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Draft of 6/12/97
[Execution Copy]
[Conformed Copy]
1,000,000 SHARES
INTELLIGROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED JUNE __, 1997
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June __, 1997
XXXXXXXXXX SECURITIES
As Underwriter
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Intelligroup, Inc., a New Jersey corporation (the
"Company"), proposes to issue and sell to Xxxxxxxxxx Securities (the
"Underwriter") an aggregate of 1,000,000 shares (the "Firm Common Shares") of
its Common Stock, par value $0.01 per share (the "Common Stock"). In addition,
the Company has granted to the Underwriter an option to purchase up to an
additional 150,000 shares (the "Optional Common Shares") of Common Stock, as
provided in Section 2. The Firm Common Shares and, if and to the extent such
option is exercised, the Optional Common Shares are collectively called the
"Common Shares."
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (File No.
333-[___]), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), any information deemed to be a part
thereof at the time of effectiveness pursuant to Rule 430A or Rule 434 under the
Securities Act, is called the "Registration Statement." Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement," and from and after the date
and time of filing of the Rule 462(b) Registration Statement the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
Such prospectus, in the form first used by the Underwriter to confirm sales of
the Common Shares, is called the "Prospectus"; provided, however, if the Company
has, with the consent of Xxxxxxxxxx Securities, elected to rely upon Rule 434
under the Securities Act, the term "Prospectus" shall mean the Company's
prospectus subject to completion (each, a "preliminary prospectus") dated June
13, 1997 (such preliminary prospectus is called the "Rule 434 preliminary
prospectus"), together with the applicable term sheet (the "Term Sheet")
prepared and filed by the Company with the Commission under Rules 434 and 424(b)
under the Securities Act and all references in this Agreement to the date of the
Prospectus shall mean the date of the Term Sheet. All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
a preliminary prospectus, the Prospectus or the Term Sheet, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
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SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
SHAREHOLDERS
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants to the Underwriter as follows:
(a) The Registration Statement and any Rule 462(b) Registration
Statement have been declared effective by the Commission under the
Securities Act. The Company has complied to the Commission's satisfaction
with all requests of the Commission for additional or supplemental
information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in
effect and no proceedings for such purpose have been instituted or are
pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
(b) Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriter for use in connection with the offer
and sale of the Common Shares. Each of the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendment
thereto, at the time it became effective and at all subsequent times,
complied and will comply in all material respects with the Securities Act
and did not and will not contain 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 not misleading. The Prospectus,
as amended or supplemented, as of its date and at all subsequent times,
did not and will not contain any untrue statement of a material fact or
omit 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. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions
from the Registration Statement, any Rule 462(b) Registration Statement,
or any post-effective amendment thereto, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity
with information relating to the Underwriter furnished to the Company in
writing by the Underwriter expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus or
to be filed as exhibits to the Registration Statement which have not been
described or filed as required.
(c) 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, 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, or any change in the capital stock or
short-term or long-term debt of the Company and its subsidiaries
considered as a whole. The Company and its
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subsidiaries have no 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.
(d) 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 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.
(e) Xxxxxx Xxxxxxxx LLP, who have expressed their opinions on the
audited 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.
(f) 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
power and authority (corporate and other) 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 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 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, except for
those jurisdictions in which the failure to so qualify has not had and
will not have a material adverse effect on 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. 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 Oxford
Systems, Inc. and Intelligroup New Zealand Ltd. and neither the Company
nor any of its subsidiaries owns or controls, directly or indirectly, any
other corporations, associations or other entities.
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(g) 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 of the Company conform to the
description thereof in the Registration Statement and the Prospectus and
have been duly authorized and validly issued and are fully paid and
nonassessable and have been issued in compliance with all 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. 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.
(h) The Shares to be issued and sold by the Company to the
Underwriter 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 to the description thereof
in the Registration Statement and the Prospectus.
(i) 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 (i)
prevent or adversely affect the transactions contemplated by this
Agreement, (ii) suspend the effectiveness of the Registration Statement,
(iii) prevent or suspend the use of the preliminary prospectus in any
jurisdiction or (iv) 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 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. The Company
is not a party nor subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body or other
governmental agency or body
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("Governmental Authority"). All of the Company's litigation required to be
disclosed pursuant to the Rules and Regulations has been disclosed and 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 of the Commission under the Securities Act (the
"Rules and Regulations").
(j) The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated 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 to which the
Company or any of its subsidiaries is a party or by which it or any of its
properties is or may be bound, the Amended and Restated Certificate of
Incorporation, Amended and Restated By-laws or other organizational
documents of the Company or any of its subsidiaries, or 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 will result in the creation of a lien.
(k) 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 the securities or "Blue Sky"
laws of any jurisdiction in connection with the purchase and distribution
of the Stock by the Underwriter.
(l) 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 Shares) 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.
(m) Except as disclosed in the Registration Statement and the
Prospectus with respect to unrecorded and unpaid federal and state
payroll-related taxes and with respect to possible past violations of the
Immigration Reform and Control Act of 1990, the Company and its
subsidiaries are in all material respects in compliance with, and conduct
their businesses in conformity 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, otherwise than 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 and its
subsidiaries. To the best knowledge of the Company, any violations by the
Company of the Immigration Reform and Control Act of 1990 or any similar
laws, rules or regulations would not be found to be a "pattern and
practice" by the Immigration and Naturalization Service. In the ordinary
course of business, employees
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of the Company conduct periodic reviews of the effect of Environmental
Laws (as defined below) on the business operations and properties of the
Company and its subsidiaries, in the ordinary course of which they seek to
identify and evaluate associated costs and liabilities. 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 (i) any "hazardous substance"
as defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act, as amended, (iii) any
petroleum or petroleum product, (iv) any polychlorinated biphenyl and (v)
any pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other Environmental Law.
(n) Except as disclosed in the Registration Statement and the
Prospectus with respect to unrecorded and unpaid federal and state
payroll-related taxes, 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; 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.
(o) 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. Summit
Investors III, L.P. and Summit Ventures IV, L.P., which would otherwise
have the right to require the registration of their shares of Common Stock
pursuant to the registration rights agreement described in the Prospectus,
have waived such rights.
(p) Neither the Company nor 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.
(q) The Company has provided you with all financial statements of
the Company and its subsidiaries since December 31, 1993 to the date
hereof that are available to the officers of the Company, including
financial statements for the quarter ended March 31, 1997.
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(r) 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 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 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.
(s) The Company and its subsidiaries have performed all material
obligations required to be performed by them under all contracts required
by Item 601(b)(10) of Regulation S-B under the Securities Act to be filed
as exhibits to the Registration Statement, and neither the Company nor any
of its subsidiaries nor 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.
(t) The Company is not involved in any labor dispute nor is any such
dispute threatened. The Company is not aware that (i) 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 (ii) 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"), 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.
(u) 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 or proposed to be owned by them which is material
to the business of the Company or of its 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
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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, in each case except as
described in or contemplated by the Registration Statement and the
Prospectus.
