Exhibit 1.1
4,400,000 shares
MAGINET CORPORATION
Common Stock
UNDERWRITING AGREEMENT
----------------------
December ___, 1996
XXXXXX BROTHERS INC.
XXXXXXXXX & XXXXX LLC
As Representatives of the several
U.S. Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
MagiNet Corporation, a Delaware corporation (the "Company"),
proposes to sell 4,400,000 shares (the "Firm Stock") of the Company's Common
Stock, par value $.001 per share (the "Common Stock"), to the U.S. Underwriters
named in Schedule 1 hereto (the "U.S. Underwriters"). In addition, the Company
proposes to grant to the U.S. Underwriters an option to purchase up to an
additional 660,000 shares of the Common Stock on the terms and for the purposes
set forth in Section 3 (the "Option Stock"). The Firm Stock and the Option
Stock, if purchased, are hereinafter collectively called the "Stock." This is to
confirm the agreement concerning the purchase of the Stock from the Company by
the U.S. Underwriters.
It is understood by all parties that the Company is
concurrently entering into an agreement dated the date hereof (the
"International Underwriting Agreement") providing for the sale by the Company of
1,265,000 shares of Common Stock (including the over-allotment option
thereunder) (the "International Stock") through arrangements with certain
underwriters outside the United States (the "International Managers"), for whom
Xxxxxx Brothers International ( Europe) and Xxxxxxxxx & Xxxxx LLC are acting as
lead managers. The U.S. Underwriters and the International Managers
simultaneously are entering into an agreement between the U.S. and international
underwriting syndicates (the "Agreement Between U.S. Underwriters and
International Managers") which provides for, among other things, the transfer of
shares of Common Stock between the two syndicates. Two forms of prospectus are
to be used in connection with the offering and sale of shares of Common Stock
contemplated by the foregoing, one relating to the Stock and the other relating
to the International Stock. The latter form of prospectus will be identical to
the former except for certain substitute pages as included in the registration
statement and amendments thereto referred to below.
Except as used in Sections 2, 3, 4, 9 and 10 herein, and except as the context
may otherwise require, references herein to the Stock shall include all shares
of the Common Stock which may be sold pursuant to either this Agreement or the
International Underwriting Agreement, and references herein to any prospectus
whether in preliminary or final form, and whether as amended or supplemented,
shall include both the U.S. and the international versions thereof.
1. Representations, Warranties and Agreements of the
Company. The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1, and
amendments thereto, with respect to the Stock have (i) been
prepared by the Company in conformity with the requirements of
the United States Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Rules
and Regulations") of the United States Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with
the Commission under the Securities Act and (iii) become
effective under the Securities Act. Copies of such
registration statement and the amendments thereto have been
delivered by the Company to you as the representatives (the
"Representatives") of the U.S. 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 in accordance with Section
5(a) hereof and deemed to be a part of the registration
statement as of the Effective Time pursuant to paragraph (b)
of Rule 430A of the Rules and Regulations; and "Prospectus"
means such final prospectus, as first filed with the
Commission pursuant to Rule 424(b) of the Rules and
Regulations. 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 (in the case of the Registration Statement
and any amendments thereto) or are filed with the Commission
(in the case of the Prospectus and any amendment or supplement
thereto), 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
2.
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 through the
Representatives by or on behalf of any U.S. Underwriter
specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as
defined in Section 16) have been duly incorporated and are
validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which the failure
to be so qualified would have a material adverse effect on the
Company's business, financial condition, and results of
operations, taken as a whole, have all power and authority to
own or hold their respective properties and to conduct the
businesses in which they are engaged and no proceeding has
been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail such power
and authority or qualification.
(d) The Company has an authorized capitalization as
set forth under the heading "Capitalization" 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 to the
description thereof contained in the Prospectus; and except as
disclosed in or contemplated by the Prospectus or the
financial statements of the Company and the related notes
thereto included in the Prospectus all of the issued shares of
capital stock of each subsidiary of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable and (except for directors' qualifying shares,
preemptive rights of the Company's joint venture partners, and
liens and pledges established in connection with the Company's
senior secured debt) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities
or claims.
(e) The unissued shares of the Stock to be issued and
sold by the Company to the U.S. Underwriters hereunder and
under the International Underwriting Agreement have been duly
authorized and, when issued and delivered against payment
therefor as provided herein and in the International
Underwriting Agreement, will be duly authorized, validly
issued, fully paid and non-assessable; and the Stock will
conform to the description thereof contained in the
Prospectus.
