EXHIBIT 1.1
2,400,000 Shares
COMMAND SYSTEMS, INC.
Common Stock
UNDERWRITING AGREEMENT
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, 1998
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XXXXX & COMPANY
XXXXX XXXXX XXXXXX & COMPANY, LLC
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Command Systems, Inc., a Delaware corporation (the
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"Company"), and the selling stockholders named in Schedule B hereto (the
"Selling Stockholders") propose to sell, pursuant to the terms of this
Agreement, to the several underwriters named in Schedule A hereto (the
"Underwriters," or, each, an "Underwriter"), an aggregate of 2,400,000 shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company.
The aggregate of 2,400,000 shares so proposed to be sold is hereinafter referred
to as the "Firm Stock." The Selling Stockholders listed in Schedule B hereto
also propose to sell to the Underwriters, upon the terms and conditions set
forth in Section 3 hereof, up to an additional 360,000 shares of Common Stock
(the "Optional Stock"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "Stock." Xxxxx & Company ("Cowen") and Xxxxx
Xxxxx Xxxxxx & Company, LLC ("Xxxxx Xxxxx") are acting as representatives of the
several Underwriters and in such capacity are hereinafter referred to as the
"Representatives."
2. (a) Representations, Warranties and Agreements of the Company.
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The Company represents and warrants to, and agrees with, the several
Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-
43877) in the form in which it became or becomes effective and also in
such form as it may be when any post-effective amendment thereto shall
become effective with respect to the Stock, including any preeffective
prospectuses included as part of the registration statement as
originally filed or as part of any amendment or supplement thereto, or
filed pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, copies of which have heretofore been
delivered to you, has been carefully prepared by the Company in
conformity with the requirements of the Securities Act and has been
filed with the Commission under the Securities Act; one or more
amendments to such registration statement, including in each case an
amended preeffective prospectus, copies of which amendments have
heretofore been delivered to you, have been so prepared and filed. If
it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed
and must be declared effective before the offering of the Stock may
commence, the term "Registration Statement" as used in this Agreement
means the registration statement as amended by said post-effective
amendment. The term "Registration Statement" as used in this Agreement
shall also include any registration statement relating to the Stock
that is filed and declared effective pursuant to Rule 462(b) under the
Securities Act. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or
(A) if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Securities Act and such
information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act, the term
"Prospectus" as used in this Agreement means the prospectus in the
form included in the Registration Statement as supplemented by the
addition of the Rule 430A information contained in the prospectus
filed with the Commission pursuant to Rule 424(b) and (B) if
prospectuses that meet the requirements of Section 10(a) of the
Securities Act are delivered pursuant to Rule 434 under the Securities
Act, then (i) the term "Prospectus" as used in this Agreement means
the "prospectus subject to completion" (as such term is defined in
Rule 434(g) under the Securities Act) as supplemented by (a) the
addition of Rule 430A information or other information contained in
the form of prospectus delivered pursuant to Rule 434(b)(2) under the
Securities Act or (b) the information contained in the term sheets
described in Rule 434(b)(3) under the Securities Act, and (ii) the
date of such prospectuses shall be deemed to be the date of the term
sheets. The term "Preeffective Prospectus" as used in this Agreement
means the prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of the
Registration Statement with the Commission, and as such prospectus
shall have been amended from time to time prior to the date of the
Prospectus.
(ii) The Commission has not issued or, to the Company's
knowledge, threatened to issue any order preventing or suspending the
use of any Preeffective Prospectus, and, at its date of issue, each
Preeffective Prospectus conformed in all material respects with the
requirements of the Securities Act and did not include any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
and, when the Registration Statement becomes effective and at all
times subsequent thereto up to and including each Closing Date (as
hereinafter defined), the Registration Statement and the Prospectus
and any amendments or supplements thereto contained and will contain
all material statements and information required to be included
therein by the Securities Act and conformed and will conform in all
material respects to the
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requirements of the Securities Act and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto,
included or will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing representations, warranties and agreements
shall not apply to (A) information contained in or omitted from any
Preeffective Prospectus or the Registration Statement or the
Prospectus or any such amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter, directly or through you,
or by any Selling Stockholder, specifically for use in the preparation
thereof or (B) to the distribution responsibilities of the
Underwriters; there is no franchise, lease, contract, agreement or
document required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed therein as required; and all
descriptions of any such franchises, leases, contracts, agreements or
documents contained in the Registration Statement are accurate and
complete descriptions of such documents in all material respects.
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as set forth or contemplated in the Prospectus, neither the
Company nor any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, nor entered into any transactions
not in the ordinary course of business (or as contemplated hereby),
and there has not been any material adverse change in the condition
(financial or otherwise), properties, business, management, prospects,
net worth or results of operations of the Company and its
subsidiaries, considered as a whole and individually, or any change in
the capital stock or, except with respect to regularly scheduled
payments of interest or principal, short-term or long-term debt of the
Company and its subsidiaries considered as a whole and individually.
Neither the Company nor any of its subsidiaries have material
contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement,
as it may be amended or supplemented, which are required to be so
disclosed under generally accepted accounting principles in the United
States ("GAAP"); and, whether or not required to be disclosed under
GAAP, to the Company's knowledge, neither the Company nor any of its
subsidiaries have material contingent obligations which are not
disclosed on such financial statements.
(iv) The financial statements, together with the related
notes and schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly present, on the basis stated in the
Registration Statement, the financial position and the results of
operations and changes in financial position of the Company and its
consolidated subsidiaries at the respective dates or for the
respective periods therein specified. Such statements and related
notes and
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schedules have been prepared in accordance with generally accepted
accounting principles in the United States applied on a consistent
basis except as may be set forth in the Prospectus. The selected
financial and statistical data set forth in the Prospectus under the
caption "Selected Consolidated Financial Data" fairly present, on the
basis stated in the Registration Statement, the information set forth
therein.
(v) Ernst & Young LLP, who have audited the financial
statements included in the Registration Statement and the Prospectus,
are independent public accountants as required by the Securities Act
and the Rules and Regulations.
(vi) The Company and each of its subsidiaries have been
duly organized and are validly existing and in good standing as
corporations under the laws of their respective jurisdictions of
organization, with corporate power and authority to own or lease their
properties and to conduct their businesses as described in the
Registration Statement and the Prospectus; the Company and its
subsidiaries are in possession of and operating in compliance in all
material respects with all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders
required for the conduct of their businesses, all of which are valid
and in full force and effect; and the Company and each of such
subsidiaries are duly qualified or authorized to do business and in
good standing as foreign corporations in all other jurisdictions where
their ownership or leasing of properties or the conduct of their
businesses requires such qualification or authorization. The Company
and each of its subsidiaries has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all
public regulatory or governmental agencies and bodies to own, lease
and operate its properties and conduct its business as now being
conducted and as described in the Registration Statement and the
Prospectus, and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. The Company owns all of the issued and
outstanding capital stock of Command International Holdings, LLC, a
corporation organized under the laws of Mauritius ("Command
Mauritius"), and Command Mauritius owns all of the issued and
outstanding capital stock of Command International Software Pvt., an
unlimited liability company organized under the laws of India
("Command India"), and neither the Company nor any of its direct or
indirect subsidiaries owns or controls, directly or indirectly, any
other corporations, associations or other entities.
(vii) The Company's authorized and outstanding capital
stock is on the date hereof, and will be on the Closing Dates, as set
forth under the heading "Capitalization" in the Prospectus; the
information set forth under the caption "Capitalization" in the
Prospectus (after giving effect to the transactions therein described)
is true and correct; the outstanding shares of Common Stock (including
the outstanding shares of Stock) of the Company conform to the
description thereof in the Registration Statement and the Prospectus
and have been duly authorized and
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validly issued and are fully paid and nonassessable and have been
issued in compliance with all applicable federal and state securities
laws and were not issued in violation of or subject to any preemptive
rights or similar rights to subscribe for or purchase securities.
Except as disclosed in and or contemplated by the Registration
Statement and the Prospectus and the financial statements of the
Company and related notes and schedules thereto included in the
Registration Statement and the Prospectus, the Company does not have
outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase any securities
or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. The description of the
Company's stock option and other stock plans or arrangements, and the
options or other rights granted or exercised thereunder, as set forth
in the Registration Statement and the Prospectus, accurately and
fairly presents the information required to be shown with respect to
such plans, arrangements, options and rights. The name of each holder
of an option to purchase shares of the capital stock of the Company
which is or will be outstanding as of the date hereof and which will
vest in whole or in part prior to 180 days following the date hereof
has been included in Schedule C hereto and has delivered a lock-up
agreement to Cowen. All outstanding shares of capital stock of each
subsidiary have been duly authorized and validly issued, and are fully
paid and nonassessable and are owned directly by the Company or by
another wholly-owned subsidiary of the Company free and clear of any
liens, charges, encumbrances, equities or claims. Neither the
transactions contemplated hereby nor by the (i) Stock Exchange
Agreement dated as of December 31, 1997 among the Company, Phoenix
Home Life Mutual Insurance Company ("Phoenix"), PHL Global Holding Co.
("PHL Global") and Command Mauritius (the "Stock Exchange Agreement");
(ii) the Company's grant of options to purchase ____ shares of Common
Stock under its 1997 Employee, Director and Consultant Stock Plan (the
"1997 Plan") or (iii) the grant of options to purchase
________________ shares of Common Stock in substitution for rights
previously granted or awarded pursuant to the Company's Shadow Stock
Incentive Plan (the "Shadow Plan") has or will trigger any anti-
dilution provisions applicable to any securities of the Company (other
than those that have been expressly waived or that will automatically
expire upon the Closing Date prior to taking effect). Upon
consummation of the offering contemplated hereby on the First Closing
Date (as defined below), all outstanding shares of the Company's
Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock of the Company shall have automatically converted into
an aggregate of 2,351,250 shares of Common Stock as is set forth under
the caption "Capitalization" in the Prospectus.
(viii) The grant of options pursuant to the 1997 Plan in
substitution for rights granted or awarded pursuant to the Shadow Plan
has not and will not result in any damage, loss, obligation or other
financial obligation of or to the Company (other than the Company's
obligations with respect to the options themselves) or result in the
incurrence of any tax liability or other adverse tax
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consequence or result in a charge to earnings or other adverse effect
on the Company's financial statements.
(ix) The Stock to be issued and sold by the Company to
the Underwriters hereunder has 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 nonassessable and free
of any preemptive or similar rights and will conform in all material
respects to the description thereof in the Registration Statement and
the Prospectus.
(x) Except as set forth in the Registration Statement
and the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries or affiliates
is a party or of which any property of the Company or any subsidiary
or affiliate is subject, which, if determined adversely to the Company
or any such subsidiary or affiliate, might individually or in the
aggregate (A) prevent or adversely affect the transactions
contemplated by this Agreement or the Stock Exchange Agreement, (B)
suspend the effectiveness of the Registration Statement, (C) prevent
or suspend the use of the Preeffective Prospectus in any jurisdiction
or (D) result in a material adverse change in the condition (financial
or otherwise), properties, business, management, prospects, net worth
or results of operations of the Company and its subsidiaries
considered as a whole, and there is no valid basis for any such legal
or governmental proceeding; and to the best of the Company's knowledge
no such proceedings are threatened or contemplated against the Company
or any subsidiary or affiliate by governmental authorities or others.
