Exhibit 1.1
CYPRESS COMMUNICATIONS, INC.
10,000,000 Shares of Common Stock
FORM OF
UNDERWRITING AGREEMENT
February ___, 2000
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
X.X. XXXXXXXX & CO.
10,000,000 Shares of Common Stock
CYPRESS COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
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February ___, 2000
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
X.X. Xxxxxxxx & Co.
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Cypress Communications, Inc., a corporation organized and existing under
the laws of Delaware (the "Company"), proposes, subject to the terms and
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conditions stated herein, to issue and sell to the several underwriters named in
Schedule 1 hereto (collectively, the "Underwriters") an aggregate of 10,000,000
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shares (the "Firm Shares") of its common stock, par value $0.01 per share (the
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"Common Stock") and, for the sole purpose of covering over-allotments in
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connection with the sale of the Firm Shares, at the option of the Underwriters,
up to an additional 1,500,000 shares (the "Additional Shares") of Common Stock.
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The Firm Shares and any Additional Shares purchased by the Underwriters are
referred to herein as the "Shares". The Shares are more fully described in the
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Registration Statement referred to below.
1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-92011), and amendments thereto, and related preliminary prospectuses
for the registration under the Securities Act of 1933, as amended (the
"Securities Act"), of shares of common stock, which registration statement,
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as so amended, has been declared effective by the Commission and copies of
which have heretofore been delivered to the Underwriters. The registration
statement, as amended at the time it became effective, including the
exhibits and information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act, is hereinafter referred to as the "Registration Statement."
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If the Company has filed or is required pursuant to the terms hereof to
file a registration statement pursuant to Rule 462(b) under the Act
registering additional shares of Common Stock (a "Rule 462(b) Registration
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Statement"), then, unless otherwise specified, any reference herein to the
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term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement,
which became effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under
the Securities Act (the "Securities Act Regulations"), each in the form
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heretofore delivered to the Underwriters). No stop order suspending the
effectiveness of either the Registration Statement or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or, to the Company's knowledge, threatened by
the Commission. The Company, if required by the Securities Act Regulations,
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
of the Securities Act Regulations. The Prospectus, in the form in which it
is to be filed with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations, is hereinafter referred to as the "Prospectus,"
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except that if any revised prospectus or prospectus supplement shall be
provided to the Underwriters by the Company for use in connection with the
offering and sale of the Shares (the "Offering") which differs from the
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Prospectus (whether or not such revised prospectus or prospectus supplement
is required to be filed by the Company pursuant to Rule 424(b) of the
Securities Act Regulations), the term "Prospectus" shall refer to such
revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Underwriters for such use; and,
provided, further, that the term "Prospectus" shall be deemed to include
any wrapper or supplement thereto prepared in connection with the
distribution of any Reserved Shares (as defined in Section 2(f), below).
Any preliminary prospectus or prospectus subject to completion included in
the Registration Statement or filed with the Commission pursuant to Rule
424 under the Securities Act is hereafter called a "Preliminary
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Prospectus". All references in this Agreement to the Registration
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Statement, the Rule 462(b) Registration Statement, a Preliminary Prospectus
and the Prospectus, or any amendments or supplements to any of the
foregoing, shall be deemed to include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("XXXXX").
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(b) The Registration Statement and Preliminary Prospectus, dated
as of January 14, 2000, and each Preliminary Prospectus thereafter,
complied in all material respects with the requirements of the Securities
Act and the Securities Act Regulations, 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 to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
Registration Statement and the Prospectus, at the time the Registration
Statement became effective and as of the Closing Date (as defined in
Section 2(b) below), complied and will comply in all material respects with
the requirements of the Securities Act and the Securities Act Regulations,
and did not and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, as of the
date hereof (unless the term "Prospectus" refers to a prospectus which has
been provided to the Underwriters by the Company for use in connection with
the offering of the Shares which differs from the Prospectus filed with the
Commission pursuant to Rule 424(b) of the Securities Act Regulations, in
which case at the time it is first provided to the Underwriters for such
use) and on the Closing Date, does not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations
and warranties in this Section (1)(b) shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by any Underwriter expressly for use in
the Registration Statement or the Prospectus. Each Preliminary Prospectus
and Prospectus filed as part of the Registration Statement, as part of any
amendment thereto or pursuant to Rule 424 under the Securities Act
Regulations, if filed by electronic transmission pursuant to Regulation S-T
under the Securities Act, was identical to the copy thereof delivered to
the Underwriters for use in connection with the
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Offering (except as may be permitted by Regulation S-T under the Securities
Act). There are no contracts or other documents required to be described in
the Prospectus or to be filed as exhibits to the Registration Statement
under the Securities Act that have not been described or filed therein as
required, and there are no business relationships or related-party
transactions involving the Company or any of its subsidiaries or any other
person required to be described in the Prospectus that have not been
described therein as required.