(f) This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable
3.
principles (whether considered in a proceeding in equity or at
law) or an implied covenant of good faith and fair dealing.
(g) The execution, delivery and performance of this
Agreement and the International Underwriting 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 material 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 the charter or by-laws of
the Company or any of its subsidiaries or 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 United States
Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and applicable state or foreign securities laws in
connection with the purchase and distribution of the Stock by
the U.S. Underwriters and the International Managers, 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 or the International Underwriting Agreement
by the Company and the consummation of the transactions
contemplated hereby and thereby.
(h) Except as disclosed in the Prospectus, 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.
(i) Except as described 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
option plans or other employee compensation plans or pursuant
to outstanding options, rights or warrants.
(j) 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
4.
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 change in the capital stock or long-term debt of the
Company or any of its subsidiaries 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 or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(k) 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.
(l) To the best of the Company's knowledge, Ernst &
Young LLP, who have expressed their opinion with respect to
the financial statements of the Company, whose report appears
in the Prospectus and who have delivered the initial letter
referred to in Section 7(f) hereof, are independent public
accountants as required by the Securities Act and the Rules
and Regulations.
(m) Except as described in the Prospectus, and
subject to the liens and pledges established in connection
with the Company's senior secured debt and the financing
activities of Prodac Prozessdatentechnik GmbH ("Prodac") and
the Company's subsidiaries in Japan and Korea, the Company or
the applicable subsidiary has good and marketable title to all
real property and good and marketable title to all personal
property reflected as owned by it in the financial statements
hereinabove described (or elsewhere in the Prospectus), 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 and adversely 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; and all real property and buildings 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 interfere with the
use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(n) 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
5.
customary for companies engaged in similar businesses in
similar industries and in similar stages of development.
(o) Except as described in the Prospectus, 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, except as described in the Prospectus, the
Company has no knowledge that the conduct of their respective
businesses will conflict with, and they have not received any
notice of any claim of conflict with, any such rights of
others.
(p) 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, is
reasonably likely to have a material adverse effect on the
consolidated financial position, stockholders' equity, results
of operations, business or prospects of the Company and its
subsidiaries, taken as a whole; and to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(q) 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 therein by reference as permitted by
the Rules and Regulations.
(r) No relationship, direct or indirect, exists
between or among the Company on the one hand, and the
directors, officers, stockholders, customers or suppliers of
the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(s) No labor disturbance by the employees of the
Company exists or, to the knowledge of the Company, is
imminent which could reasonably be expected to have a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries taken as a
whole.
(t) 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
6.
liability; the Company has not incurred and does not expect to
incur liability under I)T(i)tle 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 nothing has
occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
(u) The Company has filed all federal, state and
local income and franchise tax returns required to be filed
through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the
Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have) a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries taken as a
whole.
(v) 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 any securities, (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.
(w) 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.
(x) Neither the Company nor any of its subsidiaries
(i) is in violation of its charter or by-laws, (ii) is in
default in any material 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 material
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 material 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
7.
or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business,
except where such failure, default or violation to obtain any
license is not reasonably likely to have a material adverse
effect upon the Company and its subsidiaries, taken as a
whole.
(y) 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.
(z) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment
of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its subsidiaries (or, to
the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or
previously owned or leased by the Company or its subsidiaries
in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except
for any violation or remedial action which would not have, or
could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a
material adverse effect on the general affairs, management,
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a
whole; 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 on the general affairs, management, consolidated
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a
whole; 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.
8.
(aa) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the
United States Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
2. Purchase of the Stock by the U.S. 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 4,400,000
shares of the Firm Stock to the several U.S. Underwriters and each of the U.S.
Underwriters, severally and not jointly, agrees to purchase the number of shares
of the Firm Stock set forth opposite that U.S. Underwriter's name in Schedule 1
hereto. The respective purchase obligations of the U.S. Underwriters with
respect to the Firm Stock shall be rounded among the U.S. Underwriters to avoid
fractional shares, as the Representatives may determine.
In addition, the Company grants to the U.S. Underwriters an
option to purchase up to 660,000 shares of Option Stock. Such option is granted
solely for the purpose of covering over-allotments in the sale of Firm Stock and
is exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally for the account of the U.S. Underwriters in proportion to
the number of shares of Firm Stock set forth opposite the name of such U.S.