(v) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility 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 (except as described in the
Registration Statement and the Prospectus with respect to errors and
omissions insurance); 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 similar 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, except as
described in or contemplated by the Prospectus.
(w) 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.
(x) 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 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.
(y) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(z) Neither the Company nor any of its subsidiaries nor 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
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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.
(aa) Neither the Company nor any of its subsidiaries is, or will
become, as a result of the consummation of the transactions contemplated
by this Agreement, and application of the net proceeds therefrom as
described in the Prospectus, 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.
(bb) Neither the Company nor any of its subsidiaries is or intends
to become (i) a controlled foreign corporation, as such term is defined in
the Internal Revenue Code of 1986, as amended (the "Code"), (ii) a passive
foreign investment company within the meaning of Section 1296(a) of the
Code or (iii) a foreign personal holding corporation, as such term is
defined in the Code.
(cc) Each certificate signed by any officer of the Company and
delivered to the Underwriter or counsel for the Underwriter shall be
deemed to be a representation and warranty by the Company as to the
matters covered thereby.
(dd) The Common Stock has been approved for quotation and trading on
the Nasdaq National Market.
(ee) The Company has paid $793,000 of the $814,000 Internal Revenue
Service assessment described in the Prospectus, has reserved an additional
$21,000 for the assessed but unbilled Internal Revenue Service assessment
and has reserved an additional $186,000 for any additional state tax
assessments.
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 Principal Shareholder.
B. ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PRINCIPAL
SHAREHOLDERS. Each of Xxxxx Xxxxxx, Xxxxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxxxxxx
(individually, a "Principal Shareholder") represents and warrants to, and agrees
with, the Underwriter that:
(a) Such Principal Shareholder has duly executed and delivered the
Indemnification Agreement, dated July 16, 1996 (the "Indemnification
Agreement"), among the Company and the Principal Shareholders; the Escrow
Agreement, dated as of September 26, 1996 (the "Escrow Agreement") among
each of the Principal Shareholders, as indemnitors, the Company and Summit
Bank, as escrow agent; and the Pledge Agreement, dated as of September 26,
1996 (the "Pledge Agreement"), made by the Principal Shareholders, as
pledgors, to the Company, as pledgee. The Indemnification Agreement, the
Escrow Agreement and the Pledge Agreement are each in full force and
effect and the parties thereto are in full compliance with all their
obligations under such agreements.
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(b) Such Principal Shareholder has, by execution and delivery of the
Indemnification Agreement, the Escrow Agreement and the Pledge Agreement,
created valid and binding obligations of such Principal Shareholder,
enforceable against such Principal Shareholder in accordance with the
respective terms of such agreements.
(c) The execution, delivery and performance by such Principal
Shareholder of the Indemnification Agreement, the Escrow Agreement and the
Pledge Agreement, and the compliance by such Principal Shareholder with
his obligations thereunder, did not and 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 with notice or lapse of time, or both,
would constitute a default) by such Principal Shareholder under any
indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or instrument to
which such Principal Shareholder is a party or by which such Principal
Shareholder or any of his properties is bound, or any judgment of any
court or governmental agency or body applicable to such Principal
Shareholder or any of his properties, or to such Principal Shareholder's
knowledge, any statute, decree, order, rule or regulation of any court or
governmental agency or body applicable to such Principal Shareholder or
any of his properties.
(d) On October 2, 1996, the first closing date of the Company's
initial public offering of Common Stock (the "IPO Closing Date"), the
Principal Shareholders pledged an aggregate of 191,667 shares of Common
Stock to the Company (with Summit Bank serving as escrow agent for the
benefit of the Company). The security interest created by the Pledge
Agreement in the shares of Common Stock pledged by each Principal
Shareholder pursuant to the Pledge Agreement (the "Pledged Shares")
constitutes a valid, perfected first priority lien on the Pledged Shares,
enforceable by the Company as such against all creditors of such Principal
Shareholder and any persons purporting to purchase any of the Pledged
Shares from such Principal Shareholder.
(e) On the IPO Closing Date, the Principal Shareholders delivered a
total of $450,000 (the "Escrowed Cash") to Summit Bank, as escrow agent
under the Escrow Agreement (the "Escrow Agreement"). The security interest
created by the Escrow Agreement in the Escrowed Cash constitutes a valid,
perfected first priority lien on the Escrowed Cash, enforceable by the
Company as such against all creditors of such Principal Shareholder.
C. ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
AND THE PRINCIPAL SHAREHOLDERS REGARDING INTELLIGROUP ASIA PRIVATE LTD.
Each of the Company and each Principal Shareholder represents and warrants
to, and agrees with, the Underwriter that:
(a) 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, Intelligroup Asia Private Ltd.
("Intelligroup Asia") has not incurred any
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liabilities or obligations, direct or contingent, nor entered into any
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 Intelligroup Asia, or any change in the capital
stock or short-term or long-term debt of Intelligroup Asia. Intelligroup
Asia has no material contingent obligations which are not disclosed in the
Registration Statement, as it may be amended or supplemented.
(b) Intelligroup Asia has been duly organized and is validly
existing and in good standing as a corporation under the laws of India,
with power and authority (corporate and other) to own or lease its
properties and to conduct its business as described in the Registration
Statement and the Prospectus; Intelligroup Asia is in possession of and
operating in compliance with all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders required
for the conduct of its businesses, all of which are valid and in full
force and effect; and Intelligroup Asia is duly qualified to do business
and in good standing as foreign corporations in all other jurisdictions
where its ownership or leasing of properties or the conduct of its
business requires such qualification, except for those jurisdictions in
which the failure to so qualify has not had and will not have a material
adverse effect on the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of
Intelligroup Asia. Intelligroup Asia 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.
(c) The 200 shares of capital stock of Intelligroup Asia ("Asia
Shares") owned by Xxxxxxxx Xxxxxx, the 200 Asia Shares owned by Xxxxxxxx
Xxxxxxxxxxxx, the 100 Asia Shares owned by K. Xxxx Xxxxxx and the 100 Asia
Shares owned by X. Xxxxxx represent all of the issued and outstanding
capital stock of Intelligroup Asia and all such capital stock has been
duly authorized and validly issued, is fully paid and non-assessable and
is owned, as described in the Registration Statement and Prospectus, by
Xx. Xxxxxx, Xx. Xxxxxxxxxxxx, Xx. Xxxxxx and Xx. Xxxxxx, 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 Intelligroup
Asia exist or are outstanding.