(c) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing as a corporation in good standing under
the laws of its respective jurisdiction of incorporation, (ii) has all
requisite corporate power and authority to carry on its business as it is
currently being conducted and as described in the Prospectus and to own,
lease and operate its properties, and (iii) is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification except, with respect to
clauses (i) (as it relates to good standing) and (iii), where the failure
to be so qualified or in good standing does not and could not reasonably be
expected to (x) individually or in the aggregate, result in a material
adverse effect on the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and
its subsidiaries, taken as a whole, (y) interfere with or adversely affect
the issuance or marketability of the Shares pursuant hereto or (z) in any
manner draw into question the validity of this Agreement (any of the events
set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
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(d) All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. The Shares, when issued, delivered and sold in accordance with
this Agreement, will be duly authorized and validly issued, fully paid and
nonassessable, and will not have been issued in violation of or subject to
any preemptive or similar rights. At September 30, 1999, after giving
effect to the issuance and sale of the Shares pursuant hereto and the
application of the net proceeds from the sale thereof and the conversion of
all convertible preferred stock into Common Stock, the Company had the pro
forma as adjusted consolidated capitalization as set forth in the
Prospectus under the caption "Capitalization".
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(e) All of the outstanding capital stock of, or other ownership
interests in, the Company's subsidiaries is owned by the Company, free and
clear of any security interest, claim, lien, limitation on voting rights or
encumbrance; and all such securities have been duly authorized, validly
issued, and are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights.
(f) Except as disclosed in the Prospectus there are not
currently, and will not be as a result of the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company or any of its subsidiaries
(other than options issued pursuant to the Company's stock option plans).
(g) The Common Stock (including the Shares) is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act") and is listed for quotation on the Nasdaq National Market
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System ("Nasdaq"), and the Company has taken no action designed to, or
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likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act or delisting the Common Stock from Nasdaq, nor
has the
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Company received any notification that the Commission or Nasdaq is
contemplating terminating such registration or listing.
(h) The statistical and market-related data included in the
Prospectus are based on or are derived from sources which the Company
believes to be reliable and accurate in all material respects.
(i) The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Shares as provided herein and the power to effect the Use of Proceeds
as described in the Prospectus.
(j) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms.
(k) Neither the Company nor any of its subsidiaries is, nor
after giving effect to the Offering will be, (i) in violation of its
charter or bylaws, (ii) in default in the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties is subject, or (iii) in violation of any local, state or
federal law, statute, ordinance, rule, regulation, requirement, judgment or
court decree (including, without limitation, the Communications Act of 1934
(the "Communications Act") and the rules and regulations of the Federal
Communications Commission (the "FCC"), and environmental laws, statutes,
ordinances, rules, regulations, judgments, or court decrees) applicable to
the Company or any of its subsidiaries or any of their assets or properties
(whether owned or leased) other than, in the case of clauses (ii) and
(iii), any default or violation that (A) could not reasonably be expected
to have a Material Adverse Effect or (B) which is disclosed in the
Prospectus. There exists no condition that, with notice, the passage of
time or otherwise, would constitute a default under any such document or
instrument, except as disclosed in the Prospectus.
(l) None of (i) the execution, delivery or performance by the
Company of this Agreement, (ii) the issuance and sale of the Shares and
(iii) consummation by the Company of the transactions contemplated hereby
and in the Prospectus violate, conflict with or constitute a breach of any
of the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien on any
properties of the Company or any of its subsidiaries, or an acceleration of
any indebtedness of the Company or any of its subsidiaries pursuant to, (A)
the charter or bylaws of the Company or any of its subsidiaries, (B) any
bond, debenture, note, indenture, mortgage, deed of trust, contract or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or its subsidiaries or
their properties is or may be bound, (C) any statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their assets
or properties or (D) any judgment, order or decree of any court or
governmental agency or authority having jurisdiction over the Company or
any of its subsidiaries or any of their assets or properties. No consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, (i) any court or governmental
agency, body or administrative agency or (ii) any other person is required
for (A) the execution, delivery and performance by the Company of this
Agreement, (B) the issuance and sale of the Shares and the transactions
contemplated hereby and thereby, except such as have been obtained
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and made under the Securities Act and state securities or Blue Sky laws and
regulations or such as may be required by the National Association of
Securities Dealers, Inc. (the "NASD").
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(m) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Company or any of its
subsidiaries, threatened or contemplated to which the Company or any of its
subsidiaries is a party or to which the business or property of the Company
or any of its subsidiaries is subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency
or that has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject or to which the business, assets, or
property of the Company or any of its subsidiaries are or may be subject,
that, in the case of clauses (i), (ii) and (iii) above, (x) is required to
be disclosed in the Prospectus and that is not so disclosed, or (y) could
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Effect.
(n) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Shares or prevents or suspends the use of the
Prospectus; no injunction, restraining order or order of any kind by a
federal or state court of competent jurisdiction has been issued that
prevents the issuance of the Shares, prevents or suspends the sale of the
Shares in any jurisdiction referred to in Section 1(c) hereof or that could
adversely affect the consummation of the transactions contemplated by this
Agreement or the Prospectus; and every request of any securities authority
or agency of any jurisdiction for additional information has been complied
with in all material respects.
(o) There is (i) no significant unfair labor practice complaint
pending against the Company or any of its subsidiaries nor, to the best
knowledge of the Company, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations board or
any foreign labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of its
subsidiaries nor, to the best knowledge of the Company, threatened against
any of them, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Company or any of its subsidiaries nor, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries and (iii) to the best knowledge of the Company, no union
representation question existing with respect to the employees of the
Company or any of its subsidiaries that, in the case of clauses (i), (ii)
or (iii) above, could reasonably be expected to result in a Material
Adverse Effect. To the best knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to the
Company or any of its subsidiaries. None of the Company or any of its
subsidiaries has violated (A) any federal, state or local law or foreign
law relating to discrimination in hiring, promotion or pay of employees,
(B) any applicable wage or hour laws or (C) any provision of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA"), which in the
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case of clause (A), (B) or (C) above could reasonably be expected to result
in a Material Adverse Effect.