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
U.S. Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no U.S. Underwriter shall be obligated to purchase
Option Stock other than in 100 share amounts. The price of both the Firm Stock
and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock
to be delivered on the First Delivery Date or the Second Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein and in the
International Underwriting Agreement.
3. Offering of Stock by the U.S. Underwriters.
Upon authorization by the Representatives of the release of
the Firm Stock, the several U.S. Underwriters propose to offer the Firm Stock
for sale upon the terms and conditions set forth in the Prospectus.
It is understood that up to 220,000 shares of the Firm Stock
will initially be reserved by the several U.S. Underwriters for offer and sale
upon the terms and conditions set forth in the Prospectus and in accordance with
the rules and regulations of the National Association of Securities Dealers,
Inc. to employees and persons having business relationships with the Company and
its subsidiaries who have heretofore delivered to the Representatives offers to
purchase shares of Firm Stock in form satisfactory to the Representatives, and
that any allocation of such Firm Stock among such persons will be made in
accordance with timely directions received by the Representatives from the
Company; provided, that under no circumstances will the Representatives or any
U.S. Underwriter be liable to the Company or to any such person for any action
taken or omitted in good
9.
faith in connection with such offering to employees and persons having business
relationships with the Company and its subsidiaries. It is further understood
that any shares of such Firm Stock which are not purchased by such persons will
be offered by the U.S. Underwriters to the public upon the terms and conditions
set forth in the Prospectus.
Each U.S. Underwriter agrees that, except to the extent
permitted by the Agreement Between U.S. Underwriters and International Managers,
it will not offer or sell any of the Stock outside of the United States or
Canada.
4. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the office of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 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 shall deliver or cause to be delivered
certificates representing the Firm Stock to the Representatives for the account
of each U.S. Underwriter against payment to or upon the order of the Company of
the purchase price by wire transfer to an account designated by the Company.
Time shall be of the essence, and delivery of the Firm Stock at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each U.S. Underwriter to purchase the Firm Stock hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of
this Agreement the option granted in Section 2 may be exercised in whole or in
part, but only once, 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 the "Second
Delivery Date" and the First Delivery Date and the Second Delivery Date are
sometimes each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at
the place specified in the first sentence of the first paragraph of this Section
4 (or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time,
10.
on the Second Delivery Date. On the Second Delivery Date, the Company shall
deliver or cause to be delivered the certificates representing the Option Stock
to the Representatives for the account of each U.S. Underwriter against payment
to or upon the order of the Company of the purchase price by wire transfer to an
account designated by the Company. Time shall be of the essence, and delivery of
the Option Stock at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each U.S. Underwriter to purchase the
Option Stock hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.
5. 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;
(b) To furnish promptly to each of the
Representatives and to counsel for the U.S. 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)c(i)nformed copies of the
11.
Registration Statement as originally filed with the Commission
and each amendment thereto (in each case excluding exhibits
other than this Agreement and the computation of per share
earnings) 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 U.S.
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 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 U.S. Underwriters and obtain the consent
of the Representatives to the filing;
(f) As soon as practicable after the Effective Date,
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 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the
Company, Rule 158);
(g) For a period of five years following the
Effective Date, to furnish to the Representatives copies of
all materials furnished by the Company to its stockholders and
all public reports and all reports and financial statements
furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(h) Promptly from time to time to take such
action as the Representatives may reasonably request to
qualify the Stock for offering and sale under the securities
12.
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 or to file
a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the
Prospectus, not to, directly or indirectly, offer for sale,
sell or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be reasonably expected
to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (other than the Stock
and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation
plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights), or sell or grant
options, rights or warrants with respect to any shares of
Common Stock (other than the grant of options pursuant to
option or stock purchase plans existing on the date hereof),
without the prior written consent of Xxxxxx Brothers Inc.; and
to cause each officer and director of the Company to furnish
to the Representatives, prior to the First Delivery Date, a
letter or letters, in form and substance satisfactory to
counsel for the U.S. Underwriters, pursuant to which each such
person shall agree not to, directly or indirectly, offer for
sale, sell 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 such person at
any time in the future of) any shares of Common Stock for a
period of 180 days from the date of the Prospectus, without
the prior written consent of Xxxxxx Brothers Inc.;
(j) Prior to the Effective Date, to apply for the
inclusion of the Stock on the Nasdaq National Market, and to
use its best efforts to complete that inclusion, subject only
to official notice of issuance and evidence of satisfactory
distribution, prior to the First Delivery Date;
(k) Upon the filing with the Commission of any
reports on Form SR pursuant to Rule 463 of the Rules and
Regulations, to furnish a copy thereof to the counsel for the
U.S. Underwriters, and to deliver promptly to the
Representatives a signed copy of each report on Form SR filed
by it with the Commission;
(l) To apply the net proceeds from the sale of
the Stock being sold by the Company as set forth in the
Prospectus; and
(m) To take such steps as shall be necessary to
ensure that neither the Company nor any subsidiary shall
become an "investment company" within the meaning of such term
under the United States Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
13.
6. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (C) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement, the Agreement Between U.S. Underwriters and
International Managers, any Supplemental Agreement Among U.S. Underwriters and
any other related documents in connection with the offering, purchase, sale and
delivery of the Stock; (e) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
sale of the Stock; (f) the Nasdaq National Market application fee; (g) the fees
and expenses of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the U.S. Underwriters to the extent reasonable and customary for such
work); and (h) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided that, except as
specifically provided in this Section 6 and in Section 11, the U.S. Underwriters
shall pay the fees, costs and expenses of their counsel and their other costs
and expenses and any transfer taxes on the Stock which they may sell and the
expenses of advertising any offering of the Stock made by the U.S. Underwriters.
7. Conditions of U.S. Underwriters' Obligations. The
respective obligations of the U.S. Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and
conditions; provided, however, that the conditions set forth in Sections 7(e),
7(f) and 7(g) shall not apply in connection with the sale of Option Stock on the
Second Delivery Date:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a); no stop order
suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.
(b) No U.S. Underwriter or International Manager
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 a fact which, in the opinion of Xxxxxxx,
Phleger & Xxxxxxxx LLP, counsel for the U.S. 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.
14.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the International Underwriting Agreement, the
Stock, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the U.S.
Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, shall have furnished to the Representatives its
written opinion, as counsel to the Company, addressed to the
U.S. Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to
the effect that:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the state of Delaware, is qualified
to do business and is in good standing as a foreign
corporation in each jurisdiction in which the failure
to be so qualified would have a material adverse
effect on the Company's business, financial
condition, or results of operations and has all power
and authority necessary to own or hold its properties
and conduct the business in which it is engaged;
(ii) The Company has an authorized
capitalization as set forth under the caption
"Capitalization" 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 authorized and
validly issued, are fully paid and non-assessable and
conform to the description thereof contained in the
Prospectus;
(iii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the
Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such
counsel;
(iv) The building in which the Company's
principal executive offices are located is held by
the Company under valid, subsisting and enforceable
leases, with such exceptions that are not material
and do not interfere with the use made and proposed
to be made of such property and buildings by the
Company;
(v) To 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
is a party or of which any property or assets of the
Company is the subject which are required to be
described in the Prospectus;
15.
(vi) 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 no stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission;
(vii) The Registration Statement and the
Prospectus and any further amendments or supplements
thereto made by the Company prior to such Delivery
Date (other than the financial statements and notes
thereto, financial schedules and other financial and
statistical data included therein, as to which such
counsel need express no opinion) comply as to form in
all material respects with the requirements of the
Securities Act and the Rules and Regulations;
(viii) The statements contained in the Prospectus
under the caption "Certain United States Federal Tax
Considerations for Non-U.S. Holders of Common Stock,"
insofar as they describe federal statutes, rules and
regulations, constitute a fair summary thereof;
(ix) To 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 so
described or filed;
(x) This Agreement and the International
Underwriting Agreement have each been duly
authorized, executed and delivered by the Company and
each constitutes a valid and binding obligation of
the Company enforceable against the Company in
accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a
proceeding in equity or at law) or an implied
covenant of good faith and fair dealing;
(xi) The issue and sale of the shares of Stock
being delivered on such Delivery Date by the Company
and the compliance by the Company with all of the
provisions of this Agreement and the International
Underwriting Agreement and the consummation 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 material indenture, mortgage, deed
of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company
is a party or by which the
16.