Neither the Company nor any of its subsidiaries is a party or, to the
Company's knowledge, otherwise subject to, the provisions of any
material injunction, judgment, decree or order of any court,
regulatory body or other governmental agency or body ("Governmental
Authority"). The description of the Company's litigation under the
heading "Business--Legal Proceedings" in the Prospectus is true and
correct and complies with the Rules and Regulations.
(xi) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
(A) will not conflict with or result in the violation of any
provisions of the Amended and Restated Certificate of Incorporation,
By-Laws or other organizational documents of the Company or any of its
subsidiaries, or any law, order, rule or regulation applicable to the
Company or any of its subsidiaries 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 or will result in
the creation of a lien on any of the properties or assets of the
Company or any of its subsidiaries and (B) will not conflict with or
result in a breach or violation of any of the terms or provisions of
or constitute a default (or an event which with notice or lapse of
time, or both, would 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
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or by which it or any of its subsidiaries, or its properties or the properties
of any of its subsidiaries, is or may be bound.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body is required or necessary in connection with the
execution and delivery by the Company or for the consummation by the Company of
the transactions contemplated by this Agreement, except such as may be required
by the National Association of Securities Dealers, Inc. (the "NASD") or under
the Securities Act or under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the securities or "Blue Sky" laws of any jurisdiction in
connection with the purchase and distribution of the Stock by the Underwriters.
(xiii) The Company has the full corporate power and authority to
enter into this Agreement to perform its obligations hereunder (including to
issue, sell and deliver the Stock) and this Agreement has been duly and validly
authorized, executed and delivered by the Company and is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or the public
policy underlying such laws and except as the enforcement hereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by general equitable principles.
(xiv) The execution, delivery and performance of the Exchange
Documents (as defined below) by the Company and Command Mauritius and, to the
Company's knowledge, the other parties thereto, and the consummation of the
transactions therein contemplated did not and will not result in a breach or
violation of any of the terms or provisions of or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
under any indenture, mortgage, deed of trust, note agreement or other agreement
or instrument by which such party or any of its properties is or may be bound,
any organizational documents of such party, or any law, order, rule or
regulation applicable to such party of any court or governmental agency or body
having jurisdiction over such party or any of its properties or will result in
the creation of a lien. Each of the Exchange Documents is in full force and
effect and the Company, Command Mauritius and, to the knowledge of the Company,
the other parties thereto are in full compliance with all their obligations
under such agreements. Except with respect to the Exchange Documents or as
otherwise disclosed in the Registration Statement and Prospectus, there are no
agreements, contracts, commitments, undertakings, or other arrangements, whether
oral or written, between, among or involving the Company or any of its
subsidiaries or affiliates and Phoenix or any of its subsidiaries or affiliates.
True and complete copies of the Exchange Agreements have been provided to
counsel to the Underwriters. The Stock Exchange Agreement, the Registration
Rights Agreement dated as of December 31, 1997 between the Company and PHL
Global and the Co-Sale Agreement dated as of December 31,
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1997 among the Company, PHL Global and Xxxxxx X. Xxxxxx (the "Co-Sale
Agreement"), and the Stock Exchange Agreement dated August 26, 1997 between the
Company and Phoenix, the Registration Rights Agreement dated August 26, 1997
between the Company and Phoenix, the Co-Sale Agreement by and among the Company,
Phoenix and Xxxxxx X. Xxxxxx are collectively referred to herein as the
"Exchange Documents".
(xv) No consent, approval, authorization or order of any court or
governmental agency or body is required or necessary in connection with the
execution and delivery by the Company and Command Mauritius of, or the
consummation by the Company and Command Mauritius of the transactions
contemplated by, the Exchange Documents, except for the approval of the Reserve
Bank of India for the transfer of the Command India capital stock contemplated
by the Exchange Agreement, which approval has been obtained.
(xvi) Each of the Company, Command Mauritius and, to the Company's
knowledge, each other party to the Exchange Documents has the full corporate
power and authority to enter into the Exchange Documents and to perform its
obligations thereunder and the Exchange Documents have been duly and validly
authorized, executed and delivered by the Company and Command Mauritius and are
valid and binding obligations of such party, enforceable against such party in
accordance with their terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by general equitable principles.
(xvii) The Company and its subsidiaries are in all material respects
in compliance with, and conduct their businesses in conformity in all material
respects with, all applicable federal, state, local and foreign laws, rules and
regulations or any court or governmental agency or body; to the knowledge of the
Company, except as set forth in the Registration Statement and the Prospectus,
no prospective change in any of such federal, state, local or foreign laws,
rules or regulations has been adopted which, when made effective, would have a
material adverse effect on the operations of the Company or any of its
subsidiaries. Except as disclosed in the Registration Statement and the
Prospectus, the Company and its subsidiaries are in compliance with all
applicable existing federal, state, local and foreign laws, rules and
regulations relating to the protection of human health or the environment or
imposing liability or requiring standards of conduct concerning any Hazardous
Materials ("Environmental Laws"), except for such instances of noncompliance
which, either singly or in the aggregate, would not have a material adverse
effect. The term "Hazardous Material" means (A) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or contaminant
or hazardous, dangerous or toxic chemical, material, waste
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or substance regulated under or within the meaning of any other Environmental
Law.
(xviii) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns and have paid all taxes shown as due thereon or with respect to any of
their properties (other than those being contested in good faith which have been
disclosed to Cowen); and there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against the Company or any of
its subsidiaries or any of their respective properties or assets that would
adversely affect the financial position, business or results of operations of
the Company and its subsidiaries. All tax liabilities have been adequately
provided for in the consolidated financial statements of the Company contained
in the Registration Statement and the Prospectus.
(xix) Except as disclosed in the Registration Statement and the
Prospectus, no person or entity has the right to require registration of shares
of Common Stock or other securities of the Company because of the filing or
effectiveness of the Registration Statement or otherwise. Except to the extent
set forth in the Registration Statement and Prospectus, each person or entity
with the right to require registration of shares of Common Stock has waived such
right in writing and a true and complete a copy of such waiver has been
delivered to counsel for the Underwriters.
(xx) Neither the Company nor, to the Company's knowledge, any of
its officers, directors or affiliates has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the price
of any security of the Company, or which caused or resulted in, or which might
in the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(xxi) The Company has provided you with all financial statements of
the Company and its subsidiaries since January 1, 1992 to the date hereof that
are available to the officers of the Company, including unaudited consolidated
financial statements for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997.
(xxii) The Company and its subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
tradenames, copyrights, licenses, inventions, trade secrets and rights described
in the Prospectus as being owned by them or any of them or, except where the
failure to have such rights would not have a material adverse effect on the
business or financial condition of the Company and its subsidiaries individually
or taken as a whole, necessary for the conduct of their respective businesses,
and the Company is not aware of any claim to the contrary or any challenge by
any other person to the
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rights of the Company and its subsidiaries with respect to the foregoing. The
Company's business as now conducted and as proposed to be conducted does not and
will not infringe or conflict with in any material respect patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or other
intellectual property or franchise right of any person. Except as described in
the Prospectus, no claim has been made against the Company alleging the
infringement by the Company of any patent, trademark, service xxxx, tradename,
copyright, trade secret, license in or other intellectual property right or
franchise right of any person.
(xxiii) The Company and its subsidiaries have performed in all
material respects the obligations required to be performed by them under all
contracts required by Item 601(b)(10) of Regulation S-K under the Securities Act
to be filed as exhibits to the Registration Statement, and neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, any other party to
such contract is in default under or in breach of any such obligations. Neither
the Company nor any of its subsidiaries has received any notice of such default
or breach.
(xxiv) Neither the Company nor any of its subsidiaries is involved
in any labor dispute and, to the Company's knowledge, no such dispute is
threatened. The Company is not aware that (A) any executive, key employee or
significant group of employees of the Company or any subsidiary plans to
terminate employment with the Company or any such subsidiary or (B) any such
executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company and its
subsidiaries. Neither the Company nor any subsidiary has or expects to have any
liability for any prohibited transaction or funding deficiency or any complete
or partial withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or, with respect to Command India, other similar law,
to which the Company or any subsidiary makes or ever has made a contribution and
in which any employee of the Company or any subsidiary is or has ever been a
participant. With respect to such plans, the Company and each subsidiary are in
compliance in all material respects with all applicable provisions of ERISA or,
with respect to Command India, other similar law.
(xxv) The Company has obtained the written agreement described in
Section 8(m) of this Agreement from each of the parties listed in Schedule C
hereto and has delivered true and complete copies thereof to Cowen.
(xxvi) The Company and its subsidiaries have, and the Company and
its subsidiaries as of the Closing Dates will have, good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company or of
its
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subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as would not have a
material adverse effect on the Company and its subsidiaries considered as a
whole; and any real property and buildings held under lease by the Company and
its subsidiaries or proposed to be held after giving effect to the transactions
described in the Registration Statement and the Prospectus are, or will be as of
each Closing Date, held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a material adverse effect on the Company
and its subsidiaries considered as a whole or individually, in each case except
as described in or contemplated by the Registration Statement and the Prospectus
and except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by general equitable principles.
(xxvii) The Company and its subsidiaries maintain insurance against
such losses and risks and in such amounts as are customary in the businesses in
which they are engaged or propose to engage after giving effect to the
transactions described in the Registration Statement and the Prospectus; and
neither the Company nor any of its subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from insurers as may be necessary
to continue its business at a cost that would not materially and adversely
affect the condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries considered as a whole and
individually, except as described in or contemplated by the Prospectus.
(xxviii) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result of any of the
transactions contemplated by this Agreement.
(xxix) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
An Act Relating to Disclosure of doing Business with Cuba, and the Company
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further agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"), whichever
date is later, the Company will provide the Department notice of such business
in a form acceptable to the Department.
(xxx) The Company and each of its subsidiaries maintain a system of
internal accounting controls reasonably sufficient to provide that (A)
transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial
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statements in conformity with generally accepted accounting principles
in the United States and to maintain accountability for assets; (C)
access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxxi) Neither the Company nor any of its subsidiaries
nor, to the Company's knowledge, any director, employee or agent of
the Company or any of its subsidiaries has made any payment of funds
of the Company or any of its subsidiaries or received or retained any
funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be
disclosed in the Registration Statement and the Prospectus.
(xxxii) Neither the Company nor any of its subsidiaries is
or, after application of the net proceeds of the offering contemplated
hereby as described under the caption "Use of Proceeds" in the
Prospectus, will become, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
(xxxiii) The Company is not and does not intend to become
(a) a controlled foreign corporation, as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"), (b) a passive
foreign investment company within the meaning of Section 1296(a) of
the Code or (c) a foreign personal holding corporation, as such term
is defined in the Code.
(xxxiv) Each certificate signed by any officer of the
Company or any of its subsidiaries and delivered to the Underwriters
or counsel for the Underwriters shall be deemed to be a representation
and warranty by the Company as to the matters covered thereby.
(xxxv) The Common Stock has been approved for quotation
and trading on the Nasdaq National Market, subject to official notice
of effectiveness.
For purposes of the foregoing representations and warranties which are
conditioned by reference to the knowledge of the Company, the Company shall be
charged with the knowledge of each Selling Stockholder.
