other than the grant of options pursuant to benefit plans
existing on the date hereof), or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case without the
prior written consent of Xxxxxx Brothers Inc. on behalf of the Underwriters; and
to cause each Selling Stockholder of the Company and each executive officer and
director of the Company, to furnish to the Representatives, prior to the First
Delivery Date, a letter or letters, substantially in the form of Exhibit A
hereto.
(j) To apply for the inclusion of the Stock in the National Market
System, and to use its best efforts to complete that process, subject only to
official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock as set forth
in the Prospectus;
(l) To take such steps as shall be necessary to ensure that neither
the Company nor any subsidiary shall become an "investment company" as defined
in the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder; and
15
(m) During the period of 90 days from the date of the Prospectus, to
obtain an executed letter in the form of Exhibit A hereto from each executive
officer and director who has not previously executed such a letter.
SECTION 7. Further Agreements of the Selling Stockholders. Each
Selling Stockholder agrees:
(a) That concurrently with the execution hereof, such Selling
Stockholder will execute and deliver to the Representatives a letter in the form
of Exhibit A hereto;
(b) That the Stock to be sold by the Selling Stockholder hereunder,
which is represented by the certificates held in custody for the Selling
Stockholder, is subject to the interest of the Underwriters and the other
Selling Stockholders thereunder, that the arrangements made by the Selling
Stockholder for such custody are to that extent irrevocable, and that the
obligations of the Selling Stockholder hereunder shall not be terminated by any
act of the Selling Stockholder, or to the extent permitted by applicable law, by
the death, incapacity, disability or incompetence, liquidation or dissolution of
any Selling Stockholder or, in the case of a trust, by the death or incapacity
of any executor or trustee or the termination of such trust, to the extent
applicable, or the occurrence of any other event; and
(c) To deliver to the Representatives prior to the First Delivery
Date a properly completed and executed United States Treasury Department Form W-
8 (if the Selling Stockholder is a non-United States person) or Form W-9 (if the
Selling Stockholder is a United States person).
SECTION 8. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of reproducing and
distributing this Agreement and any other related documents in connection with
the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing the review by the National Association of Securities
Dealers, Inc. of the terms of sale of the Stock; (f) any applicable listing or
other fees; (g) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 6(h) and of
preparing and distributing a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriters); (h) the costs and expenses of the
Company (excluding costs and expenses of the Underwriters and their
representatives) relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Stock
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants (other than
representatives of the Underwriters) engaged in connection with the road show
presentations with the prior approval of
16
the Company, travel and lodging expenses of the representatives and officers of
the Company and any such consultants, and the Company's share of the cost of any
aircraft chartered in connection with the road show and (i) all other costs and
expenses incident to the performance of the obligations of the Company and the
Selling Stockholders under this Agreement; provided that, except as provided in
this Section 8 and in Section 13, the Underwriters shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes
on the Stock which they may sell and the expenses of advertising any offering of
the Stock made by the Underwriters.
SECTION 9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject (x) to the accuracy when
made and on each Delivery Date, of the representations and warranties of the
Company and the Selling Stockholders contained herein (provided that, in the
case of this clause (x), the obligations of the Underwriters hereunder shall be
subject to the accuracy in all material respects of those representations and
warranties that are not qualified as to materiality), (y) to the performance by
the Company and the Selling Stockholders of their respective obligations
hereunder and (z) to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Custody Agreement, the
Powers of Attorney, the Stock, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company and the Selling Stockholders shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Xxxxxxxxxx Xxxxxxx PC shall have furnished to the Representatives
its written opinion, as counsel to the Company, addressed to the Underwriters
and dated such Delivery Date, in substantially the form attached hereto as
Exhibit B.
17
(e) Xxxxxxx Berlin Shereff Xxxxxxxx, LLP shall have furnished to the
Representatives its written opinion, as special regulatory counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect that the
statements contained in the Prospectus under the captions "Our Business C
Government Regulation" and "Risk Factors C Future government regulation and
legal uncertainties could affect our ability to provide our services", to the
extent such statements constitute a summary of the United States federal laws,
rules and regulations referred to therein, have been reviewed by such counsel
and accurately describe in all material respects such United States federal
laws, rules and regulations.