Company is bound or to which any of the property or
assets of the Company is subject (but excluding any
such document or agreement which is governed by the
laws of any foreign jurisdiction), nor will such
actions result in any violation of the provisions of
the charter or by-laws of the Company or any statute
or any order, rule or regulation known to such
counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its
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
securities laws in connection with the purchase and
distribution of the Stock by the U.S. Underwriters
and the International Managers, no consent, approval,
authorization or order of, or filing or registration
with, any federal or state court or governmental
agency or body is required for the execution,
delivery and performance of this Agreement or the
International Underwriting Agreement by the Company
and the consummation of the transactions contemplated
hereby and thereby; and
(xii) To such counsel's knowledge, and except as
disclosed in the Prospectus, 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 I)s(i)ate
that its opinion is limited to matters governed by the Federal
laws of the United States of America, the laws of the State of
California and the General Corporation Law of the State of
Delaware and that such counsel is not admitted in the State of
Delaware; (ii) state that no opinion is given with respect to
the matters on which the Company's other counsel are opining,
and (iii) limit the disclosure or publication of the opinion
to the U.S. Underwriters and International Managers. Such
counsel shall also have furnished to the Representatives a
written statement, addressed to the U.S. Underwriters and
dated such Delivery Date, in form and substance satisfactory
to the Representatives, to the effect that (x) such counsel
has acted as counsel to the Company on a regular basis, 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, and (y) based on the foregoing, no facts have come
to the attention of such counsel which lead it to believe that
the Registration Statement, as of the Effective Date,
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
17.
not misleading, or that the Prospectus as of its date or as of
such Delivery Date 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.
(e) The Representatives shall have received from
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the U.S.
Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related
matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to
pass upon such matters.
(f) 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 U.S. Underwriters and dated
the date hereof I)c(i)nfirming 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.
(g) 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 U.S.
Underwriters and dated such Delivery Date (i) confirming that
they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information
is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(h) The Company shall have furnished to the
Representatives a certificate of the Company, dated such
Delivery Date, executed by its Chairman of the Board,
18.
its President or a Vice President and its chief financial
officer stating, on behalf of the Company, that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and
correct as of such Delivery Date; the Company has
complied with all its agreements contained herein;
and the conditions set forth in Sections 7(a) and
7I)h(i)ve been fulfilled; and
(ii) They have carefully examined the
Registration Statement and the Prospectus and (A) as
of the Effective Date, the Registration Statement and
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.
(i) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Prospectus 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 or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting
the general affairs, management, consolidated 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.
(j) 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
19.
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
a majority in interest of the several U.S. Underwriters,
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.
(k) The Nasdaq National Market shall have approved
the Stock for inclusion, subject only to official notice of
issuance and evidence of satisfactory distribution.
(l) The closing under the International Underwriting
Agreement shall have occurred concurrently with the closing
hereunder on the First Delivery Date.
(m) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, shall have furnished to the Representatives on
the First Delivery Date its written opinion, as U.S. counsel
to each of MagiNet Israel, Inc., a California corporation
("MagiNet Israel"), MagiNet South Africa, Inc., a California
corporation ("MagiNet South Africa"), Pacific Pay Video
Limited, a California corporation ("PPVL"), and MagiNet
International Corporation, a California corporation ("MagiNet
International"), addressed to the U.S. Underwriters, in form
and substance reasonably satisfactory to the Representatives,
to the effect that:
(i) Each of MagiNet Israel, MagiNet South
Africa, PPVL, and MagiNet International
(collectively, the "California Subsidiaries") has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
State of California and has all power and authority
necessary under California law to hold their
respective properties and conduct their respective
businesses;
(ii) MagiNet Israel has an authorized
capitalization of 1,000 shares of Common Stock, of
which 100 shares are issued and outstanding; MagiNet
South Africa has an authorized capitalization of 100
shares of Common Stock, all of which are issued and
outstanding; PPVL has an authorized capitalization of
15,000,000 shares of Common Stock, of which 100
shares are issued and outstanding, and 8,978,930
shares of Preferred Stock, none of which are
outstanding; and MagiNet International has an
authorized capitalization of 1,000 shares of Common
Stock, of which 100 shares are issued and
outstanding. The Company owns all the outstanding
shares of each of the California Subsidiaries free
and clear of all liens, encumbrances, equities or
claims, except for liens and pledges established in
connection with the Company's senior secured debt.
All such outstanding shares have been duly authorized
and validly issued, and are fully paid and
nonassessable;
20.