(b) Representations, Warranties and Agreements of the Selling
---------------------------------------------------------
Stockholders. Each Selling Stockholder severally and not jointly represents and
------------
warrants to, and agrees with, the several Underwriters that such Selling
Stockholder:
(i) Now has, and on each Closing Date will have, valid
and marketable title to the Stock to be sold by such Selling
Stockholder, free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on
transfer, and has full right, power and authority to enter into this
Agreement, the Power of Attorney and the Custody Agreement (each as
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hereinafter defined), and, to the extent such Selling Stockholder is a
corporation or a partnership, has been duly organized and is validly
existing and in good standing as a corporation or a partnership, as
applicable, under the laws of its jurisdiction of organization.
(ii) Now has, and on each Closing Date will have, upon
delivery of and payment for each share of Stock hereunder, full right,
power, authority and any approval required by law to sell, transfer,
assign and deliver the Stock being sold by such Selling Stockholder
hereunder, and each of the several Underwriters will acquire valid and
marketable title to all of the Stock being sold to the Underwriters by
such Selling Stockholder, free and clear of any liens, encumbrances,
equities claims, restrictions on transfer or other defects whatsoever.
(iii) For a period of 180 days after the date of this
Agreement, without the consent of Cowen, such Selling Stockholder will
not offer to sell, sell, contract to sell or otherwise dispose of any
capital stock or securities convertible into or exchangeable for
capital stock, including, without limitation, capital stock which may
be deemed to be beneficially owned by such Selling Stockholder in
accordance with the Rules and Regulations, except for the Stock being
sold hereunder.
(iv) Has duly executed and delivered a power of attorney
in substantially the form heretofore delivered to the Representatives
(the "Power of Attorney"), appointing Xxxxx X. Xxxxxx and Xxxxx X.
Xxxxx, and each of them or their duly appointed substitutes, as
attorney-in-fact (the "Attorneys-in-fact") with authority to execute
and deliver this Agreement on behalf of such Selling Stockholder, to
authorize the delivery of the shares of Stock to be sold by such
Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder in connection with the transactions contemplated
by this Agreement.
(v) Has duly executed and delivered a custody agreement
in substantially the form heretofore delivered to the Representatives
(the "Custody Agreement"), with Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C. as custodian ("Mintz Xxxxx"), pursuant to which
certificates in negotiable form for the shares of Stock to be sold by
such Selling Stockholder hereunder have been placed in custody for
delivery under this Agreement.
(vi) Has, by execution and delivery of each of this
Agreement, the Power of Attorney and the Custody Agreement, created
valid and binding obligations of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with its terms, except
to the extent that rights to indemnity hereunder may be limited by
federal or state securities laws or the public policy underlying such
laws and, except with respect to the Power of Attorney and Custody
Agreement, except as the enforcement thereof may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by general
equitable principles.
(vii) The performance by such Selling Stockholder of this
Agreement, the Custody Agreement and the Power of Attorney, and the
consummation by such Selling Stockholder of the transactions
contemplated hereby and thereby will not result in a breach or
violation by such Selling Stockholder of any of the terms or
provisions of, or constitute a default by such Selling Stockholder
under, any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement
or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any of its properties is bound, or any
judgment of any court or governmental agency or body applicable to
such Selling Stockholder or any of its properties, or to such Selling
Stockholder's knowledge, any statute, decree, order, rule or
regulation of any court or governmental agency or body applicable to
such Selling Stockholder or any of its properties or, in the case of a
Selling Stockholder that is a corporation or other entity, the
certificate of incorporation, by-laws or other organizational
documents of such Selling Stockholder.
(viii) Neither such Selling Stockholder nor, to the
knowledge of such Selling Stockholder, any of its affiliates has taken
or will take, directly or indirectly, any action designed or intended
to stabilize or manipulate the price of any security of the Company,
or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(ix) Has no reason to believe that the representations
and warranties of the Company contained in this Section 2 are not true
and correct, has reviewed the Registration Statement and the
Prospectus and has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement or the
Prospectus which has adversely affected or may adversely affect the
business of the Company or any of its subsidiaries; and the sale of
the Shares by such Selling Stockholder pursuant hereto is not prompted
by any materially adverse information concerning the Company or any of
its subsidiaries which is not set forth in the Registration Statement
and the Prospectus. The information pertaining to the Selling
Stockholder under the caption "Selling Stockholders" in the Prospectus
is complete and accurate in all material respects.
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Each Selling Stockholder agrees that the shares of Stock represented
by the certificates held in custody under the Custody Agreement are for the
benefit of and coupled with and subject to the interests of the Underwriters,
the other Selling Stockholders and the Company hereunder, and that the
arrangement for such custody and the appointment of the Attorneys-in-fact are
irrevocable; that the obligations of such Selling Stockholder hereunder shall
not be terminated by operation of law, whether by the death or incapacity,
liquidation or distribution of such Selling Stockholder, or any other event,
that if such Selling Stockholder should die or become incapacitated or is
liquidated or dissolved or any other event occurs, before the delivery of the
Stock hereunder, certificates for the Stock to be sold by such Selling
Stockholder shall be delivered on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement and the Custody
Agreement, and action taken by the Attorneys-in-fact or any of them under the
Power of Attorney shall be as valid as if such death, incapacity, liquidation or
dissolution or other event had not occurred, whether or not the Custodian, the
Attorneys-in-fact or any of them shall have notice of such death, incapacity,
liquidation or dissolution or other event.
3. Purchase by, and Sale and Delivery to, Underwriters--Closing
------------------------------------------------------------
Dates. The Company and the Selling Stockholders agree, severally and not
-----
jointly, to sell to the Underwriters the Firm Stock, with the number of shares
to be sold by the Company and each Selling Stockholder being the number of
Shares set opposite his, her or its name in Schedule B; and on the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase the Firm Stock from the Company and the
Selling Stockholders, the number of shares of Firm Stock to be purchased by each
Underwriter being set opposite its name in Schedule A, subject to adjustment in
accordance with Section 12 hereof. The number of shares of Stock to be
purchased by each Underwriter from each Selling Stockholder hereunder shall bear
the same proportion to the total number of shares of Stock to be purchased by
such Underwriter hereunder as the number of shares of stock being sold by each
Selling Stockholder bears to the total number of shares of Stock being sold by
all Selling Stockholders, subject to adjustment by the Representatives to
eliminate fractions.
The purchase price per share to be paid by the Underwriters to the
Company and the Selling Stockholders net of underwriting discounts and
commissions will be $_____ per share (the "Purchase Price").
The Company and the Selling Stockholders will deliver the Firm Stock
to the Representatives for the respective accounts of the several Underwriters
(in the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company and the Selling Stockholders given at or prior to 12:00 Noon, New York
Time, on the second full business day preceding the First Closing Date (as
defined below) or, if no such direction is received, in the names of the
respective Underwriters or in such other names as Cowen may designate (solely
for the purpose of administrative convenience) and in such denominations as
Cowen may determine), against payment of the aggregate Purchase Price therefor
by wire transfer, certified or official bank check or checks in immediately
available funds (same day funds), payable to the order of the Company and each
Selling Stockholder, all at the offices of Xxxxxxxx Ingersoll, College Centre,
000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000. The time and date of the
delivery and closing shall be at 10:00 a.m., New York Time, on
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____________, 1998, in accordance with Rule 15c6-1 of the Exchange Act. The time
and date of such payment and delivery are herein referred to as the "First
Closing Date." The First Closing Date and the location of delivery of, and the
form of payment for, the Firm Stock may be varied by agreement among the
Company, the Selling Stockholders and Cowen. The First Closing Date may be
postponed pursuant to the provisions of Section 12.
The Company and the Selling Stockholders shall make the certificates
for the Firm Stock available to the Representatives for examination on behalf of
the Underwriters not later than 10:00 a.m., New York Time, on the business day
preceding the First Closing Date at the offices of Xxxxx & Company, Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that Cowen or Xxxxx Xxxxx, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company or to the Selling Stockholders on behalf of any
Underwriter or Underwriters, for the Stock to be purchased by such Underwriter
or Underwriters. Any such payment by Cowen or Xxxxx Xxxxx shall not relieve
such Underwriter or Underwriters from any of its or their other obligations
hereunder.
The several Underwriters agree to make an initial public offering of
the Firm Stock at the initial public offering price as soon after the
effectiveness of the Registration Statement as in their judgment is advisable.
The Representatives shall promptly advise the Company and the Selling
Stockholders of the making of the initial public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, each
Selling Stockholder hereby grants to the Underwriters an option to purchase,
severally and not jointly, up to the aggregate number of shares of Optional
Stock set forth opposite each such Selling Stockholder's name on Schedule B
hereto, for an aggregate of up to 360,000 shares. The price per share to be
paid for the Optional Stock shall be the Purchase Price. The option granted
hereby may be exercised as to all or any part of the Optional Stock at any time,
and from time to time, not more than thirty (30) days subsequent to the
effective date of this Agreement. No Optional Stock shall be sold and delivered
unless the Firm Stock previously has been, or simultaneously is, sold and
delivered. The right to purchase the Optional Stock or any portion thereof may
be surrendered and terminated at any time upon notice by the Underwriters to the
Company and the Selling Stockholders.
The option granted hereby may be exercised by the Underwriters by
giving written notice from Cowen to the Selling Stockholders setting forth the
number of shares of the Optional Stock to be purchased by them and the date and
time for delivery of and payment for the Optional Stock. Each date and time for
delivery of and payment for the Optional Stock (which may be the First Closing
Date, but not earlier) is herein called the "Option Closing Date" and shall in
no event be earlier than two (2) business days nor later than ten (10) business
days after written notice is given. (The Option Closing Date and the First
Closing Date are herein called the "Closing Dates" and each a "Closing Date.")
All purchases of Optional Stock from the Selling Stockholders shall be made 50%
from Xxxxxx X. Xxxxxx and 50% from Phoenix Home Life Mutual Insurance Company
and PHL Global Holding Co. Optional Stock shall be purchased for the account of
each
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Underwriter in the same proportion as the number of shares of Firm Stock
set forth opposite such Underwriter's name in Schedule A hereto bears to the
total number of shares of Firm Stock (subject
to adjustment by the Underwriters to eliminate odd lots). Upon exercise of the
option by the Underwriters, each Selling Stockholder agrees to sell to the
Underwriters the number of shares of Optional Stock set forth in the written
notice of exercise and the Underwriters agree, severally and not jointly and
subject to the terms and conditions herein set forth, to purchase the number of
such shares determined as aforesaid.
The Selling Stockholders will deliver the Optional Stock to the
Representatives in Princeton, New Jersey (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Selling Stockholders
given at or prior to 12:00 Noon, New York Time, on the second full business day
preceding the Option Closing Date or, if no such direction is received, in the
names of the respective Underwriters or in such other names as Cowen may
designate (solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate Purchase
Price therefor by wire transfer, or certified or official bank checks, in
immediately available funds (same day funds), payable to the order of each
Selling Stockholder all at the offices of Xxxxxxxx Ingersoll, College Centre,
000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000. The Selling Stockholders
shall make the certificates for the Optional Stock available to the Underwriters
for examination not later than 10:00 a.m., New York Time, on the business day
preceding the Option Closing Date at the offices of Xxxxx & Company, Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Option Closing Date and the location of
delivery of, and the form of payment for, the Option Stock may be varied by
agreement among the Company, the Selling Stockholders and Cowen. The Option
Closing Date may be postponed pursuant to the provisions of Section 12.
4. Covenants and Agreements of the Company and the Selling
-------------------------------------------------------
Stockholders.