(f) The respective counsel for the Selling Stockholders shall each
have furnished to the Representatives its written opinion, as counsel to the
Selling Stockholder for whom it is acting as counsel, addressed to the
Underwriters and dated such Delivery Date, in substantially the form attached
hereto as Exhibit C.
(g) The Representatives shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company and the Selling
Stockholders shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(i) With respect to the letter of Ernst & Young LLP referred to in
the preceding paragraph and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters
18
covered by the initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board and its
chief financial officer stating that:
(i) The representations, warranties and agreements of the Company in
Section 1 are true and correct as of such Delivery Date (provided that such
representations, warranties and agreements that are not qualified as to
materiality shall be true in all material respects); the Company has
complied with all its agreements contained herein; and the conditions set
forth in Sections 9(a) and 9(l) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and the Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (B) since the Effective Date no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(k) Each Selling Stockholder (or one or more attorneys-in-fact on
behalf of the Selling Stockholders) shall have furnished to the Representatives
a certificate, dated such Delivery Date, signed by, or on behalf of, the Selling
Stockholder (or one or more attorneys-in-fact) stating that the representations,
warranties and agreements of the Selling Stockholder in Section 2 are true and
correct as of such Delivery Date (provided that such representations, warranties
and agreements that are not qualified as to materiality shall be true in all
material respects); and that the Selling Stockholder has complied with all
agreements contained herein required to be complied with by the Selling
Stockholder on or prior to such Delivery Date.
(l) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus (i) any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii) since such date
there shall not have been any change in the capital stock or long-term debt of
the Company and its subsidiaries on a consolidated basis or any adverse change,
or any development involving a prospective adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
19
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(n) The National Market System shall have approved the Stock for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.
(o) Prior to the First Delivery Date, the Representatives shall have
received from each Selling Stockholder and from each executive officer and
director of the Company, an executed letter in the form of Exhibit A pursuant to
Section 6(i) hereto.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter,
its officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky application, any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above
20
(provided that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse each Underwriter and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein which information consists solely of the
information specified in Section 10(g); and provided further that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, in reliance upon and in conformity with
written information concerning any Selling Stockholder furnished to the Company
in writing by or on behalf of such Selling Stockholder specifically for
inclusion therein; and provided further that as to any Preliminary Prospectus,
this indemnity agreement shall not inure to the benefit of any Underwriter, its
officers or employees, or any person controlling that Underwriter, on account of
any loss, claim, damage, liability or action arising from the sale of Stock to
any person by that Underwriter if that Underwriter failed to send or give a copy
of the Prospectus, as the same may be amended or supplemented, to that person
within the time required by the Securities Act, and the untrue statement or
alleged untrue statement of any material fact or omission or alleged omission to
state a material fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company with
Section 6(c). The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) The Selling Stockholders named in Schedule 2 hereto as the
"Designated Selling Stockholders" (the "Designated Selling Stockholders"),
severally in proportion to the number of shares of Stock to be sold by each of
them hereunder and not jointly, shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that Underwriter,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary
21
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky application, any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Underwriter and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, officer, employee or controlling person
in connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Designated Selling Stockholders shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section 10(g); and
provided further that a Designated Selling Stockholder shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning any other Selling Stockholder furnished to the Company by or on
behalf of such other Selling Stockholder specifically for inclusion therein; and
provided further that as to any Preliminary Prospectus, this indemnity agreement
shall not inure to the benefit of any Underwriter, its officers or employees, or
any person controlling that Underwriter, on account of any loss, claim, damage,
liability or action arising from the sale of Stock to any person by that
Underwriter if that Underwriter failed to send or give a copy of the Prospectus,
as the same may be amended or supplemented, to that person within the time
required by the Securities Act, and the untrue statement or alleged untrue
statement of any material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in the Prospectus,
unless such failure resulted from non-compliance by the Company with Section
6(c). Notwithstanding the foregoing, the aggregate liability of each Designated
Selling Stockholder pursuant to the provisions of this Section 10(b) and Section
10(c) shall be limited to an amount equal to the net proceeds (before deducting
expenses) received by such Designated Selling Stockholder from the sale of its
shares of Stock hereunder. The foregoing indemnity agreement is in addition to
any liability which any Designated Selling Stockholder may otherwise have to any
Underwriter or to any officer, employee or controlling person of that
Underwriter.
