ML&B DRAFT 1/JUL/99
5,750,000 Shares
NETsilicon, Inc.
Common Stock
UNDERWRITING AGREEMENT
July __, 1999
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
NETsilicon, Inc., a Massachusetts corporation (the "Company"),
and Osicom Technologies, Inc., a New Jersey corporation and the sole stockholder
of the Company (the "Selling Stockholder"), propose, subject to the terms and
conditions contained herein, to sell to you and the other underwriters named on
Schedule I to this Agreement (the "Underwriters") for whom you are acting as
Representatives (the "Representatives"), an aggregate of 5,000,000 shares (the
"Firm Shares") of the Company's Voting Common Stock, $0.01 par value per share
(the "Common Stock"). Of the 5,000,000 Firm Shares, 3,000,000 Firm Shares are to
be issued and sold by the Company and 2,000,000 Firm Shares are to be sold by
the Selling Stockholder. The respective amounts of the Firm Shares to be
purchased by each of the several Underwriters are set forth opposite their names
on Schedule I hereto. In addition, the Selling Stockholder proposes to grant to
the Underwriters an option to purchase up to an additional 500,000 shares of
Common stock from it and the Company proposes to grant the Underwriters an
option to purchase 250,000 shares of Common Stock from it (the 500,000 shares
together with the 500,000 shares are collectively the "Option Shares") for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
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1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at a price of $____ per share (the "Initial Price"),
the number of Firm Shares of Common Stock set forth opposite the name of
such Underwriter under the column "Number of Firm Shares to be Purchased
from the Company" on Schedule I to this Agreement, subject to adjustment
in accordance with Section 11 hereof. The Selling Stockholder agrees to
sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Selling Stockholder, at
the "Initial Price", the number of Firm Shares of Common Stock set forth
opposite the name of such Underwriter under the column "Number of Firm
Shares to be Purchased from the Selling Stockholder" on Schedule I to
this Agreement, subject to adjustment in accordance with Section 11
hereof.
(b) The Company and the Selling Stockholder each grant
individually to the several Underwriters an option to purchase,
severally and not jointly, all or any part of the Option Shares at the
Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such options may be exercised only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time and
from time to time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
thereafter, within thirty (30) days, from time to time after the date of
this Agreement, in each case upon written or telegraphic notice, or
verbal or telephonic notice confirmed by written or telegraphic notice,
by the Representatives to the Company no later than 12:00 noon, New York
City time, on the business day before the Firm Shares Closing Date or at
least two business days before an Option Shares Closing Date (as defined
below), as the case may be, setting forth the number of Option Shares to
be purchased and the time and date (if other than the Firm Shares
Closing Date) of each such purchase.
2. Delivery and Payment. Delivery by the Company and the Selling
Stockholder of the Firm Shares to the Representatives for the respective
accounts of the Underwriters, and payment of the purchase price by
certified or official bank check or checks payable in New York Clearing
House (same day) funds drawn to the order of the Company for the shares
purchased from the Company, or by wire transfer to the Company, and
drawn to the order of the Selling Stockholder for the shares purchased
from the Selling Stockholder, or by wire transfer to the Selling
Stockholder against delivery of the respective certificates therefor to
the Representatives, shall take place at the offices of CIBC World
Markets Corp., at Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 a.m., New York City time,
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on the third business day following the date of this Agreement, or at
such time on such other date, not later than ten (10) business days
after the date of this Agreement, as shall be agreed upon by the Company
and the Representatives (such time and date of delivery and payment are
called the "Firm Shares Closing Date").
In the event the options with respect to the Option Shares are
exercised, delivery by the Selling Stockholder and the Company of the Option
Shares to the Representatives for the respective accounts of the Underwriters
and payment of the purchase price by certified or official bank check or checks
payable in New York Clearing House (same day) funds to the order of the Company
for the shares purchased from the Company or by wire transfer to the Company,
and drawn to the order of the selling Stockholder for the shares purchased from
the Selling Stockholder or by wire transfer to the Selling Stockholder shall
take place at the offices of CIBC World Markets Corp. specified above at the
time and on the date (which may be the same date as, but in no event shall be
earlier than, the Firm Shares Closing Date) specified in the notice referred to
in Section l(b) (each such time and date of delivery and payment is called an
"Option Shares Closing Date"). The Firm Shares Closing Date and each Option
Shares Closing Date are called, individually, a "Closing Date" and, together,
the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request at
least two full business days before the Firm Shares Closing Date or, in the case
of Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared and filed in conformity with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a Registration
Statement (as hereinafter defined) on Form S-1 (No. 333-62231),
including a preliminary prospectus relating to the Shares, and such
amendments thereof as may have been filed prior to the date of this
Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to
you. The term "Preliminary Prospectus" means any preliminary prospectus
(as described in Rule 430 of the Rules) included at any time as a part
of the Registration Statement or filed with the Commission by the
Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules. The term "Registration Statement" as used in this
Agreement means the initial registration statement (including all
exhibits and financial schedules), as amended at the time and on the
date it becomes effective (the "Effective Date") and as thereafter
amended by post-effective amendments. If the Company has filed an
abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Rules (the "462(b) Registration
Statement"), then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement. The
term "Prospectus" as used in this Agreement means the prospectus in the
form included in the Registration Statement at the
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time of effectiveness or, if Rule 430A of the Rules is relied on, the
term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules.