(d) Except as set forth in the Registration Statement and the
Prospectus, there are no legal or governmental proceedings pending to
which Intelligroup Asia is a party or of which any property of
Intelligroup Asia is subject, which, if determined adversely to
Intelligroup Asia, might individually or in the aggregate (i) prevent or
adversely affect the transactions contemplated by this Agreement, (ii)
prevent or adversely affect the transactions contemplated by the
Agreement, dated April 4, 1996,
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between Xxxxxxxx Xxxxxx, as Sole Proprietor of Ms. Intelligroup Asia, as
assignor, and Intelligroup Asia, as assignee, (the "Take-over Agreement");
the Agreement, dated as of June 15, 1996, by and between the Company and
Intelligroup Asia (the "Support Agreement,"); the Agreement, dated June 7,
1996, between Xxxxxxxx Xxxxxx, as transferor, and the Company, as
transferee (the "First Transfer Agreement"); the Agreement, dated June 9,
1996, between Xxxxxxxx Xxxxxxxxxxxx, as transferor, and the Company, as
transferee (the "Second Transfer Agreement"); the Agreement, dated June 9,
1996, between Xxxxx Xxxxxx, as transferor, and the Company, as transferee
(the "Third Transfer Agreement"); the Agreement, dated June 10, 1996,
between X. Xxxxxx, as transferor, and Xxxxx Xxxxxx, as transferee (the
"Fourth Transfer Agreement"); and the Agreement, dated June 10, 1996,
between Shri Xxxx Xxxxxx, as transferor, and Xxxxx Xxxxxx, as transferee
(the "Fifth Transfer Agreement," and the above-referenced Agreements,
collectively, the "Transfer Agreements," and, together with the Take-Over
Agreement and the Support Agreement, the "Intelligroup Asia Documents"),
(iii) suspend the effectiveness of the Registration Statement, (iv)
prevent or suspend the use of any preliminary prospectus in any
jurisdiction or (v) result in a material adverse change in the condition
(financial or otherwise), properties, business, management, prospects, net
worth or results of operations of Intelligroup Asia; and to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated against Intelligroup Asia by governmental authorities or
others. Intelligroup Asia is not a party to, nor subject to the provisions
of, any material injunction, judgment, decree or order of any court,
regulatory body or other governmental agency or body. All of Intelligroup
Asia's litigation required to be disclosed pursuant to the Rules and
Regulations has been disclosed.
(e) The execution, delivery and performance of the Intelligroup Asia
Documents by each party 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 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 Intelligroup Asia Documents
is in full force and effect and the parties thereto are in full compliance
with all their obligations under such agreements
(f) 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 each party to the Intelligroup Asia
Documents of, or for the consummation by each party to the Intelligroup
Asia Documents of the transactions contemplated by, the Intelligroup Asia
Documents, except for the approval of the Reserve Bank for (i) each
transfer of Asia Shares contemplated by the Fourth and Fifth Transfer
Agreements, in respect of which the necessary application has been made
and (ii) each transfer of Asia Shares contemplated by the First, Second
and Third Transfer Agreements, in respect of which application is proposed
to be made to the Reserve Bank upon receipt of the approvals pursuant to
sub clause (i) above. Intelligroup Asia and the Principal
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Shareholders have no reason to believe that each of the aforesaid
approvals will not be granted.
(g) Each party to the Intelligroup Asia Documents has the full
corporate or other power and authority to enter into the Intelligroup Asia
Documents and to perform its obligations thereunder and the Intelligroup
Asia Documents have been duly and validly authorized, executed and
delivered by such party and are valid and binding obligations of such
party, enforceable against such party in accordance with their terms.
(h) Intelligroup Asia is in all material respects in compliance
with, and conducts its business in conformity 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, otherwise
than 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 Intelligroup Asia. In
the ordinary course of business, employees of Intelligroup Asia conduct
periodic reviews of the effect of Environmental Laws on the business
operations and properties of Intelligroup Asia, in the ordinary course of
which they seek to identify and evaluate associated costs and liabilities.
(i) Intelligroup Asia has filed all necessary local and foreign
income, payroll, franchise and other tax returns and has paid all taxes
shown as due thereon or with respect to any of its properties; and there
is no tax deficiency that has been, or to the knowledge of the Company or
the Principal Shareholders is likely to be, asserted against Intelligroup
Asia or any of its properties or assets that would adversely affect the
financial position, business or results of operations of Intelligroup
Asia. All tax liabilities of Intelligroup Asia have been adequately
provided for in the consolidated financial statements of the Company.
(j) Intelligroup Asia owns or possesses 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 it or necessary for the
conduct of its business, and Intelligroup Asia is not aware of any claim
to the contrary or any challenge by any other person to the rights of
Intelligroup Asia with respect to the foregoing. Intelligroup Asia's
business as now conducted and as proposed to be conducted does not and
will not infringe or conflict, in any material respect, with patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses or other intellectual property or franchise right of any person.
No claim has been made against Intelligroup Asia alleging the infringement
by Intelligroup Asia of any patent, trademark, service xxxx, tradename,
copyright, trade secret, license in or other intellectual property right
or franchise right of any person.
(k) Intelligroup Asia is not involved in any labor dispute nor is
any such dispute threatened. Intelligroup Asia is not aware that (i) any
executive, key employee
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or significant group of employees of Intelligroup Asia plans to terminate
employment with it or (ii) 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 Intelligroup Asia. Intelligroup Asia neither has
nor 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, to which
Intelligroup Asia makes or ever has made a contribution and in which any
employee of the Intelligroup Asia is or has ever been a participant.
(l) Intelligroup Asia has, and Intelligroup Asia as of each Closing
Date will have, good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned or
proposed to be owned by it which is material to the business of
Intelligroup Asia, 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 Intelligroup Asia; and any
real property and buildings held under lease by Intelligroup Asia 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 it under valid, subsisting and enforceable leases
with such exceptions as would not have a material adverse effect on
Intelligroup Asia, in each case except as described in or contemplated by
the Registration Statement and the Prospectus.
(m) Intelligroup Asia is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the business in which it is engaged or proposes to engage
after giving effect to the transactions described in the Registration
Statement and the Prospectus (except with respect to errors and omissions
insurance); and Intelligroup Asia does not have 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 similar 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 Intelligroup Asia.
(n) Intelligroup Asia maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles in the United States and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(o) Neither Intelligroup Asia nor any of its directors, employees or
agents has made any payment of funds of Intelligroup Asia or received or
retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds
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is of a character required to be disclosed in the Registration Statement
and the Prospectus.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
The Firm Common Shares. The Company agrees to issue and sell to the
Underwriter the Firm Common Shares upon the terms herein set forth. On the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriter agrees to
purchase from the Company the Firm Common Shares. The purchase price per Firm
Common Share to be paid by the Underwriter to the Company shall be $[___] per
share.
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriter and payment therefor shall be made at
the offices of Xxxxxxxxxx Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as may be agreed to by the Company and the
Underwriter) at 6:00 a.m. San Francisco time, on [___], or such other time and
date not later than 10:30 a.m. San Francisco time, on [___] as the Underwriter
shall designate by notice to the Company (the time and date of such closing are
called the "First Closing Date"). The Company hereby acknowledges that
circumstances under which the Underwriter may provide notice to postpone the
First Closing Date as originally scheduled include, but are in no way limited
to, any determination by the Company or the Underwriter to recirculate to the
public copies of an amended or supplemented Prospectus or a delay as
contemplated by the provisions of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the Underwriter to purchase up to an aggregate of
150,000 Optional Common Shares from the Company at the purchase price per share
to be paid by the Underwriter for the Firm Common Shares. The option granted
hereunder is for use by the Underwriter solely in covering any over-allotments
in connection with the sale and distribution of the Firm Common Shares. The
option granted hereunder may be exercised at any time (but not more than once)
upon notice by the Underwriter to the Company which notice may be given at any
time within 30 days from the date of this Agreement. Such notice shall set forth
(i) the aggregate number of Optional Common Shares as to which the Underwriter
is exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Underwriter and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. The Underwriter may
cancel the option at any time prior to its expiration by giving written notice
of such cancellation to the Company
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Public Offering of the Common Shares. The Underwriter hereby advises
the Company that the Underwriter intends to offer for sale to the public, as
described in the Prospectus, the Common Shares as soon after this Agreement has
been executed and the Registration Statement has been declared effective as the
Underwriter, in its sole judgment, has determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares shall
be made at the First Closing Date (and, if applicable, at the Second Closing
Date) by wire transfer of immediately available funds to the order of the
Company.