(iii) There are no preemptive or other rights to
subscribe for or purchase, nor any restrictions upon
the voting or transfer of, any shares of stock of
such California Subsidiary pursuant to the charter or
by-laws of such California Subsidiary or any
agreement or other instrument known to such counsel.
(iv) To such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which such
California Subsidiary is a party or of which any
property or assets of such California Subsidiary are
subject which are required to be described in the
Prospectus.
(n) For each of MagiNet Israel, MagiNet South Africa,
MagiNet Australia Pty Limited, MagiNet (H.K.) Ltd., MagiNet,
KK Ltd., MagiNet New Zealand Limited, MagiNet (Singapore) Pte.
Ltd., MagiNet Taiwan, Inc., and Pacific Pay Video (Thailand)
Co. Ltd. (collectively, the "Foreign Subsidiaries"), the
Representatives shall have received on the First Delivery Date
an opinion of foreign counsel for each such Foreign Subsidiary
in form and substance reasonably satisfactory to the
Representatives, as is customary in local practice in such
jurisdiction, and subject to such reasonable qualifications as
such local counsel shall require to the effect that:
(i) Such Foreign Subsidiary has been duly
incorporated and is validly existing and in good
standing and duly qualified to conduct business under
the laws of the country in which it is incorporated
and/or operates, provided that with respect to the
due incorporation and valid existence of MagiNet
Israel and MagiNet South Africa, local counsel shall
not be required to deliver such opinion, which shall
be delivered by Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation as described above;
(ii) The capitalization of such Foreign
Subsidiary is as set forth in such opinion, including
the number of shares authorized for issuance and the
number of shares outstanding as of the First Delivery
Date (excluding MagiNet Israel and MagiNet South
Africa, which opinion shall be delivered by Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
as described above);
(iii) All issued shares of the capital stock of
such Foreign Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable
(excluding MagiNet Israel and MagiNet South Africa,
which opinion will be delivered by Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, as
described above) and, subject to the liens and
encumbrances established in connection with the
Company's senior secured debt, are owned directly or
indirectly by the Company;
21.
(iv) There are no preemptive rights or other
rights to subscribe for or to purchase, nor any
restrictions upon the voting or transfer of, any
shares of the capital stock of such Foreign
Subsidiary pursuant to the charter documents of any
such Foreign Subsidiary (except for MagiNet Israel
and MagiNet South Africa, which opinion will be
delivered by Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, as described above) or any
agreement or other instrument known to such counsel;
(v) To the best of such counsel's knowledge,
there are no legal or governmental proceedings
pending to which such Foreign Subsidiary is a party
or of which any property or assets of such Foreign
Subsidiary are subject which, if determined adversely
to such foreign subsidiary, would have a material
adverse effect on the business, operating results or
financial condition of such Foreign Subsidiary;
(vi) The issue and sale to the public of shares
of the Company's Common Stock pursuant to the
Registration Statement will not result in a breach or
violation of any of the terms or provisions of any
contract material to such Foreign Subsidiary's
business, operating results or financial condition,
which contracts shall be listed on a schedule
reasonably satisfactory to the Representatives
attached to such opinion, nor will such actions
result in any violation of the charter or bylaws of
such Foreign Subsidiary; and
(vii) Each of the hotel contracts to which such
Foreign Subsidiary is a party, to be identified in a
schedule of such contracts reasonably satisfactory to
the Representatives, constitutes a legal, valid, and
binding obligation of the parties thereto,
enforceable in accordance with its terms.
(o) Bruckhaus Xxxxxxxx Xxxxxxxx shall have furnished
to the Representatives on the First Delivery Date its written
opinion, as counsel to each of MagiNet GmbH and Prodac
(collectively, the "German Subsidiaries"), in form and
substance reasonably satisfactory to the Representatives, as
is customary in local practice in Germany, and subject to such
reasonable qualifications as such counsel shall require to the
effect that:
(i) Each of the German Subsidiaries has been
duly incorporated and is validly existing and duly
qualified to conduct business in good standing under
the laws of Germany;
(ii) The capitalization of each of the German
Subsidiaries is as set forth in such opinion,
including the number of shares authorized for
issuance and the number of shares outstanding as of
the First Delivery Date;
22.