The Company and the Selling Stockholder understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Prospectus, as soon after the Effective Date and the date of
this Agreement as the Representatives deem advisable. The Company and the
Selling Stockholder hereby confirm that the Underwriters and dealers have been
authorized to distribute or cause to be distributed each Preliminary Prospectus
and are authorized to distribute the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to the
Underwriters).
4. Representations and Warranties of the Company and the Selling
Stockholder. The Company and the Selling Stockholder hereby, jointly and
severally, represent and warrant to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective amendment
to the Registration Statement becomes effective, the date any supplement
or amendment to the Prospectus is filed with the Commission and each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the
Rules and the rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the other dates referred to
above, neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, contained or will contain any
untrue statement of a material fact or omitted or will omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of
the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary prospectus
as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading. Notwithstanding the
foregoing, none of the representations and warranties in this paragraph
4(a) shall apply to statements in, or omissions from, the Registration
Statement or the Prospectus made in reliance upon, and in conformity
with, information herein or otherwise furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus. With respect to the preceding
sentence, the Company acknowledges that the only information furnished
in writing by the Representatives on behalf of the several Underwriters
for use in the Registration Statement or the Prospectus are the
statements contained in paragraph four (but not the first sentence),
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paragraph ten and paragraph twelve (collectively the "Underwriters'
Information") under the caption "Underwriting"in the Prospectus.
(b) The Registration Statement is effective under the Securities
Act and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are threatened under the Securities Act; any required
filing of the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules has been or will be made in the manner and within
the time period required by such Rule 424(b).
(c) The financial statements of the Company (including all notes
and schedules thereto) included in the Registration Statement and
Prospectus present fairly the financial position, the results of
operations, the statements of cash flows and the statements of
stockholders' equity and the other information purported to be shown
therein of the Company at the respective dates and for the respective
periods to which they apply; and such financial statements and related
schedules and notes have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the
periods involved, and all adjustments necessary for a fair presentation
of the results for such periods have been made. The summary financial
data and selected financial data included in the Prospectus present
fairly the information shown therein at the respective dates and for the
respective periods specified and the summary and selected financial data
have been presented on a basis consistent with the financial statements
so set forth in the Prospectus and other financial information.
(d) BDO Xxxxxxx, LLP, whose reports are filed with the Commission
as a part of the Registration Statement, are and, during the periods
covered by their reports, are independent public accountants as required
by the Securities Act and the Rules.
(e) Each of the Company and the Selling Stockholder is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. The Company has no
subsidiary or subsidiaries and does not control, directly or indirectly,
any corporation, partnership, joint venture, association or other
business organization. The Company is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in
which the nature of the business conducted by it or location of the
assets or properties owned, leased or licensed by it requires such
qualification, except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the assets or
properties, business, results of operations, financial condition or
prospects of the Company (a "Material Adverse Effect"). The Company has
all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity (collectively, the "Permits"), to own, lease and
license its assets and properties and conduct its business, all of which
are valid and in full force and effect, as described in the Registration
Statement and the Prospectus, except where the lack of such Permits
would not have a Material Adverse Effect; the Company has fulfilled and
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performed in all material respects all of its material obligations with
respect to such Permits and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the Company
thereunder. Except as may be required under the Securities Act and state
and foreign Blue Sky laws, no other Permits are required to enter into,
deliver and perform this Agreement and to issue and sell the Shares.
(f) The Company owns or possesses adequate and enforceable rights
to use all trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other
similar rights and proprietary knowledge (collectively, "Intangibles")
described in the Prospectus as being necessary for the conduct of its
business. The Company has not received any notice of, or is not aware
of, any infringement of or conflict with asserted rights of others with
respect to any Intangibles.
(g) The Company has good and marketable title in fee simple to
all items of real property and good and marketable title to all personal
property described in the Prospectus as being owned by it and any real
property and buildings described in the Prospectus as being held under
lease by the Company is held by it under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except such as are described in the Registration
Statement and the Prospectus or would not have a Material Adverse
Effect.
(h) There are no litigation matters or governmental proceedings
to which the Company is subject or which is pending or, to the knowledge
of the Company, threatened against the Company, which might have a
Material Adverse Effect, affect the consummation of this Agreement or
which is required to be disclosed in the Registration Statement and the
Prospectus and is not so disclosed.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
described therein, (i) there has not been any material adverse change
with regard to the assets or properties, business, results of
operations, financial condition, or prospects of the Company; (ii) the
Company has not sustained any loss of or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree which would have a Material
Adverse Effect; and (iii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus, except as
reflected therein, the Company has not (i) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed
money, except such liabilities or obligations incurred in the ordinary
course of business, (ii) entered into any transaction not in the
ordinary course of business or (iii) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its stock.
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(j) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required by the Securities Act or
Rules. Each description of a contract, document or other agreement in
the Registration Statement and the Prospectus accurately reflects in all
respects the terms of the underlying document, contract or agreement.
Each agreement described in the Registration Statement and Prospectus or
listed in the Exhibits to the Registration Statement is in full force
and effect and is valid and enforceable by and against the Company in
accordance with its terms. Neither the Company, nor to the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default, in any such case which
default or event would have a Material Adverse Effect. No default
exists, and no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance
of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which it
or its properties or business may be bound or affected which default or
event would have a Material Adverse Effect.