It is understood that the Underwriter has been authorized, for its
own account, to accept delivery of and receipt for, and make payment of the
purchase price for, the Firm Common Shares and any Optional Common Shares the
Underwriter has agreed to purchase.
Delivery of the Common Shares. The Company shall deliver, or cause
to be delivered, to the Underwriter certificates for the Firm Common Shares at
the First Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
Company shall also deliver, or cause to be delivered, to the Underwriter,
certificates for the Optional Common Shares the Underwriter has agreed to
purchase at the First Closing Date or the Second Closing Date, as the case may
be, against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The certificates for the
Common Shares shall be in definitive form and registered in such names and
denominations as the Underwriter shall have requested at least two full business
days prior to the First Closing Date (or the Second Closing Date, as the case
may be) and shall be made available for inspection on the business day preceding
the First Closing Date (or the Second Closing Date, as the case may be) at a
location in New York City as the Underwriter may designate. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriter.
Delivery of Prospectus to the Underwriter. Not later than 12:00 p.m.
on the second business day following the date the Common Shares of released by
the Underwriter for sale to the public, the Company shall deliver or cause to be
delivered copies of the Prospectus in such quantities and at such places as the
Underwriter shall request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY
The Company further covenants and agrees with the Underwriter as follows:
(a) Underwriter's Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of
the First Closing Date or such date, as in the opinion of counsel for the
Underwriter, the Prospectus is no longer required by law to be delivered
in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), prior to amending or supplementing the Registration
Statement (including any registration statement filed under Rule 462(b)
under the Securities Act) or the Prospectus, the Company shall furnish to
the Underwriter for review a copy of each such proposed amendment or
supplement, and
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the Company shall not file any such proposed amendment or supplement to
which the Underwriter reasonably objects.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Underwriter in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing
of any post-effective amendment to the Registration Statement or any
amendment or supplement to any preliminary prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending the use of any preliminary prospectus or
the Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Stock from any securities exchange upon
which the it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any
of such purposes. If the Commission shall enter any such stop order at any
time, the Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees
that it shall comply with the provisions of Rules 424(b), 430A and 434, as
applicable, under the Securities Act and will use its reasonable efforts
to confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if in the opinion of the
Underwriter or counsel for the Underwriter it is otherwise necessary to
amend or supplement the Prospectus to comply with law, the Company agrees
to promptly prepare (subject to Section 3(A)(a) hereof), file with the
Commission and furnish at its own expense to the Underwriter and to
dealers, amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Underwriter, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Underwriter may request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Underwriter and counsel for the Underwriter to qualify or register the
Common Shares for sale under (or obtain exemptions from the application
of) the Blue Sky or state securities laws of those jurisdictions
designated by the Underwriter, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so
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long as required for the distribution of the Common Shares. The Company
shall not be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the
Underwriter promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares for
offering, sale or trading in any jurisdiction or any initiation or threat
of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from
the sale of the Common Shares sold by it in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the Underwriter an
earnings statement (which need not be audited) covering the twelve-month
period ending at the end of the Company's first fiscal quarter that ends
more than one year after the effectiveness of the Registration Statement
and satisfying the provisions of Section 11(a) of the Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall file with the
Commission all reports on Form SR as may be required under Rule 463 under
the Securities Act.
(k) Agreement Not To Offer or Sell Additional Securities. During the
period of 90 days following the date of the Prospectus, the Company will
not, without the prior written consent of Xxxxxxxxxx Securities (which
consent may be withheld at the sole discretion of Xxxxxxxxxx Securities),
directly or indirectly, sell, offer, contract or grant any option to sell,
pledge, transfer or establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of
or transfer, or announce the offering of, or file any registration
statement under the Securities Act in respect of, any shares of Common
Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of
Common Stock (other than as contemplated by this Agreement with respect to
the Common Shares); provided, however, that the Company may issue shares
of its Common Stock or options to purchase its Common Stock, or Common
Stock upon exercise of options, pursuant to any stock option, stock bonus
or other stock plan or arrangement described in the Prospectus, but only
if the holders of such shares, options, or shares issued upon exercise of
such options, agree in writing not to sell, offer, dispose of or otherwise
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transfer any such shares or options during such 90 day period without the
prior written consent of Xxxxxxxxxx Securities (which consent may be
withheld at the sole discretion of the Xxxxxxxxxx Securities).
(l) Future Reports to the Underwriter. During the period of five
years hereafter the Company will furnish to the Underwriter at Xxx
Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000 Attention: M. Xxxxxxxx Xxxx (i) 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 or certified public
accountants; (ii) 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, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company
mailed generally to holders of its capital stock.
(m) During the Prospectus Delivery Period, the Company will file all
documents required to be filed with the Commission pursuant to Section 13,
14 or 15 of the Exchange Act in the manner and within the time periods
required by the Exchange Act.
(n) Prior to filing its quarterly statements on Form 10-Q or 10-QSB,
as the case may be, the Company will have its independent auditors perform
a limited quarterly review of its quarterly numbers, provided, however,
that such review for two full years commencing the quarter immediately
following consummation of the Offering shall be in accordance with
standards and procedures as set forth in the Statement on Auditing
Standards No. 71.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriter, (iv) all fees and expenses of
the Company's counsel, independent public or certified pubic accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriter in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the Blue Sky laws, and, if requested by the Underwriter,
preparing and printing a "Blue Sky Survey" or memorandum, and any supplements
thereto, advising the Underwriter of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of
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counsel for the Underwriter in connection with, the NASD's review and approval
of the Underwriter's participation in the offering and distribution of the
Common Shares, (viii) the fees and expenses associated with listing the Common
Shares on the Nasdaq National Market, and (ix) all other fees, costs and
expenses referred to in Item 14 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the
Underwriter shall pay its own expenses, including the fees and disbursements of
its counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter to purchase and pay for the Common Shares as
provided herein on the First Closing Date and, with respect to the Optional
Common Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Principal
Stockholders set forth in Section 1 hereof as of the date hereof and as of the
First Closing Date as though then made and, with respect to the Optional Common
Shares, as of the Second Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations hereunder, and
to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Underwriter
shall have received from Xxxxxx Xxxxxxxx LLP, independent public or
certified public accountants for the Company, a letter dated the date
hereof addressed to the Underwriter, in form and substance satisfactory to
the Underwriter, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 (or any
successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date.