(p) None of the Company or any of its subsidiaries has violated
any environmental, safety or similar law or regulation applicable to it or
its business or property relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), lacks any permit,
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license or other approval required of it under applicable Environmental
Laws or is violating any
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term or condition of such permit, license or approval, which could
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect.
(q) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Prospectus or as would not have a Material Adverse Effect, (ii) peaceful
and undisturbed possession of its properties under all material leases to
which it is a party as lessee, (iii) all licenses (including all FCC,
state, local or other regulatory licenses), certificates, permits,
authorizations, approvals, franchises and other rights from, and has made
all declarations and filings with, all federal, state and local
authorities, all self-regulatory authorities and all courts and other
tribunals (each an "Authorization") necessary to engage in the business
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conducted by it in the manner described in the Prospectus, except as
described in the Prospectus or where failure to hold such Authorizations
would not, individually or in the aggregate, have a Material Adverse Effect
and (iv) no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization.
Except where the failure to be in full force and effect would not have a
Material Adverse Effect, all such Authorizations are valid and in full
force and effect, and each of the Company and its subsidiaries is in
compliance in all material respects with the terms and conditions of all
such Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect thereto. All material leases
to which the Company or any of its subsidiaries is a party are valid and
binding, and no default by the Company or any subsidiary has occurred and
is continuing thereunder and, to the best knowledge of the Company and its
subsidiaries, no material defaults by the landlord are existing under any
such lease that could reasonably be expected to result in a Material
Adverse Effect.
(r) Each of the Company and its subsidiaries owns, possesses or
has the right to employ all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property") presently employed by it in connection with the
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businesses now operated by it or which are proposed to be operated by it or
its subsidiaries free and clear of and without violating any right, claimed
right, charge, encumbrance, pledge, security interest, restriction or lien
of any kind of any other person and none of the Company or any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing, except as
could not reasonably be expected to have a Material Adverse Effect. The
use of the Intellectual Property in connection with the business and
operations of the Company and its subsidiaries does not infringe on the
rights of any person, except as could not reasonably be expected to have a
Material Adverse Effect.
(s) None of the Company or any of its subsidiaries or, to the
best knowledge of the Company, any of their respective officers, directors,
partners, employees, agents or affiliates or any other person acting on
behalf of the Company or any of its subsidiaries has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, official or employee of any governmental agency (domestic or
foreign), instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other
person who was, is or may be in a position to help or hinder the business
of the Company or any of its subsidiaries (or assist the Company or any of
its subsidiaries in connection with any actual or proposed transaction),
which (i) might subject the Company or any of its subsidiaries, or any
other individual or entity, to any
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damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (ii) if not given in the past, might have
had a material adverse effect on the assets, business or operations of the
Company or any of its subsidiaries or (iii) if not continued in the future,
might have a Material Adverse Effect.
(t) All material tax returns required to be filed by the Company
and each of its subsidiaries in all jurisdictions have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. To the knowledge of the
Company, there are no material proposed additional tax assessments against
the Company, the assets or property of the Company or any of its
subsidiaries. The Company has made adequate charges, accruals and reserves
in the applicable financial statements included in the Prospectus in
respect of all federal, state and foreign income and franchise taxes for
all periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.
(u) None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) a "holding company" or a "subsidiary
company" or an "affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(v) Except as disclosed in the Prospectus, there are no holders
of securities of the Company or any of its subsidiaries who, by reason of
the execution by the Company of this Agreement or the consummation by the
Company or any of its subsidiaries of the transactions contemplated hereby,
have the right to request or demand that the Company or any of its
subsidiaries register under the Securities Act or analogous foreign laws
and regulations securities held by them, other than such that have been
duly waived or other than such securities as to which the right to enforce
such request or demand shall not be enforceable for a period of 180 days
after the Closing Date.
(w) Each of the Company and its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance
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 conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences thereto.
(x) Each of the Company and its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and its
subsidiaries and their respective businesses. None of the Company or any
of its subsidiaries has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance. All such insurance is
outstanding and duly in force on the date hereof, subject only to changes
made in the ordinary course of business, consistent with past practice,
which do not, singly or in the aggregate, materially alter the coverage
thereunder or the risks covered thereby. The Company has no reason to
believe that it or any subsidiary will not be able (a) to renew its
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existing insurance coverage as and when such policies expire or (b) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted or as presently
contemplated and at a cost that would not result in a Material Adverse
Effect.
(y) The Company has not (a) taken, 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 or (b) since the
date of the Preliminary Prospectus (1) sold, bid for, purchased or paid any
person any compensation for soliciting purchases of, the Shares or (2) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(z) The Company and its subsidiaries and any "employee benefit
plan" (as defined under ERISA) established or maintained by the Company,
its subsidiaries or their "ERISA Affiliates" (as defined below) are in
compliance in all material respects with ERISA. "ERISA Affiliate" means,
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with respect to the Company or a subsidiary, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
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subsidiary is a member. No "reportable event" (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any "employee
benefit plan" established or maintained by the Company, its subsidiaries or
any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss
of such qualification.