(k) The Company is not in violation of any term or provision of
its charter, articles of organization, or bylaws or of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
which would have a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or
constitute a default (or an event which with notice or lapse of time or
both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company pursuant to the
terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which it or any of its
properties or businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the
Company or violate any provision of the charter, articles of
organization, or bylaws of the Company, except for such consents or
waivers which have already been obtained and are in full force and
effect.
(m) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
those to be issued by the Company have been duly authorized for issuance
by the Company. All of the issued and outstanding shares of Common Stock
have been duly and validly issued and are fully paid and nonassessable.
There are no statutory preemptive or other similar rights to subscribe
for or to purchase or acquire any shares of Common Stock of the Company
or any such rights pursuant to its charter, articles
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of organization, or bylaws or any agreement or instrument to or by which
the Company is a party or bound. The Shares, when issued in the case of
the shares to be issued by the Company and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and nonassessable
and none of them will be issued in violation of any preemptive or other
similar right. There is no outstanding option, warrant or other right
calling for the issuance of, any share of stock of the Company or any
security convertible into, or exercisable for, such stock. There is no
commitment, plan or arrangement to issue, any share of stock of the
Company or any security convertible into, or exercisable or exchangeable
for, such stock, except as disclosed in the Prospectus. The Common Stock
conforms in all material respects to all statements in relation thereto
contained in the Registration Statement and the Prospectus.
(n) No holder of any security of the Company has the right to
have any security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such holder
during the period ending one hundred eighty (180) days after the date of
this Agreement. Each director, executive officer, and employee of the
Company has delivered to the Representatives his enforceable written
agreement that he will not, for a period of one hundred eighty (180)
days after the date of this Agreement, without the prior written consent
of CIBC World Markets Corp., make any offer, sale, assignment, transfer,
encumbrance or contract to sell, grant an option to purchase or other
disposition of any Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or enter into any swap or
other agreement that transfer in whole or in part any of the economic
consequences of ownership of the shares of Common Stock or any
securities exercisable or exchangeable for Common Stock ("Lock-Up
Agreement").
(o) All necessary corporate action has been duly and validly
taken by the Company and the Selling Stockholder to authorize the
execution, delivery and performance of this Agreement and the issuance
and sale of the Shares, by the Company. This Agreement has been duly and
validly authorized, executed and delivered by the Company and constitute
and will constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except (i)
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and (ii) to the extent that rights to indemnity or
contribution under this Agreement may be limited by Federal and state
securities laws or the public policy underlying such laws.
(p) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
would have a Material Adverse Effect. The Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
principal suppliers or contractors which would have a Material Adverse
Effect. The Company is not aware of any threatened or pending litigation
between the Company and any of its officers which, if adversely
determined, could have a Material Adverse Effect and has no reason to
believe that such officers will not remain in the employment of the
Company.
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(q) No transaction has occurred between or among the Company and
any of its officers or directors or five percent shareholders or any
affiliate or affiliates of any such officer or director or five percent
shareholders that is required to be described in and is not described in
the Registration Statement and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of any
of the Shares.
(s) The Company has filed all Federal, state, local and foreign
tax returns which are required to be filed by it through the date
hereof, or has received extensions thereof, and has paid all taxes shown
on such returns and all assessments received by it to the extent that
the same are material and have become due, and there are no tax audits
or investigations pending, which if adversely determined would have a
Material Adverse Effect; nor are there any material proposed additional
tax assessments against the Company.
(t) The Shares have been duly authorized for quotation on the
National Market Segment of The Nasdaq Stock Market, subject to official
Notice of Issuance, and a registration statement has been filed on Form
8-A pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which registration statement complies in
all material respects with the Exchange Act.
(u) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(v) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which it is engaged or propose to engage
after giving effect to the transactions described in the Prospectus; and
the Company has no reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect. The Company has not been denied any insurance coverage which it
has sought or for which it has applied.
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(w) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
(x) There are no affiliations with the NASD among the Company's
officers, directors or any five percent or greater stockholder of the
Company, except as set forth in the Registration Statement or otherwise
disclosed in writing to the Representatives of the Underwriters.
(y) (i) The Company is in compliance in all material respects
with all rules, laws and regulation relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment ("Environmental Law") which are applicable to its business;
(ii) the Company has not received any notice from any governmental
authority or third party of an asserted claim under Environmental Laws;
(iii) the Company has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval; (iv) to the Company's knowledge, no facts
currently exist that will require the Company to make future material
capital expenditures to comply with Environmental Laws; and (v) no
property which is or has been owned, leased or occupied by the Company
has been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq.) or otherwise designated as a
contaminated site under applicable state or local law.
(z) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of proceeds thereof as
described in the Prospectus, will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(aa) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company has, directly or
indirectly, while acting on behalf of the Company (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
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5. Representations and Warranties of the Selling Stockholder. The
Selling Stockholder hereby represents and warrants to each Underwriter
as follows:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder and, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes the valid and legally binding agreement of the Selling
Stockholder, enforceable against the Selling Stockholder in accordance
with its terms, except (i) as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors rights generally and by
general equitable principles and (ii) to the extent that rights to
indemnity or contribution under this Agreement may be limited by federal
and state securities laws or the public policy underlying such laws.