------------
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) if the Company and the
Representatives have determined not to proceed pursuant to Rule 430A
of the Rules and Regulations, use its best efforts to cause the
Registration Statement to become effective, (B) if the Company and the
Representatives have determined to proceed pursuant to Rule 430A of
the Rules and Regulations, use its best efforts to comply with the
provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and Rule 424 of the Rules and Regulations and
(C) if the Company and the Representatives have determined to deliver
Prospectuses pursuant to Rule 434 of the Rules and Regulations, to use
its best efforts to comply with all the applicable provisions thereof.
The Company will advise the Representatives promptly as to the time at
which the Registration Statement becomes effective, will advise the
Representatives promptly of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose, and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible the lifting thereof,
-17-
if issued. The Company will advise the Representatives promptly of the
receipt of any comments of the Commission or any request by the
Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information and will not
at any time file any amendment to the Registration Statement or
supplement to the Prospectus which shall not previously have been
submitted to the Representatives a reasonable time prior to the
proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the
Securities Act and the Rules and Regulations.
(ii) The Company will prepare and file with the Commission,
promptly upon the request of the Representatives, any amendments or
supplements to the Registration Statement or the Prospectus which in
the opinion of the Representatives may be necessary to enable the
several Underwriters to continue the distribution of the Stock and
will use its best efforts to cause the same to become effective as
promptly as possible.
(iii) If at any time after the effective date of the
Registration Statement when a prospectus relating to the Stock is
required to be delivered under the Securities Act any event relating
to or affecting the Company or any of its subsidiaries occurs as a
result of which the Prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact, or omit
to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Securities Act, the Company will promptly notify
the Representatives thereof and will prepare an amended or
supplemented prospectus which will correct such statement or omission;
and in case any Underwriter is required to deliver a prospectus
relating to the Stock nine (9) months or more after the effective date
of the Registration Statement, the Company upon the request of the
Representatives and at the expense of such Underwriter will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Securities
Act.
(iv) The Company will deliver to the Representatives, at or
before the Closing Date, signed copies of the Registration Statement,
as originally filed with the Commission, and all amendments thereto
including all financial statements and exhibits thereto, and will
deliver to the Representatives such number of copies of the
Registration Statement, including such financial statements but
without exhibits, and all amendments thereto, as the Representatives
may reasonably request. The Company will deliver or mail to or upon
the order of the Representatives, from time to time until the
effective date of the Registration Statement, as many copies of the
Preeffective Prospectus as the Representatives may reasonably request.
The Company will deliver or mail to or upon the order of the
Representatives on the date of the initial public offering, and
thereafter from time to time during the period when delivery of a
prospectus relating to the Stock is required under the Securities Act,
as many copies of the Prospectus, in final form or
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as thereafter amended or supplemented as the Representatives may
reasonably request; provided, however, that the expense of the
preparation and delivery of any prospectus required for use nine (9)
months or more after the effective date of the Registration Statement
shall be borne by the Underwriters required to deliver such
prospectus.
(v) The Company will make generally available to its
Stockholders as soon as practicable, but not later than the 45th day
following the end of the fiscal year occurring after the first
anniversary of the effective date of the Registration Statement, an
earnings statement which will be in reasonable detail (but which need
not be audited) and which will comply with Section 11(a) of the
Securities Act, covering a period of at least twelve (12) months
beginning after the "effective date" (as defined in Rule 158 under the
Securities Act) of the Registration Statement.
(vi) The Company will cooperate with the Representatives to
enable the Stock to be registered or qualified for offering and sale
by the Underwriters and by dealers under the securities laws of such
jurisdictions as the Representatives may reasonably designate and at
the request of the Representatives will make such applications and
furnish such consents to service of process or other documents as may
be required of it as the issuer of the Stock for that purpose;
provided, however, that the Company shall not be required to qualify
to do business or to file a general consent (other than that arising
out of the offering or sale of the Stock) to service of process in any
such jurisdiction where it is not now so subject. The Company will,
from time to time, prepare and file such statements and reports as are
or may be required of it as the issuer of the Stock to continue such
qualifications in effect for so long a period as the Representatives
may reasonably request for the distribution of the Stock. The Company
will advise the Representatives promptly after the Company becomes
aware of the suspension of the qualifications or registration of (or
any such exception relating to) the Common Stock of the Company for
offering, sale or trading in any jurisdiction or of any initiation or
threat of any proceeding for any such purpose, and in the event of the
issuance of any orders suspending such qualifications, registration or
exception, the Company will, with the cooperation of the
Representatives use its best efforts to obtain the withdrawal thereof.
(vii) The Company will furnish to its stockholders annual
reports containing financial statements certified by independent
public accountants and with quarterly summary financial information in
reasonable detail which may be unaudited. During the period of five
(5) years from the date hereof, the Company will deliver to the
Representatives and, upon request, to each of the other Underwriters
concurrently with furnishing to its stockholders copies of each annual
report of the Company and each other report furnished by the Company
to its stockholders and will deliver to the Representatives, (A) as
soon as they are available, copies of any other reports (financial or
other) which the Company shall publish or otherwise make available to
any of its stockholders as such, (B) as soon as they are available,
copies of any reports and financial statements furnished to or
-19-
filed with the Commission or any national securities exchange and (C)
from time to time such other information concerning the Company as you
may reasonably request. So long as the Company has active
subsidiaries, such financial statements will be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries
are consolidated in reports furnished to its stockholders generally.
Separate financial statements shall be furnished for all subsidiaries
whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the Rules and Regulations.
(viii) The Company will file with the NASD all documents
and notices required by the NASD of companies that have securities
designated on the Nasdaq National Market and will use its best efforts
to list, subject to official notice of effectiveness, on the Nasdaq
National Market, the Stock to be issued and sold by the Company.
(ix) The Company will maintain a transfer agent and
registrar for its Common Stock.
(x) Prior to filing its quarterly statements on Form 10-
Q, the Company will have its independent auditors perform a limited
quarterly review of its quarterly numbers; provided, however, that for
-------- -------
one full year commencing the quarter immediately following the First
Closing Date, such review shall be in accordance with standards and
procedures as set forth in the Statement on Auditing Standards No. 71.
(xi) The Company will not, without the prior written
consent of Xxxxx, offer, sell, assign, transfer, encumber, contract to
sell, grant an option to purchase or otherwise dispose of, other than
by operation of law, gifts, pledges or dispositions by estate
representatives, any shares of Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock (including,
without limitation, Common Stock of the Company which may be deemed to
be beneficially owned by the undersigned in accordance with the Rules
and Regulations) during the 180 days following the date on which the
Purchase Price is set, other than (A) the Company's sale of Common
Stock hereunder, (B) the Company's issuance of an aggregate of
2,351,250 shares of Common Stock upon conversion of the Series A
Convertible Preferred Stock and the Series B Convertible Preferred
Stock simultaneously with the First Closing Date, (C) the Company's
issuance of Common Stock upon the exercise of warrants and stock
options which are presently outstanding and described in the
Prospectus and (D) the Company's issuance of stock options under the
1997 Plan provided that none of such options vest prior to the
expiration of such 180-day period.
(xii) The Company will apply the net proceeds from the
sale of the Stock as set forth in the description under "Use of
Proceeds" in the Prospectus,
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which description complies in all material respects with the
requirements of Item 504 of Regulation S-K.
(xiii) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(xiv) Prior to each Closing Date the Company will furnish
to you, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its
subsidiaries, for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(xv) Prior to each Closing Date the Company will issue no
press release or other communications directly or indirectly and hold
no press conference with respect to the Company or any of its
subsidiaries, the financial condition, results of operation, business,
prospects, assets or liabilities of any of them, or the offering of
the Stock, without Xxxxx'x prior written consent. For a period of
twelve (12) months following the latest Closing Date, the Company will
use its best efforts to provide to you copies of each press release or
other public communications with respect to the financial condition,
results of operations, business, prospects, assets or liabilities of
the Company concurrently with, or as soon as may reasonably be
practicable after the issuance thereof.
(xvi) During the period of five (5) years hereafter, the
Company will furnish to the Representatives, and upon request of the
Representatives, to each of the Underwriters: (A) as soon as
practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as
of the close of such fiscal year and statements of income,
stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (B)
as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other report filed by the Company with
the Commission, or the NASD or any securities exchange; and (C) as
soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock. The Company
will deliver to the Representatives similar reports with respect to
significant subsidiaries, as that term is defined in the Rules and
Regulations, which are not consolidated in the Company's financial
statements.
(xvii) The Company will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any securities of the Company.
-21-
(xviii) Without the prior written consent of Xxxxx, for a
period of one year commencing on the date hereof, the Company will not
grant any options to purchase capital stock, or a security convertible
to capital stock, of the Company to any person or entity with an
exercise or conversion price below 75% of the fair market value (as
defined in Section 1 of the 1997 Plan) of the security issuable upon
the exercise or conversion thereof.
(b) Each Selling Stockholder, severally and not jointly, covenants
and agrees with the several Underwriters that:
(i) No offering, sale, short sale or other disposition
of any shares of Common Stock or other capital stock of the Company or
other securities convertible, exchangeable or exercisable for shares
of Common Stock or derivative of shares of Common Stock owned by such
Selling Stockholder or request by such Selling Stockholder for the
registration for the offer or sale of any of the foregoing (or as to
which such Selling Stockholder has the right to direct the
disposition) will be made for a period of 180 days after the date of
this Agreement, directly or indirectly, by such Selling Stockholder
otherwise than hereunder, as set forth in Section 8(m) herein or with
the prior written consent of Xxxxx.
(ii) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and
Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax
Compliance Act of 1983 with respect to the transactions herein
contemplated, each Selling Stockholder agrees to the extent required
by applicable law or regulation to deliver to you prior to or at the
First Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
(iii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
5. Payment of Expenses. (a) The Company will pay (directly or by
-------------------
reimbursement) all costs, fees and expenses incurred in connection with expenses
incident to the performance of the obligations of the Company and of the Selling
Stockholders under this Agreement and in connection with the transactions
contemplated hereby, including but not limited to (i) all expenses and taxes
incident to the issuance and delivery of the Stock to the Representatives; (ii)
all expenses incident to the registration of the Stock under the Securities Act;
(iii) the costs of preparing stock certificates (including printing and
engraving costs); (iv) all fees and expenses of the registrar and transfer agent
of the Stock; (v) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Stock to the Underwriters; (vi)
fees and expenses of the Company's counsel and the Company's independent
accountants; (vii) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and
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distribution of the Registration Statement, each Preeffective Prospectus and the
Prospectus (including all exhibits and financial statements) and all amendments
and supplements provided for herein, the Selling Stockholders' Powers of
Attorney and Custody Agreement, the "Agreement Among Underwriters" between the
Representatives and the Underwriters, the Master Selected Dealers' Agreement,
the Underwriters' Questionnaire and the Blue Sky memoranda and this Agreement;
(viii) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with exemptions from the qualifying or
registering (or obtaining qualification or registration of) all or any part of
the Stock for offer and sale and determination of its eligibility for investment
under the Blue Sky or other securities laws of such jurisdictions as the
Representatives may designate; provided that the attorneys' fees incurred by the
--------
Underwriters in connection with the foregoing shall not in any event exceed
$5,000 in the aggregate; (ix) all fees and expenses paid or incurred in
connection with filings made with the NASD; and (x) all other costs and expenses
incident to the performance of their obligations hereunder which are not
otherwise specifically provided for in this Section; provided that (i) except as
--------
set forth in this Section 5 and in Section 11, the Underwriters shall pay all of
their own costs and expenses, including the fees and expenses of their counsel,
any transfer taxes on the sale of the Stock by the Underwriters and the expenses
of advertising any offering of the Stock made by the Underwriters and (ii) the
Company shall not have any obligation to pay or reimburse the expenses of a
defaulting Underwriter, as set forth in Sections 11 and 12.