(c) The Selling Stockholders, severally in proportion to the number of
shares of Stock to be sold by each of them hereunder and not jointly, shall
indemnify and hold harmless each Underwriter, its officers and employees and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
22
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or in any Blue Sky application, or (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky application, any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
information concerning such Selling Stockholder furnished to the Company by or
on behalf of that Selling Stockholder specifically for inclusion therein, and
shall reimburse each Underwriter, its officers and employees and each such
controlling person for any legal or other expenses reasonably incurred by that
Underwriter, its officers and employees or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided that as to
any Preliminary Prospectus, this indemnity agreement shall not inure to the
benefit of any Underwriter, its officers or employees, or any person controlling
that Underwriter, on account of any loss, claim, damage, liability or action
arising from the sale of Stock to any person by that Underwriter if that
Underwriter failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or alleged untrue statement of any
material fact or omission or alleged omission to state a material fact in such
Preliminary Prospectus was corrected in the Prospectus, unless such failure
resulted from non-compliance by the Company with Section 6(c). Notwithstanding
the foregoing, the aggregate liability of each Selling Stockholder pursuant to
the provisions of this Section 10(c) and Section 10(b), if applicable, shall be
limited to an amount equal to the net proceeds (before deducting expenses)
received by such Selling Stockholder from the sale of its shares of Stock
hereunder. The foregoing indemnity agreement is in addition to any liability
which any Selling Stockholder may otherwise have to any Underwriter or any
officer, employee or controlling person of that Underwriter.
(d) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Representatives by or on behalf of that
Underwriter specifically for inclusion therein, and shall reimburse the Company
and any such director, officer or controlling person for any legal or other
expenses reasonably incurred by the Company or any
23
such director, officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person.
(e) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgement of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the Representatives, if
the indemnified parties under this Section 10 consist of any Underwriter or any
Underwriter's officers, employees or controlling persons, or by the Company, if
the indemnified parties under this Section consist of the Company or any of the
Company's directors, officers, employees or controlling persons. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
24
which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise, consent or judgment includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(f) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b), 10(c) or 10(d) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders (with the fault of the Company also being considered in
determining the fault of the Designated Selling Stockholders) on the one hand
and the Underwriters on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds (before deducting
expenses) from the offering of the Stock purchased under this Agreement received
by the Company and the Selling Stockholders on the one hand, and the total
underwriting discounts and commissions received by the Underwriters with respect
to the shares of the Stock purchased under this Agreement on the other hand bear
to the total gross proceeds from the offering of the shares of the Stock under
this Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders (with the fault of the Company also being
considered in determining the fault of the Designated Selling Stockholders) or
the Underwriters, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
shall be deemed to include, for purposes of this Section 10(f), any legal or
other expenses reasonably incurred by such indemnified party in
25
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(f), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 10(f) are several in proportion to their respective
underwriting obligations and not joint. Notwithstanding the foregoing, the
aggregate liability of each Selling Stockholder pursuant to the provisions of
this Section 10(f) shall be limited to an amount equal to the net proceeds
(before deducting expenses) received by such Selling Stockholder from the sale
of its shares of Stock hereunder.