(b) The execution and delivery by the Selling Stockholder of this
Agreement and the performance by the Selling Stockholder of its
obligations under this Agreement (i) will not contravene any provision
of applicable law, statute, regulation or filing or any agreement or
other instrument binding upon the Selling Stockholder or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Selling Stockholder, (ii) does not require any
consent, approval, authorization or order of or registration or filing
with any court or governmental agency or body having jurisdiction over
it, except such as may be required by the Blue Sky laws of the various
states in connection with the offer and sale of the Shares which have
been or will be effected in accordance with this Agreement, (iii) does
not and will not violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Selling
Stockholder or (iv) will not result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Selling
Stockholder pursuant to the terms of any agreement or instrument to
which the Selling Stockholder is a party or by which the Selling
Stockholder may be bound or to which any of the property or assets of
the Selling Stockholder is subject.
(c) The Selling Stockholder has, and on the Closing Date will
have, valid and marketable title to the Shares to be sold by the Selling
Stockholder on such Closing Date free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation,
any restriction on transfer, except as otherwise described in the
Registration Statement and Prospectus.
(d) The Selling Stockholder has, and on each Closing Date will
have, full legal fight, power and authorization, and any approval
required by law, to sell, assign, transfer and deliver the Shares to be
sold by the Selling Stockholder on such Closing Date in the manner
provided by this Agreement.
(e) Upon delivery of and payment for the Shares to be sold by the
Selling Stockholder pursuant to this Agreement, the several Underwriters
will receive valid and marketable title to such Shares free and clear of
any lien, claim, security interest or other encumbrance.
11
(f) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective amendment
to the Registration Statement becomes effective, the date any supplement
or amendment to the Prospectus is filed with the Commission and each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the
Rules and the rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the other dates referred to
above, neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, contained or will contain any
untrue statement of a material fact or omitted or will omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of
the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary prospectus
as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading. Notwithstanding the
foregoing, none of the representations and warranties in this paragraph
5(f) shall apply to statements in, or omissions from, the Registration
Statement or the Prospectus made in reliance upon, and in conformity
with the Underwriters' Information.
(g) The sale of Shares by the Selling Stockholder pursuant to
this Agreement is not prompted by the Selling Stockholder's knowledge of
any material information concerning the Company which is not set forth
in the Prospectus.
(h) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares.
(i) The Selling Stockholder has no actual knowledge that any
representation or warranty of the Company set forth in Section 4 above
is untrue or inaccurate in any material respect.
(j) The Selling Stockholder has filed all Federal, state, local
and foreign tax returns which are required to be filed by it through the
date hereof, or has received extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the extent
that the same are material and have become due, and there are no tax
audits or investigations pending, which if adversely determined would
have a Material Adverse Effect;
12
nor are there any material proposed additional tax assessments against
the Selling Stockholder.
6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 7(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and
no order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Commission and the
Representatives.
(c) The representations and warranties of the Company and the
Selling Stockholder contained in this Agreement and in the certificates
delivered pursuant to Sections 6(d) and 6(e) shall be true and correct
when made and on and as of each Closing Date as if made on such date and
the Company and the Selling Stockholder shall have performed all
covenants and agreements and satisfied all the conditions contained in
this Agreement required to be performed or satisfied by them at or
before such Closing Date.
(d) The Representatives shall have received on each Closing Date
a certificate, addressed to the Representatives and dated such Closing
Date, of the chief executive officer or chief operating officer and the
chief financial officer or chief accounting officer of the Company to
the effect that (i) the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement
and that the representations and warranties of the Company in this
Agreement are true and correct on and as of such Closing Date with the
same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by it
at or prior to such Closing Date, and (ii) no stop order suspending the
effectiveness of the Registration Statement has been issued and to the
best of their knowledge, no proceedings for that purpose have been
instituted or are pending under the Securities Act.
(e) The Representatives shall have received on each Closing Date
a certificate, addressed to the Representatives and dated such Closing
Date, of the Selling Stockholder, to the effect that the Selling
Stockholder has carefully examined the Registration Statement,
13
the Prospectus and this Agreement and that the representations and
warranties of the Company and the Selling Stockholder in this Agreement
are true and correct on and as of such Closing Date with the same effect
as if made on such Closing Date and each of the Company and the Selling
Stockholder has performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or
satisfied by it at or prior to such Closing Date.
(f) The Representatives shall have received on the Effective
Date, at the time this Agreement is executed and on each Closing Date a
signed letter from BDO Xxxxxxx LLP addressed to the Representatives and
dated, respectively, the Effective Date, the date of this Agreement and
each such Closing Date, in form and substance reasonably satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct insofar as
it relates to them and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration
Statement and the Prospectus and reported on by them comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in
the Registration Statement and the Prospectus under the headings
"Summary Financial Data" and "Selected Financial Data," carrying
out certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of
the meetings of the stockholders and directors of the Company,
and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company as to transactions and events subsequent to the date of
the latest audited financial statements, except as disclosed in
the Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(A) the amounts in "Summary Financial Data," and
"Selected Financial Data" included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited and unaudited
financial statements from which such amounts were
derived; or
(B) with respect to the Company, there were, at a
specified date not more than five business days prior to
the date of the letter, any increases in the current
liabilities and long-term liabilities of the Company or
any decreases in net income or in working capital or the
stockholders' equity in the Company, as compared with the
amounts shown on the Company's audited balance sheet for
the fiscal year January 31, 1999 and the three months
ended April 30, 1999 included in the Registration
Statement; and
14
(iii) they have performed certain other procedures as may
be permitted under Generally Acceptable Auditing Standards,
including a review under Statement of Accounting Standards No. 71
of unaudited financial information included in the Prospectus, as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably
specified by the Representatives agrees with the accounting
records of the Company.