(b) Except as otherwise agreed with the Company, the Selling
Stockholders will pay (directly or by reimbursement) all fees and expenses
incident to the performance of their obligations under this Agreement which are
not otherwise specifically provided for herein, including but not limited to any
fees and expenses of counsel for the Selling Stockholders, the Selling
Stockholders' pro rata share of fees and expenses of the Attorneys-in-fact and
the Custodian and all expenses and taxes incident to the sale and delivery of
the Stock to be sold by the Selling Stockholders to the Underwriters hereunder.
(c) In addition to their other obligations under Section 6(a) hereof,
the Company and each Selling Stockholder, severally but not jointly, agree that,
as an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon (i) any statement or
omission or any alleged statement or omission, (ii) any act or failure to act or
any alleged act or failure to act or (iii) any breach or inaccuracy in their
representations and warranties, they will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
and each Selling Stockholder's obligation to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company and each Selling Stockholder, as the
case may be, together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Citibank, N.A., New York, New
York (the "Prime Rate"). Any such interim reimbursement payments which are not
made to an Underwriter in a timely manner as provided below shall bear interest
at the Prime Rate
-23-
from the due date for such reimbursement. This expense reimbursement agreement
will be in addition to any other liability which the Company or any Selling
Stockholder may otherwise have. The request for reimbursement will be sent to
the Company with a copy to each Selling Stockholder. In the event that the
Company fails to make such reimbursement payment within thirty (30) days of the
reimbursement request, the Representatives shall notify the Selling Stockholders
of their obligation to make such reimbursement payments within fifteen (15)
days; provided, however, that each Selling Stockholder shall be required to
advance at such time only its pro rata portion of the reimbursement payment.
(d) In addition to its other obligations under Section 6(b) hereof,
each Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in Section 6(b) hereof which relates to information
furnished to the Company pursuant to Section 6(c) hereof, it will reimburse the
Company (and, to the extent applicable, each officer, director or controlling
person of the Company or any Selling Stockholder) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director or controlling person of the
Company or any Selling Stockholder) for such expenses and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent applicable, each
officer, director or controlling person of the Company or any Selling
Stockholder) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Company within thirty
(30) days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.
-24-
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in paragraph (c) and/or (d) of
this Section 5, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in paragraph (c) and/or (d) of
this Section 5 and would not resolve the ultimate propriety or enforceability of
the obligation to reimburse expenses which is created by the provisions of
Section 6.
6. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of the Securities Act and the
respective officers, directors, partners, employees, representatives and agents
of each of such Underwriter (collectively, the "Underwriter Indemnified Parties"
and, each, an "Underwriter Indemnified Party"), against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other federal,
state, local or foreign statute or regulation, or at common law, (i) on the
ground or alleged ground that any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the Registration
Statement or the Prospectus as from time to time amended or supplemented)
includes or allegedly includes an untrue statement of a material fact or omits
or allegedly 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, unless such statement or omission
was made 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 use in the preparation thereof or (ii) for 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 expense arising out of or based upon matters covered by
clause (i) above (provided that the Company shall not be liable under this
clause (ii) to the extent that it is determined in a final judgment by a court
of competent jurisdiction that such loss, claim, damage, liability or expense
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;
provided that the indemnity agreement set forth in this Section 6(a) with
--------
respect to any Preeffective Prospectus (or the Prospectus if it has been amended
or supplemented) shall not inure to the benefit of any Underwriter Indemnified
Party from whom the person or entity asserting any loss, claim, damage,
liability or expense based upon any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state therein a material fact
purchased such Stock, if a copy of the Prospectus (or the amendment or
supplement to the Prospectus if it shall have been amended or supplemented) in
which such untrue or alleged untrue statement or omission or alleged omission
was corrected had
-25-
not been sent or given to such person or entity within the time required by the
Securities Act and the Rules and Regulations through no fault of the Company.
Promptly after receipt by any Underwriter Indemnified Party of notice of any
claim or commencement or any action, such Underwriter Indemnified Party shall,
if a claim in respect thereof is to be made against the Company under this
Section 6(a), notify the Company in writing of such claim or action, but the
failure to so notify the Company shall not relieve the Company from any
liability which it may have to such Underwriter Indemnified Party under this
Section 6(a). The Company will be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event the
Company elects to assume the defense of any such suit and retain such counsel,
any Underwriter Indemnified Parties, defendant or defendants in the suit, may
retain not more than one separate counsel but shall bear the fees and expenses
of such counsel unless (i) the Company shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit include any such
Underwriter Indemnified Parties, and the Company and such Underwriter
Indemnified Parties at law or in equity have been advised by counsel to the
Underwriters and have reasonably concluded based on such advice that one or more
legal defenses may be available to it or them which may not be available to the
Company, in which case the Company shall not be entitled to assume the defense
of such suit notwithstanding its obligation to bear the fees and expenses of
such counsel. The Company shall not be liable to indemnify any Underwriter
Indemnified Party for any settlement of any such claim or action effected
without the Company's consent, which consent shall not be unreasonably withheld.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any rights
or remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.
(b) Each of the Selling Stockholders severally, and not jointly,
agrees to indemnify and hold harmless each Underwriter Indemnified Party against
any losses, claims, damages, liabilities or expenses (including the reasonable
cost of investigating and defending against any claims therefor and counsel fees
incurred in connection therewith), joint or several, which arise out of or are
based in whole or in part upon the Securities Act, the Exchange Act or any other
federal, state, local or foreign statute or regulation, or at common law, on the
ground or alleged ground that any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the Registration
Statement or the Prospectus as from time to time amended or supplemented)
includes or allegedly includes an untrue statement of a material fact or omits
or allegedly 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, unless such statement or omission
was made in reliance upon, and in conformity with, written information furnished
to the Company by any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof. Promptly after receipt by any
Underwriter Indemnified Party of notice of any claim or commencement or any
action, such Underwriter Indemnified Party shall, if a claim in respect thereof
is to be made against a Selling Stockholder under this Section 6(b), notify such
Selling Stockholder in writing of such claim or action, but the failure to so
notify such Selling Stockholder shall not relieve such Selling Stockholder from
any liability which it may have to such Underwriter Indemnified Party under this
Section 6(b). Such Selling Stockholder shall be entitled to participate at his
or its own expense in the defense or, if he
-26-
or it so elects, to assume the defense of any suit brought to enforce any such
liability, but if such Selling Stockholder elects to assume the defense, such
defense shall be conducted by counsel chosen by him or it. In the event that any
Selling Stockholder elects to assume the defense of any such suit and retain
such counsel, any Underwriter Indemnified Parties, defendant or defendants in
the suit, may retain not more than one separate counsel but shall bear the fees
and expenses of such counsel unless (i) such Selling Stockholder shall have
specifically authorized the retaining of such counsel or (ii) the parties to
such suit include any such Underwriter Indemnified Parties, and such Selling
Stockholder and such Underwriter Indemnified Parties at law or in equity have
been advised by counsel to the Underwriters and have reasonably concluded based
on such advice that one or more legal defenses may be available to it or them
which may not be available to such Selling Stockholder, in which case such
Selling Stockholder shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
[The liability of Phoenix Home Life Mutual Insurance Company and PHL Global
Holding Co. under this Agreement shall not exceed the net proceeds (before
deducting offering expenses) received by Phoenix Home Life Mutual Insurance
Company or PHL Global Holding Co., as applicable, from the sale of Stock in the
Offering.] This indemnity agreement is not exclusive and will be in addition to
any liability which the Selling Stockholders might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.
(c) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act (collectively, the "Company
Indemnified Parties") and each Selling Stockholder and each person, if any, who
controls a Selling Stockholder within the meaning of the Securities Act
(collectively, the "Stockholder Indemnified Parties"), against any losses,
claims, damages, liabilities or expenses (including, unless the Underwriter or
Underwriters elect to assume the defense, the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other federal,
state, local or foreign statute or regulation, or at common law, on the ground
or alleged ground that any Preeffective Prospectus, the Registration Statement
or the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus, as from time to time amended and supplemented) includes or
allegedly includes an untrue statement of a material fact or omits or allegedly
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 in which
they were made, not misleading, but only insofar as any such statement or
omission was made 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 use in the preparation thereof; provided, however,
that in no case is such Underwriter to be liable with respect to any claims made
against any Company Indemnified Party or Stockholder Indemnified Party against
whom the action is brought unless such Company Indemnified Party or Stockholder
Indemnified Party shall have notified such Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
Indemnified Party or Stockholder Indemnified Party, but failure to notify such
Underwriter of such claim shall not relieve it from any
-27-
liability which it may have to any Company Indemnified Party or Stockholder
Indemnified Party otherwise than on account of its indemnity agreement contained
in this paragraph. Such Underwriter shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it. In the
event that any Underwriter elects to assume the defense of any such suit and
retain such counsel, the Company Indemnified Parties or Stockholder Indemnified
Parties and any other Underwriter or Underwriters or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them, respectively. The Underwriter
against whom indemnity may be sought shall not be liable to indemnify any person
for any settlement of any such claim effected without such Underwriter's
consent. This indemnity agreement is not exclusive and will be in addition to
any liability which such Underwriter might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in equity to
any Company Indemnified Party or Stockholder Indemnified Party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is 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. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
or alleged statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses (or actions 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 shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Selling
Stockholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating,
-28-
defending, settling or compromising any such claim. Notwithstanding the
provisions of this subsection (d), (x) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the shares of the Stock underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and (y) neither Phoenix Home Life
Mutual Insurance Company nor PHL Global Holding Co. shall be required to
contribute any amount in excess of the net proceeds (before deducting offering
expenses) received by it from the sale of Stock in the Offering. The
Underwriters' obligations to contribute are several in proportion to their
respective underwriting obligations and not joint. 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.
7. Survival of Indemnities, Representations, Warranties, etc. The
---------------------------------------------------------
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Stockholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock or termination
of this Agreement.
8. Conditions of Underwriters' Obligations. The respective
---------------------------------------
obligations of the several Underwriters hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof, at
and as of each Closing Date, of the representations and warranties made herein
by the Company and the Selling Stockholders, to compliance at and as of each
Closing Date by the Company and the Selling Stockholders with their covenants
and agreements herein contained and other provisions hereof to be satisfied at
or prior to the Closing Dates, and to the following additional conditions:
(a) The Registration Statement shall have become effective and
no stop order suspending the effectiveness thereof shall have been issued
and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or the Representatives, shall be threatened by the
Commission, and any request for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the reasonable satisfaction
of the Representatives. Any filings of the Prospectus, or any supplement
thereto, required pursuant to Rule 424(b) or Rule 434 of the Rules and
Regulations, shall have been made in the manner and within the time period
required by Rule 424(b) and Rule 434 of the Rules and Regulations, as the
case may be.
(b) The Representatives shall have been satisfied that there
shall not have occurred any change, on a consolidated basis, prior to each
Closing Date in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of the
Company and its subsidiaries considered as a whole and individually, or any
change in the capital stock or, except with respect to regularly scheduled
payments of
-29-
interest and principal, short-term or long-term debt of the Company and its
subsidiaries considered as a whole and individually, such that (i) the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the reasonable
opinion of the Representatives, is material, or omits to state a fact
which, in the reasonable opinion of the Representatives, is required to be
stated therein or is necessary to make the statements therein not
misleading, or (ii) it is unpracticable in the reasonable judgment of the
Representatives to proceed with the public offering or purchase the Stock
as contemplated hereby.