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under
the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the Company
shall have filed a post-effective amendment to the Registration
Statement containing the information required by such Rule 430A, and
such post-effective amendment shall have become effective; or, if
the Company elected to rely upon Rule 434 under the Securities Act
and obtained the Underwriter's consent thereto, the Company shall
have filed a Term Sheet with the Commission in the manner and within
the time period required by such Rule 424 (b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment to
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the Registration Statement, shall be in effect and no proceedings
for such purpose shall have been instituted or threatened by the
Commission; and
(iii) the NASD shall have raised no objection to the fairness
and reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the
date of this Agreement and prior to the First Closing Date and, with
respect to the Optional Common Shares, the Second Closing Date, in the
judgment of the Underwriter there shall not have occurred 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.
(d) Opinions of Counsel for the Company. On each of the First
Closing Date and the Second Closing Date the Underwriter shall have
received the favorable opinions dated as of such Closing Date of (i)
Xxxxxxxx Ingersoll, counsel for the Company, in the form attached as
Exhibit A, (ii) Mulla & Mulla & Craigie Blunt and Caroe, local Indian
counsel for the Company, in the form attached as Exhibit B, and (iii)
Fragomen, Del Ray & Xxxxxxx, X.X., special immigration counsel to the
Company, in the form attached as Exhibit C.
(e) Opinion of Counsel for the Underwriter. On each of the First
Closing Date and the Second Closing Date the Underwriter shall have
received the favorable opinion of Xxxx and Xxxx LLP, counsel for the
Underwriter, dated as of such Closing Date, with respect to the matters
set forth in paragraphs (i), (vii), (xxv), (ix), (x), and (xx).
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Underwriter shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer
or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsection (b)(ii) of this Section 5, and further to
the effect that:
(i) for the period from and after the date of this Agreement
and prior to such Closing Date, there has not occurred 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.
(ii) the representations, warranties and covenants of the
Company set forth in Section 1(A) and (C) of this Agreement are true and
correct with the same force and effect as though expressly made on and as
of such Closing Date; and
(iii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at
or prior to such Closing Date.
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(g) Certificate of Principal Stockholders. On each of the First
Closing Date and the Second Closing Date the Underwriter shall have
received a written certificate executed by the Principal Shareholders
dated as of such Closing Date, to the effect that the representations,
warranties and covenants of the Principal Stockholders set forth in
Section 1(B) and (C) of this Agreement are true and correct with the same
force and effect as though expressly made on and as of such Closing Date.
(h) Bring-down Comfort Letter. On each of the First Closing Date and
the Second Closing Date the Underwriter shall have received from Xxxxxx
Xxxxxxxx LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance satisfactory to
the Underwriter, to the effect that they reaffirm the statements made in
the letter furnished by them pursuant to subsection (a) of this Section 5,
except that the specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the First
Closing Date or Second Closing Date, as the case may be.
(i) Lock-Up Agreement from Certain Stockholders of the Company. On
the date hereof, the Company shall have furnished to the Underwriter an
agreement in the form of Exhibit D hereto from each of the Principal
Stockholders and such agreement shall be in full force and effect on each
of the First Closing Date and the Second Closing Date.
(j) Additional Documents. On or before each of the First Closing
Date and the Second Closing Date, the Underwriter and counsel for the
Underwriter shall have received such information, documents and opinions
as they may reasonably require for the purposes of enabling them to pass
upon the issuance and sale of the Common Shares as contemplated herein, or
in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Underwriter by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Common Shares, at any time prior
to the Second Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITER'S EXPENSES. If this
Agreement is terminated by the Underwriter pursuant to Section 5, Section 7,
Section 10 or Section 11, or if the sale to the Underwriter of the Common Shares
on the First Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Underwriter upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Underwriter in connection with the proposed purchase
and
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the offering and sale of the Common Shares, including but not limited to fees
and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Underwriter of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company to the Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Underwriter pursuant to Sections 4 and 6 hereof, (b) of the Underwriter to the
Company. Notwithstanding anything to the contrary herein, the provisions of
Section 8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriter. Each of the Company and each
Principal Shareholder, jointly and severally, agrees to indemnify and hold
harmless the Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or
expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or (iii) in whole or in part
upon any inaccuracy in the representations and warranties of the Company
or any such Principal Shareholder contained herein; or (iv) in whole or in
part upon any failure of the Company or any such Principal Shareholder to
perform its obligations hereunder or under law; or (v) 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 Common Stock or the
offering contemplated hereby, and which is included as part of or referred
to in any loss,
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claim, damage, liability or action arising out of or based upon any matter
covered by clause (i) or (ii) above, provided that neither the Company nor
any Principal Shareholder shall not be liable under this clause (v) to the
extent that a court of competent jurisdiction shall have determined by a
final judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by such Underwriter through its gross negligence or willful
misconduct; and to reimburse the Underwriter and each such controlling
person for any and all expenses (including the fees and disbursements of
counsel chosen by Xxxxxxxxxx Securities) as such expenses are reasonably
incurred by the Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Underwriter expressly for use
in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided,
further, that with respect to any preliminary prospectus, the foregoing
indemnity agreement shall not inure to the benefit of any Underwriter from
whom the person asserting any loss, claim, damage, liability or expense
purchased Common Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter pursuant
to Section 2 and a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The
indemnity agreement set forth in this Section 8(a) shall be in addition to
any liabilities that the Company and each Principal Shareholder may
otherwise have.
(b) Indemnification of the Company, its Directors and Officers. The
Underwriter agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law
or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out
of or is based upon any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or arises out
of or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each
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case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus, the Prospectus (or any
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Underwriter expressly
for use therein; and to reimburse the Company, or any such director,
officer or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action. The
Company hereby acknowledges that the only information that the Underwriter
has furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto) are the statements set forth (i) as the last two
paragraphs on the inside front cover page of the Prospectus concerning
stabilization and passive market making by the Underwriter and (ii) as the
second and sixth paragraphs under the caption "Underwriting" in the
Prospectus; and the Underwriter confirms that such statements are correct.
The indemnity agreement set forth in this Section 8(b) shall be in
addition to any liabilities that the Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained
in this Section 8 or to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that a conflict may arise between the
positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently
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incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with local counsel), approved by the
indemnifying party (Xxxxxxxxxx Securities in the case of Section
8(b) and Section 9), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
notice of commencement of the action, in each of which cases the
fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this
Section 8 shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against
any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if
at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by Section 8(c) hereof, the
indemnifying party agrees that it shall be liable for any settlement
of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise
or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been
sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the offering of the Common Shares pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriter, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and
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warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, in connection with the offering of the Common Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Common Shares pursuant to this
Agreement (before deducting expenses) received by the Company, and the total
underwriting discount received by the Underwriter, in each case as set forth on
the front cover page of the Prospectus (or, if Rule 434 under the Securities Act
is used, the corresponding location on the Term Sheet) bear to the aggregate
initial public offering price of the Common Shares as set forth on such cover.