(iv) based upon the procedures set forth in clauses (ii)
and (iii) above and a reading of the amounts included in the
Registration Statement under the headings "Summary Financial
Data" and "Selected Financial Data" included in the Registration
Statement and Prospectus and a reading of the financial
statements from which certain of such data were derived, nothing
has come to their attention that gives them reason to believe
that the "Summary Financial Data" and "Selected Financial Data"
included in the Registration Statement and Prospectus do not
comply as to the form in all material respects with the
applicable accounting requirements of the Securities Act and the
Rules or that the information set forth therein is not fairly
stated in relation to the financial statements included in the
Registration Statement or Prospectus from which certain of such
data were derived are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the
Registration Statement and Prospectus.
References to the Registration Statement and the
Prospectus in this paragraph (f) are to such documents as amended
and supplemented at the date of the letter.
(g) The Representatives shall have received on each Closing Date
from Greenbaum, Rowe, Xxxxx, Xxxxx, Xxxxx & Xxxxxx LLP, counsel for the
Company, an opinion, addressed to the Representatives and dated such
Closing Date, and stating in effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Massachusetts. To the best of such counsel's
knowledge, the Company has no subsidiary and does not control,
directly or indirectly, any corporation, partnership, joint
venture, association or other business organization. The Company
is duly qualified and in good standing as a foreign corporation
in each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the nature of
its businesses makes such qualification necessary, except for
such jurisdictions where the failure to so qualify would not have
a Material Adverse Effect.
15
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and
conduct its business as now being conducted and as described in
the Registration Statement and the Prospectus and to enter into,
deliver and perform this Agreement and to issue and sell the
Shares other than those required under the Securities Act and
state and foreign Blue Sky laws.
(iii) The Company has authorized and issued capital stock
as set forth in the Registration Statement and the Prospectus
under the caption "Capitalization"; the certificates evidencing
the Shares are in due and proper legal form and have been duly
authorized for issuance by the Company; all of the outstanding
shares of Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable and
none of them was issued in violation of any preemptive or other
similar right. The Shares when issued and sold pursuant to this
Agreement will be duly and validly issued, outstanding, fully
paid and nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. To the best
of such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, there are no
preemptive rights or any restriction upon the voting or transfer
of any securities of the Company pursuant to the Company's
charter, articles of organization, or bylaws or other governing
documents or any other instrument to which the Company is a party
or by which it may be bound. To the best of such counsel's
knowledge, except as disclosed in the Registration Statement and
the Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and no commitment, plan or
arrangement to issue, any share of stock of the Company or any
security convertible into, exercisable for, or exchangeable for
stock of the Company.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery
and performance of this Agreement, and the issuance and sale of
the Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company and the Selling
Stockholder enforceable against the Company and the Selling
Stockholder in accordance with its terms except (A) as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles and (B) to the extent that rights to
indemnity or contribution under this Agreement may be limited by
Federal or state securities laws or the public policy underlying
such laws.
(v) Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares) will give
rise to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or any event
which with notice or lapse of time, or both, would
16
constitute a default) under, or require consent or waiver under,
or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company pursuant
to the terms of any indenture, mortgage, deed trust, note or
other agreement or instrument of which such counsel is aware and
to which the Company is a party or by which it or any of its
properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation of
which such counsel is aware or violate any provision of the
charter, articles of organization, or bylaws of the Company.
(vi) To the best of such counsel's knowledge, no default
exists, and no event has occurred which with notice or lapse of
time, or both, would constitute a default, in the due performance
and observance of any term, covenant or condition by the Company
of any indenture, mortgage, deed of trust, note or any other
agreement or instrument to which the Company is a party or by
which it or any of its assets or properties or businesses may be
bound or affected, where the consequences of such default would
have a Material Adverse Effect.
(vii) To the best of such counsel's knowledge, the
Company is not in violation of any term or provision of its
charter, articles of organization, or bylaws or any franchise,
license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation would have a
Material Adverse Effect.
(viii) No consent, approval, authorization or order of
any court or governmental agency or regulatory body is required
for the execution, delivery of performance of this Agreement by
the Company or the consummation of the transactions contemplated
hereby or thereby, except such as have been obtained under the
Securities Act and such as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution
of the Shares by the several Underwriters.
(ix) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending
or threatened against, or involving the assets, properties or
businesses of, the Company which would have a Material Adverse
Effect.
(x) The statements in the Prospectus under the captions
"Description of Capital Stock," "The Company," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources,"
"Business-Intellectual Property, Trademarks and Proprietary
Rights" "Shares Eligible for Future Sale," "Management-Employment
Agreements," "Management-Stock Option Plan, ""Management-Director
Stock Option Plan, " " Management-Osicom Stock Options" and
"Certain Relationships and Related Party Transactions," insofar
as such statements constitute a summary of documents referred to
therein or matters
17
of law, are fair summaries in all material respects and
accurately present the information called for with respect to
such documents and matters. Accurate copies of all contracts and
other documents required to be filed as exhibits to, or described
in, the Registration Statement have been so filed with the
Commission or are fairly described in the Registration Statement,
as the case may be.
(xi) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment of supplement
thereto (except for the financial statements and schedules and
other financial and statistical data included therein, as to
which such counsel expresses no opinion) comply as to form in all
material respects with the requirements of the Securities Act and
the Rules.