(c) The Representatives shall be satisfied that no legal or
governmental action, suit or proceeding affecting the Company which is
material and adverse to the Company or which affects or may affect the
Company's or the Selling Stockholders' ability to perform their respective
obligations under this Agreement shall have been instituted or threatened
and there shall have occurred no material adverse development in any such
existing action, suit or proceeding.
(d) At the time of execution of this Agreement, the
Representatives shall have received from Ernst & Young LLP, independent
certified public accountants, a letter, dated the date hereof, in form and
substance satisfactory to the Underwriters.
(e) The Representatives shall have received from Ernst & Young
LLP, independent certified public accountants, a letter, dated each Closing
Date, to the effect that such accountants reaffirm, as of each Closing
Date, and as though made on each Closing Date, the statements made in the
letter furnished by such accountants pursuant to paragraph (d) of this
Section 8.
(f) The Representatives shall have received from Xxxxx Xxxxx,
counsel for the Company and the Selling Stockholders, an opinion, dated
each Closing Date, substantially to the effect set forth on Exhibit I
hereto.
(g) The Representatives shall have received from Xxxxxx Xxxx &
Xxxxxx LLP, local Indian counsel for the Company and the Selling
Stockholders, opinions, dated each Closing Date, substantially to the
effect set forth on Exhibit II hereto.
(h) The Representatives shall have from Xxxxx X. Xxxxxxxxxx,
local Mauritius counsel for the Company and the Selling Stockholders, an
opinion, dated each Closing Date, addressed to the Underwriters
substantially to the effect set forth on Exhibit III.
(i) The Representatives shall have received from Xxxxxxxx
Xxxxxxxxx, counsel for the Underwriters, their opinion or opinions dated
each Closing Date with respect to the incorporation of the Company, the
validity of the Stock, the Registration Statement and the Prospectus and
such other related matters as it may reasonably request, and the Company
and the Selling Stockholders shall have furnished to such counsel such
documents as they may request for the purpose of enabling them to pass upon
such matters.
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(j) The Representatives shall have received a certificate, dated
each Closing Date, of the chief executive officer or the President and the
chief financial or accounting officer of the Company to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the knowledge of
the signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities
Act;
(ii) Neither any Preeffective Prospectus, as of its
date, nor the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as of the time when the
Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate,
included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, and except as set forth or contemplated in the
Prospectus, neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or
contingent, nor entered into any material transactions, not in
the ordinary course of business and there has not been any
material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its
subsidiaries considered individually and as a whole, or any
change in the capital stock, or, except with respect to
regularly scheduled payments of interest and principal, short-
term or long-term debt of the Company and its subsidiaries
considered individually and as a whole;
(iv) The representations and warranties of the Company
in this Agreement are true and correct in all material respects
at and as of each Closing Date, and the Company has complied in
all material respects with all the agreements and performed or
satisfied all the conditions on its part to be performed or
satisfied at or prior to each Closing Date; and
(v) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, (i)
there has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its
subsidiaries considered as a whole and individually; (ii) the
business and operations conducted by the Company and its
subsidiaries have not
-31-
sustained a loss by strike, fire, flood, accident or other
calamity (whether or not insured) of such a character as to
interfere materially with the conduct of the business and
operations of the Company and its subsidiaries considered as a
whole and individually; (iii) no legal or governmental action,
suit or proceeding is pending or to the Company's knowledge
threatened against the Company which is material to the Company,
whether or not arising from transactions in the ordinary course
of business, or which may materially and adversely affect the
transactions contemplated by this Agreement; (iv) since such
dates and except as so disclosed, the Company has not incurred
any material liability or obligation, direct, contingent or
indirect, made any change in its capital stock (except pursuant
to its stock plans), made any material change in its short-term
or funded debt or repurchased or otherwise acquired any of the
Company's capital stock; and (v) the Company has not declared or
paid any dividend, or made any other distribution, upon its
outstanding capital stock payable to stockholders of record on a
date prior to each Closing Date.
(k) The Representatives shall have received a certificate or
certificates, dated each Closing Date, of each Selling Stockholder to the
effect that as of the Closing Date his or its representations and
warranties in this Agreement are true and correct in all material respects
as if made on and as of each Closing Date, and that he or it has performed
in all material respects all its obligations and satisfied all the
conditions on his or its part to be performed or satisfied at or prior to
the Closing Date.
(l) The Company and each Selling Stockholder shall have
furnished to the Representatives such additional certificates as the
Representatives may have reasonably requested as to the accuracy in all
material respects, at and as of the Closing Dates, of the representations
and warranties made herein by them and as to compliance in all material
respects at and as of each Closing Date by them with their covenants and
agreements herein contained and other provisions hereof to be satisfied at
or prior to the Closing Dates, and as to satisfaction of the other
conditions to the obligations of the Underwriters hereunder.
(m) Cowen shall have received written agreements from each of
the officers, directors and holders of Common Stock and holders of vested
options to acquire Common Stock of the Company set forth on Schedule C
hereto that each will not offer, sell, assign, transfer, encumber, contract
to sell, grant an option to purchase or otherwise dispose of other than by
operation of law, gifts, pledges or disposition by estate representatives,
any shares of Common Stock (including, without limitation, Common Stock
which may be deemed to be beneficially owned by such officer, director or
holder in accordance with the Rules and Regulations) during the 180 days
following the date of the final Prospectus, except for the Stock being sold
hereunder by the Selling Stockholders.
(n) The Nasdaq National Market shall have approved the Stock for
listing, subject only to official notice of effectiveness.
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All opinions, certificates, letters and other documents will be
in compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company
will furnish to the Representatives conformed copies of such opinions,
certificates, letters and other documents as the Representatives shall
reasonably request. If any of the conditions hereinabove provided for in
this Section shall not have been satisfied when and as required by this
Agreement, this Agreement may be terminated by the Representatives by
notifying the Company of such termination in writing or by telegram at or
prior to each Closing Date, but Cowen, on behalf of the Representatives,
shall be entitled to waive any of such conditions.
9. Effective Date. This Agreement shall become effective immediately
--------------
as to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Stock
for sale to the public. For the purposes of this Section 9, the Stock shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by you of
telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.
10. Termination. This Agreement (except for the provisions of
-----------
Section 5) may be terminated by the Company at any time before it becomes
effective in accordance with Section 9 by notice to the Representatives and may
be terminated by the Representatives at any time before it becomes effective in
accordance with Section 9 by notice to the Company. In the event of any
termination of this Agreement under this or any other provision of this
Agreement, there shall be no liability of any party to this Agreement to any
other party, other than as provided in Sections 5, 6 and 11 and other than as
provided in Section 12 as to the liability of defaulting Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the First Closing
Date or the Option Closing Date (only for such portion) trading in securities on
the Nasdaq National Market, the American Stock Exchange or the New York Stock
Exchange shall have been suspended or minimum or maximum prices shall have been
established on such exchange or market, or a banking moratorium shall have been
declared by New York or United States authorities; (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) if at or prior to the First Closing Date or the
Option Closing Date (only for such portion) there shall have been (A) an
outbreak or escalation of hostilities between the United States and any foreign
power or of any other insurrection or armed conflict involving the United States
or (B) any change in financial markets or any calamity or crisis which, in
either case (A) or (B) in the judgment of the Representatives, makes it
impractical or inadvisable to offer or sell the Firm Stock or Optional Stock, as
applicable, on the terms contemplated by the Prospectus; (iv) if there shall
have been any development or prospective development involving particularly the
business or properties or securities of the Company or any of its subsidiaries
or the transactions contemplated by
-33-
this Agreement, which, in the judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the Firm Stock or the Optional
Stock, as applicable, on the terms contemplated by the Prospectus; (v) if there
shall be any litigation or proceeding, pending or threatened, which, in the
judgment of the Representatives, makes it impracticable or inadvisable to offer
or deliver the Firm Stock or Optional Stock, as applicable, on the terms
contemplated by the Prospectus; or (vi) if there shall have occurred any of the
events specified in the immediately preceding clauses (i) - (v) together with
any other such event that makes it, in the judgment of the Representatives,
impractical or inadvisable to offer or deliver the Firm Stock or Optional Stock,
as applicable, on the terms contemplated by the Prospectus.
11. Reimbursement of Underwriters. Notwithstanding any other
-----------------------------
provisions hereof, if this Agreement shall not become effective by reason of any
election of the Company or the Selling Stockholders pursuant to the first
paragraph of Section 10 or shall be terminated by the Representatives under
Section 8 or Section 10, the Company will bear and pay the expenses specified in
Section 5 hereof and, in addition to its their obligations pursuant to Section 6
hereof, the Company will reimburse the reasonable out-of-pocket expenses of the
several Underwriters (including reasonable fees and disbursements of counsel for
the Underwriters) incurred in connection with this Agreement and the proposed
purchase of the Stock, and promptly upon demand the Company will pay such
amounts to you as Representatives; provided that (i) this Section 11 shall not
--------
apply (A) if this Agreement shall have been terminated by the Representatives
upon any failure, refusal or inability of the Company to perform any condition
to be fulfilled by it hereunder, which failure, refusal or inability to perform
any agreement or fulfill any condition is due to the default or omission of any
Underwriter under this Agreement or (B) if this Agreement shall have been
terminated under Section 12 following the default or defaults of any
Underwriter, and (ii) the Company shall have no such obligation to pay or
reimburse the expenses if any Underwriter who shall have defaulted in its
obligation to purchase shares of Stock hereunder.
12. Substitution of Underwriters. If any Underwriter or Underwriters
----------------------------
shall default in its or their obligations to purchase shares of Stock hereunder
and the aggregate number of shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the total number of shares underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 12, (i) the Company and
the Selling Stockholders shall have the right to postpone any Closing Date for a
period of not more than five (5) full business days in order that the Company
and the Selling Stockholders may effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the
-34-
respective numbers of shares to be purchased by the remaining Underwriters or
substituted Underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company, the Selling
Stockholders or the other Underwriters for damages occasioned by its default
hereunder. Any termination of this Agreement pursuant to this Section 12 shall
be without liability on the part of any non-defaulting Underwriter, the Selling
Stockholders or the Company, except for expenses to be paid or reimbursed
pursuant to Section 5 and except for the provisions of Section 6.
13. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Underwriters shall be mailed, delivered or telecopied and
confirmed to you, as their Representatives c/o Cowen & Company at Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, with a copy to Xxxxxxxx Xxxxxxxxx, College
Centre, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxx X.
Xxxxx, except that notices given to an Underwriter pursuant to Section 6 hereof
shall be sent to such Underwriter at the address furnished by the
Representatives or, if sent to the Company or the Selling Stockholders, shall be
mailed, delivered or telecopied and confirmed c/o Command Systems, Inc., 00
Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, with a copy to Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. at Xxx Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx.
14. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the several Underwriters, the Company and the Selling Stockholders
and their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company and the Selling
Stockholders contained in this Agreement shall also be for the benefit of the
person or persons entitled to the benefit of the provisions of Section 6 and
each person, if any, who controls any Underwriter or Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and the indemnities of the several Underwriters shall also be for the benefit of
each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons entitled to the benefit of
Section 6 and each person, if any, who controls the Company or any Selling
Stockholders within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act.