(aa) Subsequent to the respective dates as of which information
is given in the Prospectus and up to the Closing Date, except as set forth
in the Prospectus, (i) none of the Company or any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, nor entered into any transaction not in the
ordinary course of business, (ii) none of the Company or any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, that will be material to the Company and its subsidiaries taken
as a whole, (iii) there has not been, singly or in the aggregate, any
change or development that could reasonably be expected to result in a
Material Adverse Effect; (iv) there has been no dividend or distribution of
any kind declared, paid or made by the Company or any of its subsidiaries
on any class of its capital stock; (v) there has been no change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by the Company or any of its subsidiaries;
(vi) there has been no revaluation by the Company or any of its
subsidiaries of any of their assets; (vii) there has been no increase in
the salary or other compensation payable or to become payable by the
Company or any of its subsidiaries to any of their officers, directors,
employees or advisors, nor any declaration, payment or commitment or
obligation of any kind for the payment by the Company or any of its
subsidiaries of a bonus or other additional salary or compensation to any
such person; (viii) there has been no amendment or termination of any
material contract, agreement or
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license to which the Company or any subsidiary is a party or by which it is
bound; (ix) there has been no waiver or release of any material right or
claim of the Company or any subsidiary, including any write-off or other
compromise of any material account receivable of the Company or any
subsidiary; and (x) there has been no material change in pricing or
royalties set or charged by the Company or any subsidiary to their
respective customers or licensees or in pricing or royalties set or charged
by persons who have licensed Intellectual Property Rights to the Company or
any of its subsidiaries.
(bb) Xxxxxx Xxxxxxxx LLP, who have expressed their opinion with
respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules included in
the Prospectus, are independent public or certified public accountants
within the meaning of Regulation S-X under the Securities Act and the
Exchange Act.
(cc) The financial statements, together with the related notes,
included in the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of
and at the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. The financial data
set forth in the Prospectus under the captions "Prospectus Summary--Summary
and Other Financial Data", "Selected Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Prospectus.
(dd) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and any other person that
would give rise to a valid claim against the Company or any of the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Shares.
(ff) Each of the Company and its subsidiaries has implemented
Year 2000 compliance programs designed to ensure that its computer systems
and applications will function properly beyond 1999. The Company believes
that adequate resources have been allocated for this purpose and expects
the Company's and its subsidiaries' Year 2000 date conversion programs to
be completed on a timely basis.
(gg) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters pursuant to
this Agreement shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
The Company acknowledges that each of the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
6 hereof, counsel to the Company and counsel to the Underwriters, will rely upon
the accuracy and truth of the foregoing representations and hereby consents to
such reliance.
2. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to sell to the Underwriters and the
Underwriters, severally and not jointly, agree
9
to purchase from the Company, at a purchase price per share of $__, the
number of Firm Shares set forth opposite the respective names of the
Underwriters in Schedule I hereto plus any additional number of Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Xxxxxx &
Xxxxxxx, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx, 00000, or at
such other place as shall be agreed upon by the Underwriters and the
Company, at 10:00 A.M. on February ___, 2000 (unless postponed in
accordance with the provisions of Section 9 hereof), after the
determination of the public offering price of the Firm Shares, or such
other time not later than ten business days after such date as shall be
agreed upon by the Underwriters and the Company (such time and date of
payment and delivery being herein called the "Closing Date"). Payment
shall be made to the Company by wire transfer in same day funds, against
delivery to the Underwriters of certificates for the Shares to be purchased
by them. Certificates for the Firm Shares shall be registered in such name
or names and in such authorized denominations as the Underwriters may
request in writing at least two full business days prior to the Closing
Date. The Company will permit the Underwriters to examine and package such
certificates for delivery at least one full business day prior to the
Closing Date.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 1,500,000 Additional Shares at the same
purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares as set forth in this Section 2, for the sole purpose of
covering over-allotments in the sale of Firm Shares by the Underwriters.
This option may be exercised at any time and from time to time, in whole or
in part, on or before the thirtieth day following the date of the
Prospectus, by written notice by the Underwriters to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by the Underwriters, when the Additional Shares are to be
delivered (each such date and time being herein sometimes referred to as an
"Additional Closing Date"); provided, however, that such Additional Closing
-----------------------
Date shall not be earlier than the Closing Date or earlier than the second
full business day after the date on which the option shall have been
exercised nor later than the eighth full business day after the date on
which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 9 hereof).
Certificates for the Additional Shares shall be registered in such name or
names and in such authorized denominations as the Underwriters may request
in writing at least two full business days prior to such Additional Closing
Date. The Company will permit the Underwriters to examine and package such
certificates for delivery at least one full business day prior to such
Additional Closing Date.
(d) The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same ratio to the aggregate
number of Additional Shares being purchased as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto (or
such number increased as set forth in Section 9 hereof) bears to the total
number of Firm Shares being purchased from the Company, subject, however,
to such adjustments to eliminate any fractional shares as the Underwriters
in their sole discretion shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer in same day funds each payable to the order of the Company at the
office of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx, 00000, or such other location as may be mutually acceptable, upon
delivery of the certificates for the Additional Shares to the Underwriters.