(xii) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for
that purpose have been instituted or are threatened, pending or
contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities
Act has been made in the manner and within the time period
required by such Rule 424(b).
(xiii) The Shares have been approved for listing on the
Nasdaq National Market.
(xiv) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xv) The Company is not an "investment company" or an
entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(xvi) To the best of such counsel's knowledge, (A) The
Company is in compliance in all material respects with any and
all applicable Environmental Laws; (B) the Company has not
received any notice from any governmental authority or third
party of an asserted claim under any Environmental Law; (C) the
Company has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of
any such permit, license or approval, except where such failure
to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or other approvals would not, singly or in the
aggregate, have a Material Adverse Effect; and (D) no property
which is or has been owned, leased or occupied by the Company has
been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et
18
seq.), or otherwise designated as a contaminated site under
applicable state or local law.
To the extent deemed advisable by such counsel, they may
rely as to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel satisfactory
to the Representatives as to matters which are governed by laws other than the
laws of the State of New York, and the Federal laws of the United States;
provided that such counsel shall state that in their opinion the Underwriters
and they are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to the Representatives and
counsel for the Underwriters.
In addition, such counsel shall state that such counsel
has participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective and on the date
of the opinion (except with respect to the financial statements and notes and
schedules thereto and other financial data, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof and on the date of the opinion contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) The Representatives shall have received on each Closing Date
from Greenbaum, Rowe, Xxxxx, Xxxxx, Xxxxx & Xxxxxx LLP, counsel for the
Selling Stockholder, an opinion, addressed to the Representatives and
dated such Closing Date. and stating in effect that:
(i) This Agreement has been duly and validly executed and
delivered by or on behalf of the Selling Stockholder.
(ii) This Agreement constitutes the legal, valid and
binding obligation of the Selling Stockholder enforceable against
the Selling Stockholder in accordance with its terms except (A)
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles and (B) to the extent that rights to
indemnity or contribution under this Agreement may be limited by
Federal or state securities laws or the public policy underlying
such
19
laws; and the Selling Stockholder has full legal right and
authority to enter into this Agreement and to sell, transfer and
deliver in the manner provided in this Agreement, the Shares to
be sold by the Selling Stockholder hereunder.
(iii) The transfer and sale by the Selling Stockholder of
the Shares to be sold by the Selling Stockholder as contemplated
by this Agreement will not conflict with, result in a breach of,
or constitute a default under any agreement or instrument known
to such counsel to which the Selling Stockholder is a party or by
which the Selling Stockholder or any of its properties may be
bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation.
(iv) All of the Selling Stockholder's rights in the
Shares to be sold by the Selling Stockholder pursuant to this
Agreement, have been transferred to the Underwriters who have
severally purchased such Shares pursuant to this Agreement, free
and clear of adverse claims, assuming for purposes of this
opinion that the Underwriters purchased the same in good faith
without notice of any adverse claims.
(v) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or
regulatory agency, authority or body or financial institution is
required in connection with the performance of this Agreement by
the Selling Stockholder or the consummation of the transactions
contemplated hereby, including the delivery and sale of the
Shares to be delivered and sold by the Selling Shareholder,
except such as may be required under state securities or blue sky
laws in connection with the purchase and distribution of the
Shares by the several Underwriters.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of the Selling Stockholder and on the opinions
of other counsel satisfactory to the Representatives as to matters which are
governed by laws other than the laws of the State of New York, the laws of the
State of New Jersey or the Federal laws of the United States; provided that such
counsel shall state that in their opinion the Underwriters and they are
Justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Representatives and counsel for the
Underwriters.
(i) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their
counsel, and the Underwriters shall have received from Xxxxxx, Xxxxx &
Bockius LLP a favorable opinion, addressed to the Representatives and
dated such Closing Date, with respect to the Shares, the Registration
Statement and the Prospectus, and such other related matters, as the
Representatives may reasonably request, and the Company shall have
furnished to Xxxxxx, Xxxxx & Xxxxxxx LLP such documents as they may
reasonably request for the purpose of enabling them to pass upon such
matters.
20
(j) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(n).
(k) The Company and the Selling Stockholder shall have furnished
or caused to be furnished to the Representatives such further
certificates or documents as the Representatives shall have reasonably
requested.
7. Covenants of the Company and the Selling Stockholder.
(a) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus in a form
approved by the Representatives and file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the
Representatives in writing (A) when any amendment to the
Registration Statement shall have become effective, (B) of any
request by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional information,
(C) of the prevention or suspension of the use of any preliminary
prospectus or the Prospectus or of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (D) of the receipt by the Company
of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Company has
furnished the Representatives a copy for its review prior to
filing and shall not file any such proposed amendment or
supplement to which the Representatives reasonably object. The
Company shall use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Securities Act and
the Rules, any event occurs as a result of which the Prospectus
as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend or supplement the Prospectus to
comply with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the second
sentence of paragraph (ii) of this Section 7(a), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
21
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as
practicable, but not later than forty-five (45) days after the
end of the twelve month period beginning at the end of the fiscal
quarter of the Company during which the Effective Date occurs (or
ninety (90) days if such twelve month period coincides with the
Company's fiscal year), an earning statement (which need not be
audited) of the Company, covering such twelve month period, which
shall satisfy the provisions of Section 11(a) of the Securities
Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of
the Registration Statement (including all exhibits thereto and
amendments thereof) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and all
amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or
the Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as
the Representatives may reasonably request.