15. Applicable Law; Submission to Jurisdiction. This Agreement shall
------------------------------------------
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to its conflict-of-law principles. Each of the
parties hereto consents to the jurisdiction of and venue in federal and state
courts located in the Borough of Manhattan, City and State of New York, over any
suit, action or proceeding with respect to this Agreement.
16. Authority of the Representatives. In connection with this
--------------------------------
Agreement, you will act for and on behalf of the several Underwriters, and any
action taken under this Agreement
-35-
by Cowen, as Representative, will be binding on all the Underwriters; and any
action taken under this Agreement by any of the Attorneys-in-fact will be
binding on all the Selling Stockholders.
17. Partial Unenforceability. The invalidity or unenforceability of
------------------------
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
18. General. This Agreement constitutes the entire agreement of the
-------
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and the
Representatives.
19. Counterparts. This Agreement may be signed in two (2) or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Any person executing and delivering this Agreement as Attorney-in-fact
for the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in-fact by such Selling Stockholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-fact to
take such action.
* * * * *
-36-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
COMMAND SYSTEMS, INC.
By:
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SELLING STOCKHOLDERS LISTED
IN SCHEDULE B
By: Attorney-in-fact
By:
--------------------------
Attorney-in-fact
Acting on behalf of the Selling Stockholders
listed in Schedule B.
Accepted and delivered in
New York, New York as of
the date first above written.
XXXXX & COMPANY
XXXXX XXXXX XXXXXX & COMPANY, LLC
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: Xxxxx & Company
By: Cowen Incorporated,
its general partner
By:
------------------------------
Title:
-37-
SCHEDULE A
Number of shares Number of shares
of Firm Stock to of Optional Stock
Be Purchased to Be Purchased
------------ ---------------
Name
----
Xxxxx & Company......................................... [ ] [ ]
Xxxxx Xxxxx Xxxxxx & Company, LLC....................... [ ] [ ]
------- -------
Total................................................... 2,400,000 360,000
SCHEDULE B
Number of
Number of Firm Shares to Optional Shares
Be Sold to Be Sold
------------------------- ----------------
Command Systems, Inc.............................. 2,100,000 0
Selling Stockholders
--------------------
Xxxxxx X. Xxxxxx.................................. [ ] [180,000]
Phoenix Home Life Mutual Insurance Company........ [ ] [ ]
PHL Global Holding Co............................. [ ] [ ]
----- -----
Total............................................. 2,400,000 360,000
========= =======
SCHEDULE C
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxx
Xxx Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxx Xxx Xxxxx
Xxxx X. X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxxx Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Phoenix Home Life Mutual Insurance Company
PHL Global Holding co.
EXHIBIT I
FORM OF XXXXX XXXXX OPINION
[Date]
Xxxxx & Company
Xxxxx Xxxxx Xxxxxx & Company, LLC
As representatives of the several
Underwriters named in Schedule A
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Command Systems, Inc.
---------------------
2,400,000 Shares of Common Stock
Dear Sirs:
We have acted as counsel for Command Systems, Inc., a Delaware corporation
(the "Company"), in connection with the sale by the Company and purchase of
2,400,000 shares of Common Stock, par value $.01 per share, of the Company (the
"Shares") by the several Underwriters listed in Schedule A to the Underwriting
Agreement, dated ________________ ____, 1998 among the Company, Xxxxx & Company
and Xxxxx Xxxxx Xxxxxx & Company, LLC, as representatives of the several
Underwriters named therein (the "Underwriting Agreement"). This opinion is
being furnished pursuant to Section 8(f) of the Underwriting Agreement. All
defined terms not defined herein shall have the meanings ascribed to them in the
Underwriting Agreement.
We are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified to do business and in good standing as a foreign
corporation in Connecticut, Massachusetts and New York, which constitute all of
the jurisdictions wherein the failure to be so qualified could reasonably be
expected to have a material adverse effect on the business, assets, operations
or results of operations of the Company. The Company has all power and
authority necessary to own or hold its properties and conduct the business in
which it is engaged.
2. The authorized, issued and outstanding capital stock is as set forth in the
Prospectus under the caption "Capitalization", and all of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
including the shares of Stock to be sold by the Selling Stockholders pursuant to
the Underwriting Agreement, are fully paid and non-assessable and all of the
Shares to be issued and sold by the Company to the Underwriters
pursuant to the Underwriting Agreement, have been duly and validly authorized
and, when issued and delivered against payment therefor as provided for in the
Underwriting Agreement, shall be duly and validly issued, fully paid and non-
assessable; and, to our knowledge, all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and issued
and are fully paid, non-assessable and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims; and the
Company has granted options to purchase shares of the Company's capital stock as
set forth in the Prospectus, and all such granted options have been duly and
validly authorized by the Company and conform to the descriptions thereof set
forth in the Prospectus.
3. Except as described in the Prospectus, to our knowledge, there are no
outstanding securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital stock of
the Company and there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or evidencing
the right to purchase or subscribe for any shares of such stock; and except as
described in the Prospectus, to our knowledge, no holder of any securities of
the Company or any other person has the right, contractual or otherwise, which
has not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
shares of Stock or the right to have any shares of Stock or other securities of
the Company included in the Registration Statement or the right, as a result of
the filing of the Registration Statement, to require registration under the
Securities Act of any shares of Stock or other securities of the Company.
4. The shares of Stock conform in all material respects to the description
thereof contained in the Prospectus, and the form of certificate used to
evidence the shares of Stock is in due and proper form and complies in all
material respects with all applicable statutory requirements.
5. There are no preemptive or other rights to subscribe for or to purchase, nor
any restriction upon the voting or transfer of, any of the Shares pursuant to
the Company's Amended and Restated Certificate of Incorporation or By-Laws or,
except with respect to the Co-Sale Agreement, any agreement or other instrument.
6. Based solely on our inquiry of the Company's President and Chief Executive
Officer, or otherwise to our knowledge, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a party
or of which any property or assets of the Company or any of its Subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, could have a material adverse effect on the Company and its
subsidiaries; and, to our knowledge, no such proceedings are threatened or
contemplated by governmental authorities or other third parties.
7. The Company and each of its subsidiaries owns or possesses all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being
owned by them or any of them or necessary for the conduct of their respective
businesses, and we are not aware of any claim to the contrary or any challenge
or basis for challenge by any other person to the rights of the Company or any
of its subsidiaries with respect to the foregoing.
8. The Company has full corporate power and authority to enter into the
Underwriting Agreement and to perform its obligations thereunder (including to
issue, sell and deliver the Shares), and the Underwriting Agreement has been
duly and validly authorized, executed and delivered by the Company and is a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that rights to indemnification
and contribution thereunder may be limited by federal or state securities laws
or the public policy underlying such laws.
9. The execution, delivery and performance of the Underwriting Agreement and
the consummation of the transactions therein contemplated (other than with
respect to Sections 5(c), 5(d) and 5(e) and Section 6 thereof, as to which we
express no opinion) will not result in a breach or violation of any of the terms
or provisions of or constitute a default under (A) the Amended and Restated
Certificate of Incorporation or By-Laws of the Company or (B) to our knowledge,
any indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them or any of their properties is or may be bound, or, to our
knowledge, any law, 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, to our knowledge, result in the creation of a
lien.
10. No consent, approval, authorization or filing by or with any governmental
agency or body is required in connection with the execution and delivery by the
Company of the Underwriting Agreement and the issuance and sale by the Company
of the Stock to the Underwriters, except such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or under the Securities Act
or the securities or "Blue Sky" laws of any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters.
11. The execution, delivery and performance of the Exchange Documents by the
Company and Command Mauritius and the consummation of the transactions therein
contemplated by the Company and Command Mauritius did not and will not result in
a breach or violation of any of the terms or provisions of or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under (A) the Amended and Restated Certificate of
Incorporation or By-Laws of the Company or (B) to our knowledge, any indenture,
mortgage, deed of trust, note agreement or other agreement or instrument by
which the Company or any of its properties is or may be bound, or, to our
knowledge, any law, order, rule or regulation of any court or governmental
agency or body having jurisdiction over such party or any of its properties or,
to our knowledge, will result in the creation of a lien. To our knowledge, each
of the Exchange Documents is in full force and effect and the parties thereto
are in full compliance with all their obligations under such agreements. To our
knowledge, except with respect to the Exchange Documents, as otherwise disclosed
in the Registration Statement and Prospectus or otherwise disclosed in writing
to Cowen, there are no agreements, contracts, commitments, undertakings, or
other arrangements, whether oral or written, between, among or
involving the Company or any of its subsidiaries or affiliates and Phoenix or
any of its subsidiaries or affiliates.
12. To our knowledge, the Company and each of its subsidiaries are in
material compliance with, and conduct their businesses in material conformity
with, all applicable federal, state and local laws, rules and regulations,
including, but not limited to, those of any governmental agency, court or
tribunal; to our knowledge, no prospective change in any of such federal, state,
local or foreign laws, rules or regulations has been adopted which, when made
effective, would have a material adverse effect on the operations of the Company
and its subsidiaries.
13. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company and by or on behalf of each Selling Stockholder. The
Power of Attorney and Custody Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder. Each Attorney-in-Fact has
been duly authorized by each Selling Stockholder to deliver the Stock to be so
sold by such Selling Stockholder on behalf of such Selling Stockholder in
accordance with the terms of this Agreement.
14. Immediately prior to the applicable Closing Date, to our knowledge
after due inquiry of corporate books and records, review of certificates
representing the Shares to be sold by each Selling Stockholder and review of all
representations and warranties by and certificates from such Selling
Stockholder, each Selling Stockholder had good and valid title to the Stock to
be sold by such Selling Stockholder hereunder on such date, free and clear of
all liens, encumbrances, equities and claims. Each Selling Stockholder has full
legal right, power and authority, and has obtained any approval required by law
(other than as required by State securities and Blue Sky laws as to which such
counsel need express no opinion), to sell, assign, transfer and deliver the
Stock to be sold by such Selling Stockholder.
15. Upon the Underwriters obtaining control of the Shares to be sold by
the Selling Stockholders and assuming the Underwriters purchased such Shares for
value and without notice of any adverse claim to such Shares within the meaning
of Section 8-102 of the Uniform Commercial Code as in effect in the State of New
Jersey, the Underwriters will have acquired all rights of the Selling
Stockholders in such Shares free of any adverse claim, any lien in favor of the
Company and any restrictions on transfer imposed by the Company.
16. We have been orally advised by a member of the Commission's staff that
the Registration Statement was declared effective under the Securities Act as of
___________ ___, 1998. The Prospectus was filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations in the manner and within the time
period prescribed by Rule 424(b) and, to our knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose is pending or threatened by the Commission.
17. The Registration Statement and the Prospectus and any amendments or
supplements thereto, as of the effective date of the Registration Statement,
complied as to form in all material respects with the applicable requirements of
the Securities Act and the Rules and
Regulations (except that we express no opinion as to the financial statements
and notes thereto, schedules or other financial information included therein).
18. To our knowledge, there are no contracts or other documents which are
required by the Securities Act or by the Rules and Regulations to be described
in the Prospectus or filed as exhibits to the Registration Statement which have
not been so described or filed as required.