(g) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth in the third sentence of the first paragraph of the cover
page and in paragraphs 2, 3, 4, 9 and 11 under the caption "Underwriting" in,
the Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
SECTION 11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1; provided,
however, that the remaining non-defaulting Underwriters shall not be obligated
to purchase any of the Stock on such Delivery Date if the total number of shares
of the Stock which the defaulting Underwriter or Underwriters agreed but failed
to purchase on such date exceeds 9.09% of the total number of shares of the
Stock to be purchased on such Delivery Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase more than 110% of the number of
shares of the Stock which it agreed to purchase on such Delivery Date pursuant
to the terms of Section 3. If the foregoing maximums are exceeded, the
remaining non-defaulting Underwriters, or those other underwriters satisfactory
to the Representatives who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them, all
the Stock to be purchased on such Delivery Date. If the foregoing maximums are
exceeded and the remaining Underwriters or other underwriters satisfactory to
the Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company and the Option Stockholders to
sell, the Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company or the
26
Selling Stockholders, except that the Company will continue to be liable for the
payment of expenses to the extent set forth in Sections 8 and 13. As used in
this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 11, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Stockholders for damages
caused by its default. If other underwriters are obligated or agree to purchase
the Stock of a defaulting or withdrawing Underwriter, either the Representatives
or the Company may postpone the Delivery Date for up to seven full business days
in order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
SECTION 12. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice given to and
received by the Company and the Selling Stockholders prior to delivery of and
payment for the Firm Stock if, prior to that time, any of the events described
in Sections 9(l) or 9(m), shall have occurred or if the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement.
SECTION 13. Reimbursement of Underwriters' Expenses. If the Company
or any Selling Stockholder shall fail to tender the Stock for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of the
Company or the Selling Stockholders to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Stockholders is
not fulfilled, the Company or the respective Selling Stockholder, as the case
may be, will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock and upon demand the Company or the respective Selling Stockholder, as
the case may be, shall pay the full amount thereof to the Representatives. If
this Agreement is terminated pursuant to Section 12 by reason of the default of
one or more Underwriters, neither the Company nor the Selling Stockholders shall
be obligated to reimburse any defaulting Underwriter on account of those
expenses.
SECTION 14. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to Xxxxxx Brothers Inc., Three World Financial Center,
New York New York 10285, Attention: Syndicate Department (Fax: 000-000-0000),
with a copy, in the case of any notice pursuant to Section 10(d), to the
Director of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc.,
Three World Financial Xxxxxx, 00xx Xxxxx, Xxx Xxxx XX 00000;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention:
27
Xxxxxx X. Xxxxxx, (Fax: (000) 000-0000), with a copy to Xxxxx X. Xxxxxxxxx,
Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (fax:
000-000-0000); and
(c) if to any Selling Stockholder, shall be delivered or sent by
mail, telex or facsimile transmission to the address of such Selling Stockholder
set forth on Schedule 2 hereto.
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Selling Stockholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Xxxxxx Brothers Inc. on behalf of the Representatives and the Company and the
Underwriters shall be entitled to act and rely upon any request, consent, notice
or agreement given or made on behalf of the Selling Stockholders by the
Custodian or the attorneys-in-fact acting on behalf of the Selling Stockholders.
.
SECTION 15. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Selling Stockholders and their respective representatives and successors.
This Agreement and the terms and provisions hereof are for the sole benefit of
only those persons, except that (A) the representations, warranties, indemnities
and agreements of the Company and the Selling Stockholders contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained in
Section 10(c) of this Agreement shall be deemed to be for the benefit of
directors, officers and employees of the Company, and any person controlling the
Company within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 15, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
SECTION 16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Stockholders and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Stock and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
SECTION 17. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
28
SECTION 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 19. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 20. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the Company,
the Selling Stockholders and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
ITXC Corp.
By_________________________________
Name:
Title:
The Selling Stockholders named in Schedule
2 to this Agreement
By_________________________________
Attorney-in-Fact
Accepted:
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
PaineWebber Incorporated
First Analysis Securities Corporation
Xxxxxxx Bros., L.P.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By Xxxxxx Brothers Inc.