10
(f) The Company and the Underwriters agree that up to 5% of the
Firm Shares to be purchased by the Underwriters (the "Reserved Shares")
---------------
shall be reserved for sale by the Underwriters to certain individuals and
entities having relationships with the Company and officers, directors and
employees of the Company (the "Reserved Shares Purchasers"), as part of the
--------------------------
distribution of the Shares by the Underwriters, subject to the terms of
this Agreement, the applicable rules, regulations and interpretations of
the NASD and all other applicable laws, rules and regulations; provided,
however that under no circumstances will Bear, Xxxxxxx & Co. Inc. ("Bear
Xxxxxxx") or any other Underwriter be liable to the Company or any of the
Reserved Shares Purchasers for any action taken or omitted in good faith in
connection with transactions effected with regard to the Reserved Shares
Purchasers. To the extent that oral confirmations for the purchase of any
Reserved Shares are not received from any such individuals and entities
having business relationships with the Company at the close of business on
the first business day after the date of this Agreement, such Reserved
Shares may be offered to the public as part of the Offering.
3. Offering. Upon the Underwriters' authorization of the release of
--------
the Firm Shares, the Underwriters propose to offer the Shares for sale to the
public upon the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
------------------------
each of the Underwriters that:
(a) The Company will notify the Underwriters immediately (and, if
requested by the Underwriters, will confirm such notice in writing) (i)
when any post-effective amendment to the Registration Statement becomes
effective, (ii) of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for any
additional information, (iii) of the mailing or the delivery to the
Commission for filing of the Prospectus or any amendment of or supplement
to the Registration Statement or the Prospectus or any document to be filed
pursuant to the Exchange Act during any period when the Prospectus is
required to be delivered under the Securities Act, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, (v) of the
receipt of any comments or inquiries from the Commission, and (vi) 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 that purpose. If the
Commission shall propose or enter a stop order at any time, the Company
will make every reasonable effort to prevent the issuance of any such stop
order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any post-effective amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs
from the prospectus filed with the Commission pursuant to Rule 424(b) of
the Securities Act Regulations, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations) to which the Underwriters or Underwriters' Counsel (as
hereinafter defined) shall reasonably object, will furnish the Underwriters
with copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be.
(b) If any event shall occur as a result of which the Prospectus
would, in the judgment of the Underwriters or the Company, include an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
11
therein, in the light of the circumstances under which they were made, not
misleading, or if it shall be necessary at any time to amend or supplement
the Prospectus or the Registration Statement to comply with the Securities
Act or the Securities Act Regulations, the Company will notify the
Underwriters promptly and prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to
the Underwriters) which will correct such statement or omission or which
will effect such compliance.
(c) The Company has delivered to the Underwriters five signed
copies of the Registration Statement as originally filed, including
exhibits, and all amendments thereto, and the Company will promptly deliver
to each of the Underwriters, from time to time during the period that the
Prospectus is required to be delivered under the Securities Act, such
number of copies of the Prospectus and the Registration Statement, and all
amendments of and supplements to such documents, if any, as the
Underwriters may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions as the Underwriters may designate and to maintain such
qualification in effect for so long as required for the distribution
thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a
general consent to service of process.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Securities Act) to its security holders and
to the Underwriters as soon as practicable, but not later than 45 days
after the end of its fiscal quarter in which the first anniversary date of
the effective date of the Registration Statement occurs (or if such fiscal
quarter is the Company's fourth fiscal quarter, not later than 90 days
after the end of such quarter), an earnings statement (in form complying
with the provisions of Rule 158 of the Securities Act Regulations) covering
a period of at least twelve consecutive months beginning after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act).
(f) During the period of 180 days from the date of the
Prospectus, the Company will not, directly or indirectly, without the prior
written consent of Bear, Xxxxxxx, offer, sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose (or announce any offer,
sale, contract to sell, grant of an option to purchase, pledge or other
disposition) of any shares of Common Stock of the Company or any securities
convertible into or exercisable or exchangeable for such Common Stock,
except that the Company may issue (i) shares of Common Stock and options to
purchase Common Stock under its 1997 Management Option Plan , 2000 Stock
Option and Incentive Plan and 2000 Employee Stock Purchase Plan, (ii) an
aggregate number of shares of Common Stock equal to 20% of the number of
shares of Common Stock outstanding on the Closing Date in connection with
the execution of licensing agreements with real estate owners and operators
and to pay for possible acquisitions of businesses complementary to those
of the Company, so long as the recipients of such shares agree to be bound
by a lock-up agreement substantially in the form of Exhibit B hereto (which
shall provide that any transferees and assigns of such recipients shall be
bound by the lock-up agreement) for the remainder of the 180-day lock-up
period.
(g) During a period of three years from the date of the
Prospectus, the Company will furnish to the Underwriters copies of (i) all
reports to its stockholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or
any national securities exchange.
12
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) If the Company elects to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
New York City time, on the date of this Agreement, no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission, and all requests for additional
information on the part of the Commission shall have been complied with to
the Underwriters' reasonable satisfaction.
(j) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will
file all documents required to be filed with the Commission pursuant to
Sections 13, 14 or 15 of the Exchange Act within the time periods required
by the Exchange Act and the rules and regulations thereunder.
(k) The Company hereby agrees that it will ensure that the
Reserved Shares are restricted to the extent required by the NASD or the
NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three (3) months following the Closing Date. The Underwriters
will notify the Company as to which persons will need to be so restricted.
At the request of the Underwriters, the Company will direct the transfer
agent to place a stop transfer restriction upon such securities for such a
period of time. Should the Company release, or seek to release, from such
restrictions any of the Reserved Shares, the Company agrees to reimburse
the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.