(iii) All issued shares of the capital stock of each of the
German Subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable and, subject to the liens
and encumbrances established in connection with the Company's
senior secured debt, are owned directly or indirectly by the
Company or MagiNet GmbH, as the case may be;
(iv) There are no preemptive rights or other rights to
subscribe for or to purchase, nor any restrictions upon the
voting or transfer of, any shares of the capital stock of either
of the Germany Subsidiaries pursuant to the charter documents of
such German Subsidiary or any agreement or other instrument known
to such counsel;
(v) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending to which either German
Subsidiary is a party or of which any property or assets of
either German Subsidiary are subject which, if determined
adversely to such German Subsidiary, would have a material
adverse effect on the business, operating results or financial
condition of such German Subsidiary;
(vi) The issued and sale to the public of shares of the
Company's Common Stock pursuant to the Registration Statement
will not result in a breach or violation of any of the terms or
provisions of any contract material to such German Subsidiary's
business, operating results or financial condition, which
contracts shall be listed on a schedule reasonably satisfactory
to the Representatives attached to such opinion, nor will such
actions result in any violation of the charter or bylaws of such
German Subsidiary; and
(vii) Each of the hotel contracts to which Prodac or any
subsidiary of Prodac is a party, to be identified in a schedule
of such contracts reasonably satisfactory to the Representatives,
constitutes a legal, valid, and binding obligation of the
parties thereto, enforceable in accordance with its terms.
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 U.S. Underwriters.
8. Indemnification and Contributions.
(a) The Company shall indemnify and hold harmless each U.S.
Underwriter, its officers and employees and each person, if any, who controls
any U.S. 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 U.S.
Underwriter, officer, employee
23.
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)a(i)y 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 other document prepared or executed by the Company (or based upon
any written information furnished by the Company) specifically for the purpose
of qualifying any or all of the Stock under the securities laws of any state or
other jurisdiction (any such application, document or information being
hereinafter called a "Blue Sky Application"), (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 therin not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any U.S. Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated hereby, and
which is include as part of or referred to in any loss, claim, damage, liability
or action arising out of or based upon matters covered by clause (i) or (ii)
above (provided that the Company shall not be liable under this clause (iii) to
the extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such U.S. Underwriter through its gross negligence or willful misconduct),
and shall reimburse each U.S. Underwriter and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that U.S. 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, or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such U.S. Underwriter furnished to the
Company through the Representatives by or on behalf of any U.S. Underwriter
specifically for inclusion therin; and provided further that as to any
Preliminary Prospectus this indemnity agreement shall not inure to the benefit
of any U.S. Underwriter 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 if a copy of the Prospectus was not sent to such U.S. Underwriter as
required by the Securities Act and if the untrue statement or omission has been
corrected in the Prospectus unless such failure to send a Prospectus resulted
from non-compliance by the Company with Section 5(c) hereof. The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any U.S. Underwriter or to any officer, employee or
controlling person of that U.S. Underwriter.
(b) Each U.S. 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
24.
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 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
Prospectus, the Registration Statement of 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 written information concerning such U.S. Underwriter furnished
to the Company through the Representatives by or on behalf of the U.S.
Underwriter specifically for inclusion therein, and shall reimburse the Company
and any such director, officer or controlling person for any legal expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any U.S. Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been material
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate 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 indemnified party shall not be liable to the
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other U.S. Underwriters and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the U.S.
Underwriters against the Company under this Section 8 if, in the reasonable
judgement of the Representatives, it is advisable for the Representatives and
those U.S. Underwriters, officers, employees and controlling persons to be
jointly represented by separate counsel, and in that event the reasonable fees
and expenses of such separate counsel shall be paid by the Company. 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 judgement with respect to any
pending or threatened
25.
claim, action, suit or proceedings in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceedings,
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
judgement 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 judgement.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the U.S. Underwriters on the other
from the offering of the Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the U.S. Underwriters
on the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the U.S. Underwriters on the other with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement (before
deducting expenses) received by the Company on the one hand, and the total
underwriting discounts and commissions received by the U.S. Underwriters with
respect to the shares of the Stock purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the shares of the
Stock under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the U.S. Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the U.S. Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 8(d) were to
be determined by pro rata allocation (even if the U.S. 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 8 shall be deemed to include, for purposes of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), no U.S. 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
26.
to the public exceeds the amount of any damages which such U.S. 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 U.S. Underwriters' obligations to contribute
as provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint.