By______________________________
Authorized Representative
Exhibit A
LOCK-UP LETTER AGREEMENT
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
PaineWebber Incorporated
First Analysis Securities Corporation
Xxxxxxx Bros., L.P.,
As Representatives of the several
Underwriters,
c/x Xxxxxx Brothers Inc.
Three World Financial Center
New York New York 10285
Dear Sirs:
The undersigned understands that you and certain other firms propose
to enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
AShares") of common stock, par value $0.001 per share (the "Common Stock"), of
ITXC Corp., a Delaware corporation (the "Company"), from the Company and from
certain selling stockholders of the Company (the "Selling Stockholders") and
that the Underwriters propose to reoffer the Shares to the public (the
"Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock (other
than the Shares) or substantially similar securities owned by the undersigned on
the date of execution of this Lock-Up Letter Agreement or on the date of the
execution of the Underwriting Agreement, or sell or grant options, rights or
warrants with respect to any shares of Common Stock or substantially similar
securities (other than the grant of options pursuant to option plans existing on
the date hereof) or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or
2
otherwise, except to the Underwriters pursuant to the Underwriting Agreement,
for a period of 90/1/ days after the effective date of the Registration
Statement relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, the undersigned will be released from
the undersigned's obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company, the Selling Stockholders
and the Underwriters will proceed with the Offering in reliance on this Lock-Up
Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant
to an Underwriting Agreement, the terms of which are subject to negotiation
among the Company, the Selling Stockholders and the Underwriters.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-Up Letter Agreement and
that, upon request, the undersigned will execute any additional documents
necessary in connection with the enforcement hereof. Any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Very truly yours,
By:_________________________________
Name:
Title:
Dated:__________________________
--------------
/1/ 240 days solely with respect to VocalTec Communications, Inc..
Exhibit B
Opinion of Counsel to the Company
1. Each of the Company and the Domestic Subsidiary (A) has been duly
organized and is validly existing as a corporation (in the case of the Company)
or limited liability company (in the case of the Domestic Subsidiary) in good
standing under the laws of its jurisdiction of organization, (B) is duly
qualified to do business and is in good standing as a foreign corporation (in
the case of the Company) or limited liability company (in the case of the
Domestic Subsidiary) in each jurisdiction in the United States in which its
ownership or lease of property or the conduct of its business requires such
qualification and (C) has all power and authority necessary to own or hold its
properties and conduct the business in which it is engaged, except, in the case
of clauses (B) and (C), where the failure to be so qualified and to be in good
standing as a foreign corporation (in the case of the Company) or limited
liability company (in the case of the Domestic Subsidiary) or to have such power
or authority would not, singularly or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
2. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the shares of Stock being delivered on such Delivery Date) have been
duly and validly authorized and issued, are fully paid and non-assessable and
conform in all material respects to the description thereof contained in the
Prospectus; to the best of such firm's knowledge after reasonable investigation,
the Company is the sole member of the Domestic Subsidiary, which is organized as
a limited liability company, and the Company holds such membership interest free
and clear of all liens, encumbrances, equities or claims, other than liens
securing the Credit Agreement.