The relative fault of the Company, on the one hand, and the Underwriter, on the
other hand, shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company, on the one hand, or the Underwriter, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, the
Underwriter shall not be required to contribute any amount in excess of the
underwriting commissions received by the Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each officer and employee of the Underwriter and each person, if any, who
controls the Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company with
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.
SECTION 10. DEFAULT OF THE UNDERWRITER. [Intentionally
Deleted]
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SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First
Closing Date this Agreement may be terminated by the Underwriter by notice given
to the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York or
California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States' or international political, financial or economic conditions, as
in the judgment of the Underwriter is material and adverse and makes it
impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities;
(iv) in the judgment of the Underwriter there shall have occurred 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; or (v) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Underwriter may interfere materially with
the conduct of the business and operations of the Company regardless of whether
or not such loss shall have been insured. Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company to the
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Underwriter pursuant to Sections 4 and 6 hereof, (b) any
Underwriter to the Company. Notwithstanding anything to the contrary herein, the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE
DELIVERY. The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers and of the Underwriter set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Common Shares sold hereunder and any termination of this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Underwriter:
Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
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with copies to:
Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
and
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: 617-526-5000
Attention: Xxxx X. Xxxxxx, Esq.
If to the Company:
Intelligroup, Inc.
000 XX Xxxxxxx 0 Xxxxx
0xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Xxxxxxxx Xxxxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the
benefit of and be binding upon the parties hereto.
SECTION 15. 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.
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SECTION 16. (a) GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby ("Related Proceedings") may be instituted in the federal
courts of the United States of America located in the City and County of San
Francisco or the courts of the State of California in each case located in the
City and County of San Francisco (collectively, the "Specified Courts"), and
each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party's address set forth above
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum. Each party
not located in the United States irrevocably appoints CT Corporation System,
which currently maintains a San Francisco office at 00 Xxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America, as its agent to receive
service of process or other legal summons for purposes of any such suit, action
or proceeding that may be instituted in any state or federal court in the City
and County of San Francisco.
(c). Waiver of Immunity. With respect to any Related
Proceeding, each party irrevocably waives, to the fullest extent permitted by
applicable law, all immunity (whether on the basis of sovereignty or otherwise)
from jurisdiction, service of process, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in the Specified
Courts, and with respect to any Related Judgment, each party waives any such
immunity in the Specified Courts or any other court of competent jurisdiction,
and will not raise or claim or cause to be pleaded any such immunity at or in
respect of any such Related Proceeding or Related Judgment, including, without
limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
SECTION 17. GENERAL PROVISIONS. 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. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
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Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
INTELLIGROUP, INC.
By:
--------------------------
Name:
Title:
PRINCIPAL SHAREHOLDERS
-------------------------
Xxxxx Xxxxxx
-------------------------
Xxxxxxxx Xxxxxx
-------------------------
Xxxxxxxx Xxxxxxxxxxxx
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The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Underwriter in San Francisco, California as of the date first
above written.
XXXXXXXXXX SECURITIES
----------------------------
By:
Authorized Signatory
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EXHIBIT A - OPINION OF XXXXXXXX INGERSOLL
The final opinion in draft form should be attached as Exhibit A at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to
Section 5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any
supplements thereto at the Closing Date.
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of New Jersey.
(ii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement.
(iii) To the best of such counsel's knowledge, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Change.
(iv) Each subsidiary of the Company (excluding
Intelligroup Europe Limited and Intelligroup New Zealand Limited, as
to which no opinion is being rendered) has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and,
to the best of such counsel's knowledge, is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required and in
which the failure to so qualify would, individually or in the
aggregate, have a material adverse effect on the condition
(financial or otherwise), properties, business, management,
prospects, net worth or results of the Company and its subsidiaries
taken as a whole; and all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, to the best of such
counsel's knowledge, is owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim 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 any
such subsidiary are outstanding.
(v) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under
"Capitalization"; and all of the
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35
outstanding shares of the Company's capital stock, including the
Shares to be sold by the Company pursuant to the Underwriting
Agreement, have been duly authorized and validly issued and are
fully paid and non-assessable.
(vi) The issuance and sale of the Shares by the Company
are not subject to preemptive rights arising by operation of law or,
to the best of such counsel's knowledge, otherwise.
(vii) The Underwriting Agreement has been duly
authorized, executed and delivered by the Company.
(viii) Except as described in the Prospectus, to such
counsel's 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 such
counsel's 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 Common Shares or the right to have any shares of
Common 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 Common Stock or other securities of
the Company.
(ix) The Registration Statement is effective under the
Securities Act and, to the best of such counsel's knowledge, no stop
order proceedings with respect thereto have been instituted or are
pending or threatened under the Securities Act and all filings
required by Rule 424(b) of the Rules and Regulations have been
timely made.
(x) At the time the Registration Statement became
effective and on each Closing Date, the Registration Statement, the
preliminary prospectus, the Prospectus and each amendment or
supplement thereto (other than the financial statements and
supporting schedules including therein, as to which no opinion need
be rendered) complied as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations.
(xi) The Shares conform to the description thereof
contained in the Prospectus, and the form of certificate used to
evidence the Shares in due and proper form and complies with all
applicable statutory requirements.
(xii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required, and
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such contracts and documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material
respects.
(xiii) There is no 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 the Company with respect to INS issues, known to such
counsel to be pending or threatened against, or involving the
properties or business of, the Company or any of its subsidiaries
which is of a character required to be disclosed in the Registration
Statement and the Prospectus which has not been properly disclosed
therein.
(xiv) No authorization, approval, consent or order of
any court or governmental authority or agency is required in
connection with the sale of the Shares to the Underwriter, except
such as may be required under the Securities Act or the Rules and
Regulations or State securities law; to the best of such counsel's
knowledge, the execution, delivery and performance of the
Underwriting Agreement and the consummation of the transactions
contemplated herein and compliance by the Company with its
obligations hereunder 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 the Company or any of its subsidiaries pursuant to, 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 it or any of them may be bound,
or to which any of the properties or assets of the Company or any of
its subsidiaries is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or
By-laws 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 the Company or any of its
subsidiaries.
(xv) The statements under the captions "Description of
Capital Stock," insofar as they purport to constitute a summary of
the terms of the share capital, "Certain Transactions," and "Shares
Eligible for Future Sale," in the Prospectus, insofar as they
constitute a summary of relevant matters of law, the Company's
Certificate of Incorporation or documents referred to therein, and
"Principal Shareholders" are in all material respects accurate
summaries and fairly and correctly present the information called
for with respect to such documents and matters; the descriptions of
certain provisions of the Company's stock option plans contained
under the caption "Management" are materially accurate; and the
statements made with respect to Rule 144 under the Act set forth in
"Shares Eligible for Future Sale" are fair and correct statements
about the provisions described without purporting to summarize or
describe all material aspects of those rules and regulations.
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(xvi) The Company has options to purchase shares of the
Company's capital stock as set forth in the Prospectus; and all of
such granted options have been duly and validly authorized by the
Company and conform to the descriptions thereof contained in the
Prospectus.