19. Other than as described in the Prospectus, to our knowledge, 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 this Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
20. The descriptions in the Registration Statement and Prospectus of
statutes, rules, regulations, legal or governmental proceedings, contracts and
other documents are accurate and such descriptions fairly present the
information required to be disclosed; and to the best of our knowledge, there
are no legal or governmental proceedings, statutes, rules or regulations, or any
contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
21. The statements (i) in the Prospectus under the captions "Description
of Capital Stock," "Certain Transactions," and "Shares Eligible for Future Sale"
and (ii) in Item 14 of the Registration Statement, insofar as such statements
constitute matters of law or legal conclusions, have been reviewed by us and
fairly present, in all material respects, the matters referred to therein.
22. To our knowledge, the Company has complied with all provisions of
Section 517.075 of the Florida Statutes (Chapter 92 198; Laws of Florida).
23. The Company is not, nor will it be immediately after receiving the
proceeds from the sale of the Shares, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
24. The Company is not and will not become, as a result of the
consummation of the transactions and contemplated by the Underwriting Agreement,
and the application of the net proceeds therefrom as described in the
Prospectus, (A) a controlled foreign corporation, as such term is defined in the
Code, (B) a passive foreign investment company within the meaning of Section
1296(a) of the Code or (C) a foreign personal holding corporation, as such term
is defined in the Code.
25. Based on a letter dated ____________ ___, 1998 from The Nasdaq Stock
Market, Inc., the shares of Stock to be sold under the Underwriting Agreement to
the Underwriters are
duly authorized for quotation and trading on the Nasdaq National Market, subject
to official notice of effectiveness.
The foregoing opinion is limited to matters governed by the Federal laws of
the United States of America and the Delaware General Corporation Law.
In rendering such opinion, Xxxxx Xxxxx may rely (A) as to all matters governed
other than by United States federal laws and the laws of the State of Delaware
on local counsel in the relevant jurisdictions reasonably satisfactory to the
Representatives and counsel to the Underwriters, provided that in each case
Xxxxx Xxxxx shall state that they believe that they and the Underwriters are
justified in relying on such other counsel; and (B) as to matters of fact, to
the extent they deem proper, on the representations and warranties of the
Company set forth in this Agreement and on certificates of responsible officers
of the Company or its subsidiaries and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company or of its
subsidiaries; provided that copies of any such statements or certificates shall
be delivered to counsel to the Underwriters
We participated in the preparation by the Company of the Registration Statement
and the Prospectus, including review and discussion of the contents thereof,
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Underwriters and their counsel, during which the contents of the Registration
Statement and the Prospectus were discussed at length. There is no assurance,
however, that all possible material facts as to the Company were disclosed at
such conferences, and we cannot vouch for the accuracy or completeness of the
statements contained in the Registration Statement or Prospectus, other than to
the extent specifically set forth in Paragraphs 20 and 21 above. However,
nothing has come to our attention which has caused us to believe that (A) the
Registration Statement, as of the time it became effective under the Securities
Act, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (B) the Prospectus, or any supplement thereto, on the
date it was filed pursuant to the Rules and Regulations and as of the date
hereof, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that we express no view as to financial statements and notes
thereto, schedules and other financial and statistical information included
therein).
Very truly yours,
EXHIBIT II
Form of Indian Counsel Opinion
(i) Command India has been duly incorporated as a private
company under the provisions of the Companies Act, 1956 which is the
law governing, inter alia, unlimited liability companies in India.
Command India is validly existing as a private company in good
standing under the laws of India.
(ii) Command India has corporate power and authority to own,
lease and operate its properties, and to conduct its business as
described in the Registration Statement.
(iii) Command India is entitled to the benefit of all
instruments (including, but not limited to, contracts, leases, lease
deeds, bonds, agreements, permissions, and approval certificates)
acquired by it prior to and after consummation of the transactions
contemplated by the Exchange Agreement and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim, charge or
equity.
(iv) Command India is duly qualified as a company incorporated
under the Companies Act, 1956 to transact business and is in good
standing in each Indian jurisdiction in which such qualification is
required. All of the issued and outstanding capital stock of Command
India has been duly authorized and validly issued, is fully paid and
non-assessable and is owned of record by Command Mauritius, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim, charge or equity, and no options, warrants or other rights to
purchase, agreements or other obligations to issue, or other rights to
convert, any obligations into shares of capital or ownership interest
in Command India are outstanding.
(v) All contracts and documents with respect to Command India
summarized in the Registration Statement or the Prospectus are fairly
summarized in all material respects.
(vi) Such counsel is not aware of any litigation or
governmental or other action, suit, proceeding or investigation before
any court or before or by any public, regulatory or governmental
agency or body including, but not limited to, investigations and
proceedings against Command India known to such counsel to be pending
or threatened against, or involving the properties or business of, the
Company or Command India.
(vii) Except for the approvals of the Reserve Bank of India
with respect to the Exchange Documents, which have been obtained, no
authorization, approval, consent or order of any court or governmental
authority or agency is
required in connection with the execution of the Exchange Documents;
to the best of such counsel's knowledge, the execution, delivery and
performance of the Exchange Documents and the consummation of the
transactions contemplated therein and compliance by each of the
parties thereto will not conflict with or constitute a breach of, or
default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of Command India or the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, note agreement,
or other agreement or instrument to which Command India or the Company
or any of its subsidiaries is a party or by which it or any of them
may be bound, or to which any of the properties or assets of Command
India or the Company or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the
Memorandum and Articles of Association of Command India or the
Certificate of Incorporation of the Company, or any applicable law,
administrative regulation or any order, rule or regulation known to
such counsel of any court, regulatory body, administrative agency or
other governmental body having jurisdiction over Command India or the
Company or any of its subsidiaries.
(viii) Nothing has come to such counsel's attention which
indicates that Command India is not conducting its business in
compliance with all laws, rules and regulations of India except for
such violations that would not, individually or in the aggregate, have
a material adverse effect on Command India's condition (financial or
otherwise), properties, business, management, prospects, net worth or
results.
(ix) Command India is not subject to any current claim and has
not received any notice of infringement or other violation of any
Intellectual Property of others; to the best of such counsel's
knowledge, (A) there are no legal or governmental proceedings pending
relating to Intellectual Property owned or used by Command India and
(B) no such proceedings, including without limitation interference
proceedings, are currently threatened or contemplated by governmental
authorities or others; such counsel has no knowledge of any facts
which would preclude Command India from having clear title to Command
India's Intellectual Property. Such counsel has no knowledge of any
facts that Command India lacks any rights or licenses to use all
Intellectual Property materially necessary to the conduct of its
business as now being or proposed to be conducted by Command India as
described in the Prospectus. To such counsel's knowledge, Command
India has not received any notice of conflict with rights or claims of
others with respect to any Intellectual Property owned or currently
being used by, or intended to be used by it, except as described in
the Prospectus.
In rendering such opinion, ____________________ may rely as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of Command India or its subsidiaries and certificates
or other written statements of officers
of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of Command Mauritius or
its subsidiaries; provided that copies of any such statements or
certificates shall be delivered to counsel to the Underwriters. In addition
to the matters set forth above, such opinion shall also include a statement
to the effect that nothing has come to the attention of such counsel which
leads them to believe that the Registration Statement, as of the time it
became effective under the Securities Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the
Securities Act), contained, in relation to Command Mauritius, an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus or any amendment to the supplement
thereto, on the date it was filed pursuant to Rule 424(b), and the
Registration Statement and the Prospectus, or any amendment or supplement
thereto, as of the Closing Date, contain, in relation to Command Mauritius,
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 light of the circumstances under which they were made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and other financial information included therein).
With respect to such statement, ____________________ may state that their
belief is based upon the procedures set forth therein, but is without
independent check and verification.
EXHIBIT III
Form of Mauritius Counsel Opinion
(i) Command Mauritius has been duly incorporated as a
____________ company under the provisions of the ____________ which is
the law governing, inter alia, ____________ companies in Mauritius.
Command Mauritius is validly existing as a ____________ company in
good standing under the laws of Mauritius.
(ii) Command Mauritius has corporate power and authority to
own, lease and operate its properties, and to conduct its business as
described in the Registration Statement.
(iii) Command Mauritius is a holding company formed for the
purpose of owning the capital stock of Command India. Command
Mauritius conducts no business activities other than holding such
stock and making appropriate filings and fee or franchise tax payments
required to maintain its existence as a ____________ company is good
standing under the laws of Mauritius and any other jurisdictions
wherein it is required to be in good standing for the purposes of
owning capital stock of Command India. To our best knowledge, Command
Mauritius has no material liabilities, commitments, or obligations,
whether indebtedness or otherwise, and is not a party to or bound by
any other agreement, document or instrument, other than its
organizational documents and subscription documents relating to its
ownership of Command India capital stock.
(iv) Command Mauritius is duly qualified as a ____________
company incorporated under the ____________ to transact business and
is in good standing in each jurisdiction in which such qualification
is required. All of the issued and outstanding capital stock of
Command Mauritius has been duly authorized and validly issued, is
fully paid and non-assessable and is owned of record by Command
Systems, Inc., free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim, charge or equity, and no options,
warrants or other rights to purchase, agreements or other obligations
to issue, or other rights to convert, any obligations into shares of
capital or ownership interest in Command Mauritius are outstanding.
(v) Such counsel is not aware of any litigation or
governmental or other action, suit, proceeding or investigation before
any court or before or by any public, regulatory or governmental
agency or body including, but not limited to, investigations and
proceedings against Command Mauritius known to such counsel to be
pending or threatened against, or involving the properties or business
of, the Company or Command Mauritius.
(vi) Except for the approvals of the Reserve Bank of India with
respect to the Exchange Documents, no authorization, approval, consent
or order of any court or governmental authority or agency was required
in connection with the execution of the Exchange Documents; to the
best of such counsel's knowledge, the execution, delivery and
performance of the Exchange Documents and the consummation of the
transactions contemplated therein and compliance by each of the
parties thereto will not conflict with or constitute a breach of, or
default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of Command Mauritius or the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, note agreement,
or other agreement or instrument to which Command Mauritius or the
Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the properties or assets of
Command Mauritius or the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the ____________ of Command Mauritius or the Certificate
of Incorporation of the Company, or any applicable law, administrative
regulation or any order, rule or regulation known to such counsel of
any court, regulatory body, administrative agency or other
governmental body having jurisdiction over Command Mauritius or the
Company or any of its subsidiaries.
(vii) Nothing has come to such counsel's attention which
indicates that Command Mauritius is not conducting its business in
compliance with all laws, rules and regulations of Mauritius except
for such violations that would not, individually or in the aggregate,
have a material adverse effect on Command Mauritius's condition
(financial or otherwise), properties, business, management, prospects,
net worth or results.
In rendering such opinion, ____________________ may rely as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of Command India or its subsidiaries and certificates
or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate
existence or good standing of Command India or its subsidiaries; provided
that copies of any such statements or certificates shall be delivered to
counsel to the Underwriters. In addition to the matters set forth above,
such opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel which leads them to believe that the
Registration Statement, as of the time it became effective under the
Securities Act (but after giving effect to any modifications incorporated
therein pursuant to Rule 430A under the Securities Act), contained, in
relation to Command India, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus or
any amendment to the supplement thereto, on the date it was filed pursuant
to Rule 424(b), and the Registration Statement and the Prospectus, or any
amendment or supplement thereto, as of the Closing Date, contain, in
relation to Command India, 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 light of the
circumstances under which they were made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
other financial information included therein). With respect to such
statement, ____________________ may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