3. There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any shares of the
Stock pursuant to the Company's certificate of incorporation or by-laws or any
agreement or other instrument known to such counsel;
4. To the best of such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would be
reasonably likely to have a Material Adverse Effect; and, to the best of such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
5. Such counsel has been advised by the Commission that the Registration
Statement was declared effective under the Securities Act as of the date and
time specified in such opinion; the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and, to the knowledge of
such counsel, no stop order suspending the effectiveness of the Registration
2
Statement has been issued and no proceeding for that purpose is pending or
threatened by the Commission;
6. The Registration Statement, as of its effective date, and the
Prospectus, as of its date, and any further amendments or supplements thereto
made by the Company prior to such Delivery Date (except for the financial
statements, the notes thereto, supporting schedules and other financial or
statistical data included therein or omitted therefrom, as to which such counsel
need express no opinion) complied as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations;
7. The statements contained in the Prospectus under the captions "Certain
U.S. Federal Income Tax Considerations to Non-U.S. Holders", insofar as they
describe federal statutes, rules and regulations, constitute a fair summary
thereof;
8 The statements contained in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute summaries
of the terms of the Company's capital stock (including the Stock) constitute
accurate summaries of the terms of such capital stock in all material respects;
9. To the best of such counsel's knowledge, there are no contracts or
other documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to the
Registration Statement;
10. This Agreement has been duly authorized, executed and delivered by the
Company;
11. The issue and sale of the shares of Stock being delivered on such
Delivery Date by the Company pursuant to this Agreement, and the execution,
delivery and compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument identified on the
schedule annexed to such counsel's opinion furnished to such counsel by the
Company, nor will such actions result in any violation of the provisions of (i)
the certificate of incorporation (as amended through such Delivery Date) or by-
laws (as amended through such Delivery Date) of the Company or the
organizational documents of the Domestic Subsidiary or (ii) any statute, rule or
regulation or any order known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or its Domestic Subsidiary
or any of their properties or assets; and except for the registration of the
Stock under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws or by the NASD in connection with
the purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
3
transactions contemplated hereby, other than such consents, approvals,
authorizations, orders, filings and registrations as have been made or obtained;
and
12. To the best of such counsel's knowledge, except as otherwise disclosed
in the Registration Statement, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
(other than rights which have been waived or satisfied) to require the Company
to file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New Jersey and the General Corporation Law of the State
of Delaware and that such counsel is not admitted in the State of Delaware. The
opinion of Xxxxxxxxxx Xxxxxxx PC shall also be to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis (other than with
respect to certain regulatory matters), has acted as counsel to the Company in
connection with previous financing transactions and has acted as counsel to the
Company in connection with the preparation of the Registration Statement, (y)
such counsel has participated in conferences with officials and other
representatives of the Company, the Representatives, counsel to the Underwriters
and the Company's independent certified public accountants, at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and (z) based on the foregoing, together with such counsel's
examination of the Registration Statement and the Prospectus and its
investigations made in connection with the preparation of the Registration
Statement and the Prospectus, no facts have come to the attention of such
counsel which lead it to believe that, as of the Effective Date, the
Registration Statement (other than the financial statements, the notes thereto,
supporting schedules and other financial or statistical data included therein or
omitted therefrom, as to which such counsel need express no opinion) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that, as of its date and the applicable Delivery
Date, the Prospectus (other than the financial statements, the notes thereto,
supporting schedules and other financial or statistical data included therein or
omitted therefrom, as to which such counsel need express no opinion) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as set forth in clauses 7
and 8 above).
Exhibit C
Opinion of Counsel to the Selling Stockholders
1. The Selling Stockholder has full right, power and authority to enter
into the Underwriting Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of the Underwriting
Agreement, the Power of Attorney and the Custody Agreement by the Selling
Stockholder and the consummation by the Selling Stockholder of the transactions
contemplated thereby will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
statute, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument identified on Annex A hereto furnished to us by the
Selling Stockholder and which the Selling Stockholder has represented to us
lists all material agreements to which the Selling Stockholder [and its
subsidiaries]/2/ [is/are] a party or by which the Selling Stockholder [and its
subsidiaries] [is/are] bound or to which any of the property or assets of the
Selling Stockholder [and its subsidiaries] is subject, nor will such actions
result in any violation of [the [organizational documents] of the Selling
Stockholder or]/3/ any statute or any order, rule or regulation known to us of
any court or governmental agency or body having jurisdiction over the Selling
Stockholder or the property or assets of the Selling Stockholder; and, except
for the registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state and foreign securities laws and by
the National Association of Securities Dealers, Inc. and the Nasdaq Stock Market
in connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of the Underwriting Agreement, the Power
of Attorney or the Custody Agreement by the Selling Stockholder and the
consummation by the Selling Stockholder of the transactions contemplated
thereby;
2. The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder;
3. The Power-of-Attorney and Custody Agreement have been duly authorized,
executed and delivered by the Selling Stockholder and constitute valid and
binding agreements of the Selling Stockholder, enforceable in accordance with
their respective terms; and
------------------
/2/ Insert if applicable.