(e) The U.S. Underwriters severally confirm that the statements with
respect to the public offering of the Stock by the U.S. Underwriters set forth
on the cover page of, the legend concerning over-allotments on the inside front
cover page of and the concession and reallowance figures appearing under the
caption "Underwriting" in, the Prospectus are correct, and the U.S. Underwriters
confirm and the Company acknowledges that such statements constitute the only
information concerning such U.S. Underwriters furnished in writing to the
Company by or on behalf of the U.S. Underwriters specifically for inclusion in
the Registration Statement and the Prospectus.
9. Defaulting U.S. Underwriters.
If, on either Delivery Date, any U.S. Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting U.S. Underwriters shall be obligated to purchase the Stock which
the defaulting U.S. 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 U.S. 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 U.S. Underwriters in
Schedule 1 hereto; provided, however, that the remaining non-defaulting U.S.
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
U.S. Underwriter or U.S. 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 U.S. Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-faulting U.S.
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 remaining U.S. Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting U.S. Underwriters or U.S. Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to the Second
Delivery Date, the obligation of the U.S. Underwriters to purchase, and of the
Company to sell, the Option Stock) shall terminate without liability on the
part of any non-defaulting U.S. Underwriter or the Company, except that the
Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 6 and 11. As used in this Agreement, the term "U.S.
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 9, purchases Firm Stock which a defaulting U.S. Underwriter agreed
but failed to purchase.
27.
Nothing contained herein shall relieve a defaulting U.S. Underwriter
of any liability it may have to the Company for damages caused by its default.
If other underwriters are obligated or agree to purchase the Stock of a
defaulting or withdrawing U.S. 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 U.S. Underwriters may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the U.S. Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7I)o(i) 7(j) shall have occurred
or if the U.S. Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
11. Reimbursement of U.S. Underwriters' Expenses. If the Company
shall fail to tender the Stock for delivery to the U.S. Underwriters by reason
of any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
U.S. Underwriters' obligations hereunder required to be fulfilled by the Company
is not fulfilled, the Company will reimburse the U.S. Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of counsel)
incurred by the U.S. Underwriters in connection with this Agreement and the
proposed purchase of the Stock, and upon demand the Company shall pay the full
amount thereof to the Representatives. If this Agreement is terminated pursuant
to Section 10 by reason of the default of one or more U.S. Underwriters, the
Company shall not be obligated to reimburse any defaulting U.S. Underwriter on
account of those expenses.
12. Notices. etc. All statements, request, notices and agreements
hereunder shall be in writing. and;
(a) if to the U.S. Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Xxxxxx Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 000-000-0000), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 0 Xxxxx Xxxxxxxxx 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: Xxxxxxx X. Xxxxxx,
President and Chief Executive Officer (Fax: 000-000-0000) with a copy
to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
Attention: Xxxxxx X. XxXxxxxxx, Esq. (Fax: 000-000-0000);
provided, however, that any notice to an U.S. Underwriter pursuant to Section
8(c) shall be delivered or sent by mail, telex or facsimile transmission to such
U.S. Underwriter at its address set forth in
28.
its acceptance telex to the Representatives, which address will be supplied to
any other party hereto by the Representatives upon request. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the U.S. Underwriters by
Xxxxxx Brothers Inc., on behalf of the Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the U.S. Underwriters, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representatives, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any U.S. Underwriter within the meaning of Section
15 of the Securities Act and for the benefit of each International Manager (and
controlling persons thereof) who offers or sells any shares of Common Stock in
accordance with the terms of the Agreement Between U.S. Underwriters and
International Managers and (B) the indemnity agreement of the U.S. Underwriters
contained in Section 8(b) of this Agreement shall be deemed to be for the
benefit of directors of the Company, officers of the Company who have signed the
Registration Statement 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 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the U.S. 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.
15. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of California
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
29.
If the foregoing correctly sets forth the agreement between the Company
and the U.S. Underwriters, please indicate your acceptance in the space provided
for that purpose below.
Very truly yours,
MAGINET CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted:
XXXXXX BROTHERS INC.
XXXXXXXXX & XXXXX LLC
For themselves and as Representatives
of the several U.S. Underwriters named
in Schedule 1 hereto
BY XXXXXX BROTHERS INC.
By
---------------------
Authorized Representative
SCHEDULE 1
Number of
U.S. Underwriters Shares
----------------- --------
Xxxxxx Brothers Inc.........................................
Xxxxxxxxx & Xxxxx LLC.......................................
Total ========