(xvii) To the best of such counsel's knowledge, and
except as disclosed in the Registration Statement and Prospectus,
nothing has come to such counsel's attention which indicates that
the Company is not conducting its business in compliance with all
laws, rules and regulations of the United States of America and of
the State of New Jersey except for such violations that would not,
individually or in the aggregate, have a material adverse effect on
the Company's condition (financial or otherwise), properties,
business, management, prospects, net worth or results.
(xviii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by the
Underwriting Agreement, and application of the net proceeds
therefrom as described in the Prospectus, required to register as an
investment company under the Investment Company Act.
(xix) The Company is not and will not become, as a
result of the consummation of the transactions 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.
(xx) The Shares be sold under the Underwriting Agreement
to the Underwriter are duly authorized for quotation and trading on
the Nasdaq National Market, subject to official notice of
effectiveness.
(xxi) To the best of such counsel's knowledge, the
Company is not subject to any current claim and has not received any
notice of infringement or other violation of any copyright,
copyright application, trade secret, trademark, service xxxx,
trademark registration or other proprietary information or materials
(collectively, "Intellectual Property") of others; to the best of
such counsel's knowledge and except as set forth in the Prospectus,
(A) there are no legal or governmental proceedings pending relating
to Intellectual Property owned or used by the Company or any of its
subsidiaries, other than review of pending copyright applications
and trademark or service xxxx registrations, 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 the Company from having clear title to the Company's
Intellectual Property. Except as otherwise described in the
Prospectus, such counsel has no knowledge of any facts that the
Company lacks any rights or licenses to use all Intellectual
Property materially necessary to
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the conduct of its business as now being or proposed to be conducted
by the Company as described in the Prospectus. To such counsel's
knowledge, the Company 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.
(xxii) The Indemnification Agreement, the Escrow
Agreement and the Pledge Agreement have been duly executed and
delivered by each of the Principal Shareholders and each constitutes
the legal, valid and binding obligation of such Principal
Shareholder, enforceable against such Principal Shareholder in
accordance with its terms and, in the case of the Indemnification
Agreement, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the
enforcement of creditors' rights and the application of equitable
principles relating to the availability of remedies.
(xxiii) To the best of such counsel's knowledge, the
execution, delivery and performance of the Indemnification
Agreement, the Escrow Agreement and the Pledge Agreement and the
compliance by the Principal Shareholders with their obligations
thereunder 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) by any Principal Shareholder under any
indenture, mortgage, deed of trust, trust (constructive or other),
loan agreement, lease, franchise, license or other agreement or
instrument to which any Principal Shareholder or any of his
properties is bound, or any judgment of any court or governmental
agency or body applicable to such Principal Shareholder or any of
his properties, or to any statute, decree, order, rule or regulation
of any court or governmental agency or body applicable to such
Principal Shareholder or any of his properties.
(xxiv) The provisions of the Escrow Agreement and the
Pledge Agreement are effective to create in favor of the Escrow
Agent for the benefit of the Company a valid and enforceable
security interest in the cash and Pledged Shares described therein.
The Pledge Agreement and the Escrow Agreement, respectively, created
in favor of the Escrow Agent for the benefit of the Company a
perfected security interest in the Pledged Shares and cash which
rank prior to any security interest which may be created under the
Uniform Commercial Code of the State of New Jersey. In rendering the
foregoing opinion, such counsel may assume that the Escrow Agent
acted in good faith and without notice or knowledge of any adverse
claim to any of such Pledged Shares.
(xxv) The Common Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance
and sale pursuant to the Underwriting Agreement and, when issued and
delivered by the Company pursuant to the Underwriting Agreement
against payment of the consideration set forth therein, will be
validly issued, fully paid and nonassessable.
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In rendering such opinion, Xxxxxxxx Xxxxxxxxx may rely (A) as
to all matters governed other than by United States federal laws and the laws of
the State of New York and the State of New Jersey and on local counsel in the
relevant jurisdictions reasonably satisfactory to the Underwriter and counsel to
the Underwriter, provided that in each case Xxxxxxxx Ingersoll shall state that
they believe that they and the Underwriter 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 Underwriter. 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 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 or
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 each Closing Date, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the 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, Xxxxxxxx Xxxxxxxxx may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
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EXHIBIT B - OPINION OF MULLA & MULLA
& CRAIGIE BLUNT & CAROE
Opinion of local Indian counsel to the Company to be delivered pursuant
to Section 5(d) of the Underwriting Agreement
References to the Prospectus in this Exhibit B include any supplements
thereto at the Closing Date.
(i) Intelligroup Asia has been duly incorporated as a
private company under the provisions of the Companies Act, 1956
which is the law governing, inter alia, limited liability companies
in India. Intelligroup Asia is validly existing as a private company
in good standing under the laws of India.
(ii) Intelligroup Asia has corporate power and authority
to own, lease and operate its properties, and to conduct its
business as described in the Registration Statement and to enter
into and perform its obligations under the Take-over Agreement and
the Support Agreement.
(iii) Intelligroup Asia 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 Ms. Intelligroup Asia, prior to and
subsequent to the execution of the Take-Over Agreement, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim, charge or equity.
(iv) Intelligroup Asia has not borrowed any amount from
any bank, financial institution or other creditor. So far as Ms.
Intelligroup Asia is concerned, its indebtedness is as reflected in
its balance sheet for the year ended March 31, 1996, which is
annexed to the Take-Over Agreement.
(v) Xxxxxxxx Xxxxxx is a non-resident Indian under the
exchange control laws of India and all necessary filings have been
made with governmental authorities of India including, but not
limited to, the Reserve Bank, for Xx. Xxxxxx to freely invest by way
of capital contribution in Intelligroup Asia.
(vi) To the best of such counsel's knowledge,
Intelligroup Asia is duly qualified as a company incorporated under
the Companies Act, 1956 to transact business and is in good standing
in Indian jurisdiction in which such qualification is required and
in which the failure to so qualify would, individually or in the
aggregate, have a material adverse effect on the condition
(financial or otherwise), properties, business, management,
prospects, net worth or results of Intelligroup Asia or the Company;
the 200 Asia Shares owned by Xxxxxxxx Xxxxxx, the 200 Asia Shares
owned by Xxxxxxxx Xxxxxxxxxxxx, the 100 Asia Shares owned by K. Xxxx
Xxxxxx and the 100 Asia Shares owned by X. Xxxxxx represent all of
the issued and outstanding capital stock of Intelligroup Asia and
all such capital stock
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has been duly authorized and validly issued, is fully paid and
non-assessable and, to the best of such counsel's knowledge, is
owned, as described in the Registration Statement and Prospectus, by
Xx. Xxxxxx, Xx. Xxxxxxxxxxxx, Xx. Xxxxxx and Xx. Xxxxxx, 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 Intelligroup Asia are outstanding, save and except the
transactions contemplated by the Fifth and Fourth Transfer
Agreements, respectively.
(vii) Each of the Intelligroup Asia Documents has been
duly executed and delivered by the parties thereto subject to the
requisite permissions/approvals of the Reserve Bank of India and
constitutes the legal, valid and binding obligations of the parties
thereto, enforceable against them in accordance with its terms.