/3/ Non-individual Selling Stockholder to fill-in governing organizational
documents.
4. [Option 1 -- The Selling Stockholder has full power, right and
authority to sell the shares of Stock to be sold by it and upon the payment and
transfer contemplated by the Underwriting Agreement, the Underwriters will
acquire a security entitlement with respect to such shares and no action based
on any adverse claim may be asserted against the Underwriters.]/4/ or
[Option 2 -- The Selling Stockholder is the sole registered owner of
the shares of Stock to be sold by it; the Selling Stockholder has full power,
right and authority to sell such shares and upon payment for and delivery of the
shares of Stock in accordance with the
--------------
/4/ To be used if immediately prior to the transfer to the Underwriters, the
shares are included in a global or balance certificate registered in the name of
Cede & Co., as nominee for DTC, and are held in the custody of DTC, as
securities intermediary, or its agent, and (2) the Underwriters receive security
entitlements with respect to the shares through book entries by DTC to the
accounts of the Underwriters. This option is used when one of the following
situations applies:
(a) prior to the closing the Selling Stockholder holds share certificates
representing the shares to be sold, registered in the name of the Selling
Stockholder, and the Selling Stockholder delivers such certificates to the
Company's transfer agent, with instructions to transfer such certificates to DTC
or Cede & Co., as its nominee, at the closing, for credit of security
entitlements to the securities accounts of the underwriters;
(b) prior to the closing the Selling Stockholder owns security
entitlements (with respect to either certificated or uncertificated securities)
and transfers such security entitlements to the underwriters by entitlement
orders to the Selling Stockholder's securities intermediaries; or
(c) prior to the closing the shares to be sold are uncertificated
securities registered on the books of the Company in the name of the Selling
Stockholder, and at the closing the Selling Stockholder instructs the Company to
transfer registration of such shares to Cede & Co., as nominee for DTC, for
credit of security entitlements to the securities accounts of the underwriters.
Underwriting Agreement, the Underwriters will acquire all of the rights of the
Selling Stockholder in such shares and will also acquire their interest in such
shares free of any adverse claim.]/5/
In rendering the opinion in paragraph 4, counsel may assume:
* If Option 1 for paragraph 4 is used, that (i) DTC is a
"securities intermediary" as defined in Section 8-102 of the New
York UCC, and the State of New York is the "securities
intermediary's jurisdiction" of DTC for purposes of Section 8-110
of the New York UCC, (ii) the shares of Stock are registered in
the name of DTC or its nominee, and DTC or another person on
behalf of DTC maintains possession of certificates representing
the shares of Stock, (iii) DTC indicates by book entries on its
books that security entitlements with respect to the shares of
Stock have been credited to the Underwriters' securities accounts
and (iv) the Underwriters are purchasing the shares of Stock in
good faith and without notice of any adverse claim (within the
meaning of the New York UCC); or
* If Option 2 for paragraph 4 is used, that the Underwriters
purchase the Stock in good faith and do not have notice of any
adverse claim (within the meaning of the Uniform Commercial Code
as in effect in the State of New York (the "New York UCC")) to
the shares of Stock.
Such counsel shall also furnish to the Representatives a written
statement, addressed to the Underwriters and dated the First Delivery Date, in
form and substance satisfactory to the Representatives, to the effect that such
counsel has acted as counsel to the Selling Stockholder on a regular basis, if
applicable, and has acted as counsel to the Selling Stockholder in connection
with the execution of the Underwriting Agreement, the Power of Attorney and the
Custody Agreement.
----------------
/5/ To be used if the shares sold by the Selling Stockholder (1) are
represented by certificates registered in the name of the Selling Stockholder
(and not in the name of DTC or a nominee thereof) and (2) are delivered at the
closing of the secondary offering to the Underwriters, accompanied by a stock
power or other indorsement.