(vi) The Company shall cooperate with the Representatives
and their counsel in endeavoring to qualify the Shares for offer
and sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for
the distribution of the Shares; provided, however, that the
Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any
Jurisdiction or subject itself to taxation as doing business in
any jurisdiction.
(vii) For a period of five years after the date of this
Agreement, the Company shall supply to the Representatives, and
to each other Underwriter who may so request in writing, copies
of such financial statements and other periodic and special
reports as the Company may from time to time distribute generally
to the holders of any class of its capital stock and to furnish
to the Representatives a copy of each annual or other report it
shall be required to file with the Commission (including the
Report on Form SR required by Rule 463 of the Rules).
(viii) Without the prior written consent of CIBC World
Markets Corp., for a period of three hundred sixty-five (365)
days after the date of this Agreement, the Company shall not
issue, sell or register with the Commission (other than on Form
S-8 or on any successor form), or otherwise dispose of, directly
or indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable for
equity securities of the convertible Company), except for the
issuance of the Shares pursuant to the Registration Statement and
the issuance of shares pursuant to the Company's existing stock
option plans as described in the
22
Registration Statement and the Prospectus. In the event that
during this period, (i) any shares are issued pursuant to the
Company's existing stock option plans that are exercisable during
such three hundred sixty-five (365) day period or (ii) any
registration is effected on Form S-8 or on any successor form
relating to shares that are exercisable during such three hundred
sixty-five (365) day period, the Company shall obtain the written
agreement of such grantee or purchaser or holder of such
registered securities that, for a period of one hundred eighty
(180) days after the date of this Agreement, such person will
not, without the prior written consent of CIBC World Markets
Corp., offer for sale, sell, distribute, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, or
exercise any registration rights with respect to, any shares of
Common Stock (or any securities convertible into, exercisable
for, or exchangeable for any shares of Common Stock) owned by
such person. Without the prior written consent of CIBC World
Markets Corp., the Company shall not file any registration
statement on Form S-8 or any successor form with the Commission
for a period of one hundred eighty (180) days after the date of
this Agreement.
(ix) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including any
required registration under the Exchange Act).
(x) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration
or qualification of the Shares for offer and sale under the securities
or Blue Sky laws of the various jurisdictions referred to in Section
7(a)(vi), including the reasonable fees and disbursements of counsel for
the Underwriters in connection with such registration and qualification
and the preparation, printing, distribution and shipment of preliminary
and supplementary Blue Sky memoranda; (iv) the furnishing (including
costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus
and all amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold;
(v) the filing fees of the NASD in connection with its review of the
terms of the public offering and reasonable fees and disbursements of
counsel for the Underwriters in connection with such review; (vi) the
23
furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 7(a)(vii); (vii) inclusion of the Shares
for quotation on the Nasdaq National Market; and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by
the Company to the Underwriters. Subject to the provisions of Section
10, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all
costs and expenses incident to the performance of the obligations of the
Underwriters under this Agreement not payable by the Company pursuant to
the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
(c) The Selling Stockholder agrees that without the prior written
consent of CIBC World Markets Corp., the Selling Stockholder will not
directly or indirectly, (i) make any offer, sale, assignment, transfer,
encumbrance or contract to sell, grant an option to purchase or other
disposition of any Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap
or other agreement that transfers in whole or in part any of the
economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares
of Common Stock beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) by the undersigned on the date
hereof or hereafter acquired for a period of 365 days subsequent to
the date of the Underwriting Agreement. The Selling Stockholder further
agrees with the Underwriters that, for a period of 365 days subsequent
to the date of the Underwriting Agreement, neither it nor any of its
subsidiaries, but not including the Company, shall acquire any shares
of Voting Common Stock of the Company or engage in any transaction that
would result in the Selling Stockholder or any of its subsidiaries,
but not including the Company, holding Voting Common Stock of the
Company.