5. Payment of Expenses. Whether or not the transactions
-------------------
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (a) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed and all amendments thereto
(including all exhibits thereto), any Preliminary Prospectus, the Prospectus and
any amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), the underwriting documents
(including this Agreement, the Agreement Among Underwriters and the Selling
Agreement) and all other documents related to the public offering of the Shares
(including those supplied to the Underwriters in quantities as hereinabove
stated), (b) the issuance, transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (c) the
qualification of the Shares under state or foreign securities or Blue Sky laws,
including the costs of printing and mailing a preliminary and final "Blue Sky
Memorandum" and the fees of counsel in connection therewith and such counsel's
disbursements in relation thereto, (d) listing of the Shares for quotation on
the Nasdaq, (e) filing fees of the Commission and the NASD, (f) the cost of
printing certificates representing the Shares, (g) the cost and charges of any
transfer agent or registrar and (h) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Shares.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
------------
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to the Underwriters or to Xxxxxx &
Xxxxxxx ("Underwriters' Counsel") pursuant to this Section 6 of any material
---------------------
misstatement or
13
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) Prior to the Closing Date the Registration Statement shall
have become effective, and on the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
under the Securities Act or proceedings therefor initiated or, to the
Company's knowledge, threatened by the Commission. If required by the
Securities Act Regulations, the Prospectus shall have been filed or
transmitted for filing with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations within the prescribed time period, and prior to
Closing Date the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing or transmittal.
(b) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof
and on the Closing Date with the same force and effect as if made on and as
of the date hereof and the Closing Date, respectively. The Company shall
have performed or complied with all of the agreements herein contained and
required to be performed or complied with by it at or prior to the Closing
Date.
(c) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City
time, on the second business day following the date of this Agreement or at
such later date and time as to which the Underwriters may agree, and no
stop order suspending the qualification or exemption from qualification of
the Shares in any jurisdiction referred to in Section 4(d) shall have been
issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of the Shares; no action, suit or proceeding shall have been
commenced and be pending against or affecting or, to the best knowledge of
the Company, threatened against, the Company or any of its subsidiaries
before any court or arbitrator or any governmental body, agency or official
that (i) could reasonably be expected to result in a Material Adverse
Effect or (ii) has not been disclosed in the Prospectus.
(e) Since the dates as of which information is given in the
Prospectus, (i) there shall not have been any material adverse change, or
any development that is reasonably likely to result in a material adverse
change, in the capital stock or the long-term debt, or material increase in
the short-term debt, of the Company or any of its subsidiaries from that
set forth in the Prospectus, (ii) no dividend or distribution of any kind
shall have been declared, paid or made by the Company or any of its
subsidiaries on any class of its capital stock, (iii) neither the Company
nor any of its subsidiaries shall have incurred any liabilities or
obligations, direct or contingent, that are material, individually or in
the aggregate, to the Company and its subsidiaries, taken as a whole, and
that are required to be disclosed on a balance sheet or notes thereto in
accordance with generally accepted accounting principles and are not
disclosed on the latest balance sheet or notes thereto included in the
Prospectus. Since the date hereof and since the dates as of which
information is given in the Prospectus, there shall not have occurred any
Material Adverse Effect.
(f) The Underwriters shall have received (1) a certificate,
dated the Closing Date, signed on behalf of the Company by each of the
Company's Chief Executive Officer and Chief Financial Officer in form and
substance reasonably satisfactory to the Underwriters, confirming, as of
the Closing Date, the matters set forth in paragraphs (a) through (c) of
this Section 6 and that, as of the Closing Date, the obligations of the
Company to be performed
14
hereunder on or prior thereto have been duly performed in all material
respects and (2) a certificate dated the Closing Date, signed by the
Company's Secretary, in form and substance reasonably satisfactory to the
Underwriters.
(g) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Xxxxxxx, Procter & Xxxx
LLP, counsel for the Company, to the effect set forth in Exhibit A hereto.
(h) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters and counsel to the Underwriters, of Arent Fox Xxxxxxx Xxxxxxx
& Xxxx, PLLC, special communications counsel for the Company, to the effect
set forth in Exhibit B hereto.
(i) The Underwriters shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters, of Xxxxxx & Xxxxxxx, counsel to the Underwriters, covering
such matters as are customarily covered in such opinions.
(j) Xxxxxx & Xxxxxxx shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Section 6 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(k) At the time this Agreement is executed and at the Closing
Date the Underwriters shall have received from Xxxxxx Xxxxxxxx LLP,
independent public accountants for the Company and its subsidiaries, dated
as of the date of this Agreement and as of the Closing Date, customary
comfort letters addressed to the Underwriters in form and substance
satisfactory to the Underwriters and counsel to the Underwriters with
respect to the financial statements and certain financial information of
the Company and its subsidiaries contained in the Prospectus.
(l) At the time this Agreement is executed, the Underwriters
shall have received a "lock-up" agreement, substantially in the form
attached as Exhibit C hereto, from each of the officers, directors and
stockholders of the Company identified on Exhibit D hereto.
(m) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq.
(n) At the time this Agreement is executed and at the Closing
Time, the NASD shall not have withdrawn, or given notice of an intention to
withdraw, its approval of the fairness of the underwriting terms and
arrangements of the offering of the Shares by the Underwriters.