(viii) To the best of such counsel's knowledge, the
execution, delivery and performance of the Intelligroup Asia
Documents and the compliance by each party thereto with its
obligations thereunder 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 any (1) indenture,
mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or
instrument to which any party to the Intelligroup Asia Documents or
any of his properties is bound, (2) any judgment of any court or
governmental agency or body applicable to it or any of its
properties, or (3) any statute, decree, order, rule or regulation of
any court or governmental agency or body applicable to it or any of
its properties.
(ix) Each of K. Xxxx Xxxxxx and X. Xxxxxx has full legal
right, power and authority, and has applied for any and all
approvals required by law, to sell, assign, transfer and deliver 100
Asia Shares each (the "Transfer Shares") to Xxxxx Xxxxxx pursuant to
Fifth and Fourth Transfer Agreements, respectively. Each such
Agreement requires approval only of the Reserve Bank to complete the
transfer of the Transfer Shares from Xx. Xxxxxx and Xx. Xxxxxx to
Xx. Xxxxxx, for which all necessary applications have been made, and
such counsel has no reason to believe that approvals for the
Transfer Shares from Xx. Xxxxxx and Xx. Xxxxxx to Xx.
Xxxxxx will not be granted.
(x) Each Principal Shareholder has full legal right,
power and authority, and has obtained any and all approvals required
by law, to sell, assign, transfer and deliver all 600 issued and
outstanding Asia Shares to the Company pursuant to the First, Second
and Third Transfer Agreements, respectively. Each such Agreement
requires approval only of the Reserve Bank to complete the transfer
of all issued and outstanding Asia Shares from Xx. Xxxxxx, Xx.
Xxxxxxxxxxxx and Xx. Xxxxxx to the Company, all necessary
applications are proposed to be made immediately subsequent to
obtaining the approvals of the Reserve Bank pursuant to Section (ix)
above, and such counsel has no reason to believe that approval by
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the Reserve Bank for transfer of all the issued and outstanding Asia
Shares from Xx. Xxxxxx, Xx. Xxxxxxxxxxxx and Xx. Xxxxxx to the
Company will not be granted.
(xi) To the best of such counsel's knowledge, there are
no outstanding securities of Intelligroup Asia convertible or
exchangeable into or evidencing the right to purchase or subscribe
for any shares of capital stock of Intelligroup Asia and there are
no outstanding or authorized options, warrants or rights of any
character obligating Intelligroup Asia 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, to the best of such counsel's knowledge, no holder of
any securities of Intelligroup Asia or any other person has the
right, contractual or otherwise, which has not been satisfied or
effectively waived, to cause Intelligroup Asia to sell or otherwise
issue to them, or to permit them to underwrite the sale of, any of
the shares of Stock of Intelligroup Asia or the right to have any
shares of Stock of Intelligroup Asia or other securities of
Intelligroup Asia 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 of Intelligroup Asia or other securities
of Intelligroup Asia.
(xii) The form of certificate used to evidence the
shares of Stock of Intelligroup Asia is in due and proper form and
complies with all applicable statutory requirements. Under the
Indian law, this is governed by the Companies Act, 1956, read with
the Companies (Issue of Share Certificates) Rules, 1960.
(xiii) All contracts and documents with respect to
Intelligroup Asia summarized in the Registration Statement or the
Prospectus are fairly summarized in all material respects.
(xiv) 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 Intelligroup Asia known to
such counsel to be pending or threatened against, or involving the
properties or business of, the Company or Intelligroup Asia.
(xv) Except for the approvals of the Reserve Bank of
India with respect to the Transfer Agreements and the Support
Agreement, no authorization, approval, consent or order of any court
or governmental authority or agency is required in connection with
the execution of the Intelligroup Asia Documents; to the best of
such counsel's knowledge, the execution, delivery and performance of
the Intelligroup Asia 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 Intelligroup Asia or the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust,
note agreement, or other agreement or
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instrument to which Intelligroup Asia 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 Intelligroup Asia 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 Intelligroup Asia 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 Intelligroup Asia
or the Company or any of its subsidiaries.
(xvi) The statements in the Prospectus under the
captions "International Operations" and "Certain Transactions"
insofar as they purport to constitute a summary of the terms of the
ownership of Intelligroup Asia are in all material respects accurate
summaries and fairly and correctly present the information called
for with respect to such documents and matters.
(xvii) Nothing has come to such counsel's attention
which indicates that Intelligroup Asia 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 Intelligroup Asia's
condition (financial or otherwise), properties, business,
management, prospects, net worth or results.
(xviii) Intelligroup Asia 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 Intelligroup Asia 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 Intelligroup Asia
from having clear title to Intelligroup Asia's Intellectual
Property. Such counsel has no knowledge of any facts that
Intelligroup Asia 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 Intelligroup
Asia as described in the Prospectus. To such counsel's knowledge,
Intelligroup Asia 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, Mulla & Mulla & Craigie Blunt
& Caroe may rely as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Intelligroup Asia 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 Intelligroup Asia or of its
subsidiaries; provided that copies of any such statements or certificates shall
be delivered to counsel to the Underwriter. 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
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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 Intelligroup Asia, 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 or 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 Intelligroup Asia, 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, Mulla & Mulla & Craigie Blunt & Caroe
may state that their belief is based upon the procedures set forth therein, but
is without independent check and verification.
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EXHIBIT C - OPINION OF
FRAGOMEN, DEL RAY & XXXXXXX, P.C.
Opinion of special immigration counsel to the Company to be
delivered pursuant to Section 5(d) of the Underwriting Agreement.
References to this Prospectus in this Exhibit C include any
supplements thereto at the Closing Date.
(i) The statements under the caption "Legal
Proceedings," insofar as they relate to INS matters, are in all
material respects accurate summaries and fairly and correctly
present the investigations of the Company by the Immigration and
Naturalization Service or any other Governmental Authority
concerning violations of the INS Regulations.
(ii) There is no 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 with
respect to matters arising under the INS Regulations known to such
counsel to be pending or threatened against, or involving the
properties or business of, the Company or any of its subsidiaries
which is of a character required to be disclosed in the Registration
Statement and the Prospectus which has not been properly disclosed
therein.
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, with respect to all
INS related issues, 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
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 or 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 each Closing
Date, with respect to such INS-related issues, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. With respect to such statement,
Fragomen may state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
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EXHIBIT D
June __, 1997
Xxxxxxxxxx Securities
As Underwriter
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Intelligroup, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
underwriter. The undersigned recognizes that the Offering will be of benefit to
the undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of Xxxxxxxxxx Securities
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under Securities Exchange Act
of 1934, as amended) by the undersigned, or publicly announce the undersigned's
intention to do any of the foregoing, for a period commencing on the date hereof
and continuing through the close of trading on the date 90 days after the date
of the Prospectus. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
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This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
______________________________
Printed Name of Holder
By: __________________________
Signature
______________________________
Printed Name of Person Signing (and indicate capacity of person signing if
signing as custodian, trustee, or on behalf of an entity)
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