8. Indemnification.
(a) The Company and the Selling Stockholder agree, jointly and
severally, to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which
they, or any of them, may become subject under the Securities Act, the
Exchange Act or other Federal or state law or regulation, at common law
of otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, or arise out of or are based
upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) in whole or in part any breach of the
representations and
24
warranties set forth in Section 4 hereof, or (iii) in whole or in part
any failure of the Company or the Selling Stockholder to perform any of
its respective obligations hereunder or under law; provided, however,
that such indemnity shall not inure to the benefit of any Underwriter
(or any person controlling such Underwriter) on account of any losses,
claims, damages or liabilities arising from the sale of the Shares to
any person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with the
Underwriters' Information.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Stockholder and
each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, each
director of the Company, and each officer of the Company who signs the
Registration Statement, to the same extent as the foregoing indemnity
from the Company and the Selling Stockholder to each Underwriter, but
only insofar as such losses, claims, damages or liabilities arise out of
or are based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto in reliance upon or in conformity with the
Underwriters' Information under the caption "Underwriting" in the
Prospectus; provided, however, that the obligation of each Underwriter
to indemnify the Company or the Selling Stockholder (including any
controlling person, director or officer thereof) shall be limited to the
net proceeds received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all
papers served. No indemnification provided for in Section 8(a) or 8(b)
shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the omission
so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to
any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except
as provided below and except for
25
the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such
action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the
defense of such action (in which case the indemnifying parties shall not
have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of
which cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable for
any settlement of any action, suit, proceeding or claim effected without
its written consent, which consent shall not be unreasonably withheld or
delayed.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in Section 8(a) or 8(b) is due in accordance with its terms but for any
reason is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b), then each indemnifying
party shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled
hereunder to contribution from any person who may be liable for
contribution) to which the indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholder on the one hand and the
Underwriters on the other from the offering of the Shares or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received
notice as provided in Section 8 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Selling Stockholder
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the
Selling Stockholder and the Underwriters shall be deemed to be in the
same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the
Company or the Selling Stockholder, as set forth in the table on the
cover page of the Prospectus, bear to (y) the underwriting discounts
received by the Underwriters, as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company and the
Selling Stockholder or the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact related to information supplied by the Company and
the Selling Stockholder or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder
and the Underwriters agree that it would not be just and
26
equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 9, (i) in no case shall
any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such
Underwriter hereunder and (ii) the Company and the Selling Stockholder
shall be liable and responsible for any amount in excess of such
underwriting discount; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of
this Section 9, each person, if any, who controls an Underwriter within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of
the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to
clauses (i) and (ii) in the immediately preceding sentence of this
Section 9. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be
made against another party or parties under this Section, notify such
party or parties from whom contribution may be sought, but the omission
so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or
otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim
settled without its written consent. The Underwriter's obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
10. Termination. This Agreement may be terminated with respect to
the Shares to be purchased on a Closing Date by the Representatives by
notifying the Company and the Selling Stockholder at any time
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if on or prior to such date, any domestic
or international event or act or occurrence has materially disrupted, or
in the opinion of the Representatives will in the future materially
disrupt, the securities markets; (ii) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States
is such as to make it, in the judgment of the Representatives,
inadvisable to proceed with the offering; (iii) if there shall be such a
material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of
the Representatives, inadvisable or impracticable to market the Shares;
(iv) if trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock
27
Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq
National Market has been suspended or limited, or minimum or maximum
ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by said exchanges
or by order of the Commission, the National Association of Securities
Dealers, Inc., or any other governmental or regulatory authority; or (v)
if a banking moratorium has been declared by any state or Federal
authority; or (vi) if, in the judgment of the Representatives, there has
occurred a Material Adverse Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Stockholder shall be under any
liability to any Underwriter, and no Underwriter shall be under any liability to
the Company, except that (y) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure, refusal or inability
on the part of the Company or the Selling Stockholder to comply with the terms
or to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in contemplation
of performing their obligations hereunder and (z) no Underwriter who shall have
failed or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Company, the Selling Stockholder or to the other Underwriters
for damages occasioned by its failure or refusal.
11. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify
the cancellation or termination of this Agreement under Section 10) to
purchase on any Closing Date the Shares agreed to be purchased on such
Closing Date by such Underwriter or Underwriters, the Representatives
may find one or more substitute underwriters to purchase such Shares or
make such other arrangements as the Representatives may deem advisable
or one or more of the remaining Underwriters may agree to purchase such
Shares in such proportions as may be approved by the Representatives, in
each case upon the terms set forth in this Agreement. If no such
arrangements have been made by the close of business on the business day
following such Closing Date:
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing
Date, then each of the nondefaulting Underwriters shall be obligated to
purchase such Shares on the terms herein set forth in proportion to
their respective obligations hereunder; provided, that in no event shall
the maximum number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 11 by more
than one-ninth of such number of Shares without the written consent of
such Underwriter, or
28
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date,
then the Company shall be entitled to one additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase
such Shares upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company or the Selling
Stockholder and without liability on the part of the Company, except in both
cases as provided in Sections 7(b), 8, 9 and 10. The provisions of this Section
shall not in any way affect the liability of any defaulting Underwriter to the
Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes of
this Agreement.
12. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its
officers, of the Selling Stockholder and of the Underwriters set forth
in or made pursuant to this Agreement shall remain in full force and
effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or the Selling Stockholder or any of the
officers, directors or controlling persons referred to in Sections 8 and
9 hereof, and shall survive delivery of and payment for the Shares. The
provisions of Sections 7(b), 8, 9 and 10 shall survive the termination
or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and the Selling Stockholder and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters, or the Company, and directors and officers
of the Company, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser of Shares from any
Underwriter merely because of such purchase. The obligations of the Selling
Stockholder shall be valid, binding and enforceable obligations of the Selling
Stockholder notwithstanding any bankruptcy, receivership, or liquidation
proceedings that may commence with regard to the Selling Stockholder or its
assets.
29
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., Xxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ________________________,
with a copy to Xxxxxx, Xxxxx & Xxxxxxx LLP, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, Attention: N. Xxxxxxx Xxxxxxx, Esq. and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement with a copy to ___________________and (c) if
to the Selling Stockholder to with a copy to _________________________________.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
30
Please confirm that the foregoing correctly sets forth the agreement among us.
Very truly yours,
NETSILICON, INC.
By
_________________________________
Title:
OSICOM TECHNOLOGIES, INC.
By
_________________________________
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
U.S. BANCORP XXXXX XXXXXXX INC.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed hereto.
By CIBC WORLD MARKETS CORP.
By
_________________________________
Title:
31
SCHEDULE I
Number of
Firm Shares to
Be Purchased
------------
Name
----
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
_________
Total 5,000,000
=========
32