(o) Each of the [Material Agreements: Third Amended and Restated
Stockholders Agreement; First Amendment to the Third Amended and Restated
Stockholders Agreement, Second Amendment to the Third Amended and Restated
Stockholders Agreement; MTS Communications Acquisition; AEW Capital
Management; Boston Properties; Brookfield; Cornerstone; Shorenstein; Tower
Realty, Transwestern; Vornado] shall be in full force and effect, and no
party to any such agreement shall have given any notice of termination or
amendment of any material provision thereof, or of any intention to
terminate or amend any material provision
15
thereof, to any other party, and no event shall have occurred which would
prevent either party from substantially performing its obligations under
such agreements.
(r) All opinions, certificates, letters and other documents
required by this Section 6 to be delivered by the Company will be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriters. The Company will
furnish the Underwriters with such conformed copies of such opinions,
certificates, letters and other documents as Bear Xxxxxxx shall reasonably
request. Prior to the Closing Date, the Company shall have furnished to
the Underwriters such further information, certificates and documents as
the Underwriters may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to the Underwriters or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to the Underwriters and
to Underwriters' Counsel, all obligations of the Underwriters hereunder may be
canceled by the Underwriters at, or at any time prior to, the Closing Date and
the obligations of the Underwriters to purchase the Additional Shares may be
canceled by the Underwriters at, or at any time prior to, any Additional Closing
Date. Notice of such cancellation shall be given to the Company in writing, or
by telephone, telecopy, telex or telegraph, confirmed in writing.
7. Indemnification.
---------------
(a) The Company agrees 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(a) of the
Exchange Act against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys'
fees and any and all expenses whatsoever incurred in investigating,
preparing for or defending against any litigation, commenced or threatened,
or any claim whatsoever, and any and all amounts paid in settlement of any
claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon (I) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or
any related Preliminary Prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading or (II) any untrue statement or alleged untrue statement of a
material fact included in the supplement or prospectus wrapper material
distributed in connection with the reservation and sale of the Reserved
Shares to eligible employees and certain persons designated by the Company
or the omission or alleged omission therefrom of a material fact necessary
to make the statements therein, when considered in conjunction with the
Prospectus or Preliminary Prospectus, not misleading; provided, however,
that the Company will not be liable in any such case to the extent but only
to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company by or on
behalf of any Underwriter expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company and each other person, if any, who
controls the Company within the
16
meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys'
fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or
any claim whatsoever, and any and all amounts paid in settlement of any
claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or
any related preliminary prospectus, preliminary prospectus supplement or
prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company by or on
behalf of any Underwriter expressly for use therein; provided, however,
that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder. This indemnity will be in addition
to any liability which any Underwriter may otherwise have, including under
this Agreement.
(c) In connection with the offer and sale of the Reserved
Shares, the Company agrees, promptly upon a request in writing, to
indemnify and hold harmless the Underwriters from and against any and all
losses, liabilities, claims, damages and reasonable expenses incurred by
them as a result of (i) the failure of the Reserved Shares Purchasers to
pay for and accept delivery of the Reserved Shares which, by the end of the
day following the date of this Agreement, were subject to a properly
confirmed agreement to purchase such Reserved Shares, or (ii) the refusal
by any Reserved Shares Purchasers that are also officers, directors or
employees of the Company to properly confirm their respective agreements to
purchase Reserved Shares.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under such subsection, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party
shall not relieve it from any liability which it may have under this
Section 7 except to the extent that it has been prejudiced in any material
respect by such failure or from any liability which it may otherwise have).
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the
extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action,
or (iii) such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are different from
or additional to those available to one or all of the indemnifying parties
(in which case the
17
indemnifying party or parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written
consent; provided, however, that such consent was not unreasonably
withheld.
8. Contribution. In order to provide for contribution in
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circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) as incurred to which the Company and one
or more of the Underwriters may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Underwriters 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 7
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
Underwriters 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 on the one hand and the Underwriters on the other hand 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
and (y) the underwriting discounts received by the Underwriters, respectively,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 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 8, (i) in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, and (ii) 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. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue statement or alleged untrue statement or omission or
alleged omission. For purposes of this Section 8, 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 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
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rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of this Section 8. 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, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
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(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder,
and if the Firm Shares or Additional Shares with respect to which such
default relates do not (after giving effect to arrangements, if any, made
by the Underwriters pursuant to Subsection (b) below) exceed in the
aggregate 10% of the number of Firm Shares or Additional Shares, the Firm
Shares or Additional Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase shall be purchased by
the non-defaulting Underwriters in proportion to the respective proportions
which the numbers of Firm Shares set forth opposite their respective names
in Schedule I hereto bear to the aggregate number of Firm Shares set forth
opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, the Underwriters
may in their discretion arrange for themselves or for another party or
parties (including any non-defaulting Underwriter or Underwriters who so
agree) to purchase such Firm Shares or Additional Shares, as the case may
be, to which such default relates on the terms contained herein. In the
event that within five calendar days after such a default the Underwriters
do not arrange for the purchase of the Firm Shares or Additional Shares, as
the case may be, to which such default relates as provided in this Section
9, this Agreement, or in the case of a default with respect to the
Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares, shall thereupon terminate,
without liability on the part of the Company with respect thereto (except
in each case as provided in Section 5, 7(a) and 8 hereof) or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, the Underwriters or the Company shall have the right to postpone
the Closing Date or Additional Closing Date, as the case may be, for a
period not exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company
agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel,
may thereby be made necessary or advisable. The term "Underwriter" as used
in this Agreement shall include any party substituted under this Section 9
with like effect as if it had originally been a party to this Agreement
with respect to such Firm Shares or Additional Shares.
10. Survival of Representations and Agreements. All representations
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and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including
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the agreements contained in Section 5, the indemnity agreements contained in
Section 7 and the contribution agreements contained in Section 8, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof or by or on
behalf of the Company, any of its officers and directors, or any controlling
person of the Company, and shall survive delivery of and payment for the Shares
to and by the Underwriters. The representations contained in Section 1 and the
agreements contained in Sections 5, 7, 8, 11(d) and 12 hereof shall survive the
termination of this Agreement, including termination pursuant to Section 9 or 11
hereof.
11. Effective Date of Agreement; Termination.
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(a) This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Underwriters shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Underwriters to purchase any Additional Shares at any time prior to any
Additional Closing Date, as the case may be, if on or prior to such date,
(i) the Company shall have failed, refused or been unable to perform in any
material respect any agreement on its part to be performed hereunder, (ii)
any other condition to the obligations of the Underwriters hereunder as
provided in Section 6 is not fulfilled when and as required in any material
respect, (iii) in the judgment of the Underwriters any changes of
circumstance shall have occurred since the respective dates as of which
information is given in the Prospectus which could have a Material Adverse
Effect, other than as set forth in the Prospectus, or (iv) (A) any domestic
or international event or act or occurrence has materially adversely
effected, or in the opinion of the Underwriters will in the immediate
future materially adversely effect, the market for the Company's securities
or for securities in general; or (B) trading in securities generally on the
New York Stock Exchange ("NYSE") or quotations on the Nasdaq shall have
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been suspended or materially limited, or minimum or maximum prices for
trading shall have been established, or maximum ranges for prices for
securities shall have been required, on such exchange, or by such exchange
or other regulatory body or governmental authority having jurisdiction; or
(C) a banking moratorium shall have been declared by federal or state
authorities, or a moratorium in foreign exchange trading by major
international banks or persons shall have been declared; or (D) there is an
outbreak or escalation of armed hostilities involving the United States on
or after the date hereof, or if there has been a declaration by the United
States of a national emergency or war, the effect of which shall be, in the
Underwriters' judgment, to make it inadvisable or impracticable to proceed
with the offering, sale and delivery of the Firm Shares or the Additional
Shares, as the case may be, on the terms and in the manner contemplated by
the Prospectus; or (E) there shall have been such a material adverse change
in general economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States
shall be such as, in the Underwriters' judgment, makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Firm
Shares or the Additional Shares, as the case may be, on the terms and in
the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall
be by telephone, telecopy, telex, or telegraph, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9(b) or 11(b) hereof), or
if the sale of the Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth herein is
not satisfied or because of any refusal, inability or failure on the part
of the Company to perform any agreement herein or comply with any provision
hereof, the Company
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will, subject to demand by the Underwriters, reimburse the Underwriters for
all out-of-pocket expenses (including the reasonable fees and expenses of
their counsel), incurred by the Underwriters in connection herewith.
12. Underwriters' Information. The Company and the Underwriters
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severally acknowledge that the statements set forth in (i) the last paragraph of
the outside front cover of the Prospectus concerning the delivery of the shares
of Common Stock to the Underwriters and the offering of such shares by the
Underwriters; (ii) the fourth paragraph under the caption "Underwriting" in the
Prospectus concerning the proposed public offering price, discount and
concession; and (iii) the seventh paragraph under the caption "Underwriting" in
the Prospectus concerning transactions that stabilize, maintain, or otherwise
affect the price of the Common Stock, constitute the only information furnished
in writing by or on behalf of any Underwriter expressly for use in the
Registration Statement, as originally filed or in any amendment thereof, any
related Preliminary Prospectus or preliminary prospectus supplement or the
Prospectus or in any amendment thereof or supplement thereto, as the case may
be.
13. Notices. All communications hereunder, except as may be otherwise
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specifically provided herein, shall be in writing and, if sent to the
Underwriters shall be mailed, delivered, telegraphed or telecopied and confirmed
in writing to the Underwriters, c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department, telecopy
number: (000) 000-0000, and if sent to the Company, shall be mailed, delivered
or telexed, telegraphed or telecopied and confirmed in writing to Cypress
Communications, Inc., Fifteen Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx,
00000, Attention: Chief Financial Officer, telecopy number: (000) 000-0000,
with a copy to Xxxxxxx, Procter & Xxxx XXX, Xxxxxxxx Xxxxx, Xxxxxx, XX, 00000,
Attention: Xxxxxxx X. Xxxxx, P.C., telecopy number: (000) 000-0000; provided,
however, that any notice pursuant to Sections 7 or 8 shall be mailed, delivered,
telegraphed or telecopied and confirmed in writing.
14. Parties. This Agreement shall inure solely to the benefit of,
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and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
15. Construction. This Agreement shall be construed in accordance
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with the internal laws of the State of New York applicable to agreements made
and to be performed within New York, without giving any effect to any provisions
thereof relating to conflicts of law. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
16. Captions. The captions included in this Agreement are included
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solely for convenience of reference and are not to be considered a part of this
Agreement.
17. Counterparts. This Agreement may be executed in various
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counterparts which together shall constitute one and the same instrument.
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