EXHIBIT 1.1
NETSOURCE COMMUNICATIONS, INC.
Shares
------
Common Stock
($.001 par value)
Underwriting Agreement
New York, New York
, 1996
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DEUTSCHE XXXXXX XXXXXXXX INC.
As U.S. Representative of the several U.S. Underwriters,
c/o Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXX XXXXXXXX & CO., LIMITED
As International Representative of the several
International Underwriters,
c/o Xxxxxx Xxxxxxxx & Co., Limited
0 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx X0
Ladies and Gentlemen:
NetSource Communications, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the Underwriters (as defined below)
___________ shares of Common Stock, par value $.001 per share, of the Company
(the "Firm Securities"). It is understood that, subject to the conditions
contained herein, __________ Firm Securities (the "U.S. Firm Securities") will
be sold to the several U.S. Underwriters named in Schedule I hereto (the "U.S.
Underwriters") in connection with the offering and sale of such U.S. Firm
Securities in the United States and Canada to United States and Canadian Persons
(as defined below), and ____________ Firm Securities (the "International Firm
Securities") will be sold to the several International Underwriters named in
Schedule II hereto (the "International Underwriters") in connection with the
offering and sale of such International Firm Securities outside the United
States and Canada to persons other than United States and Canadian Persons.
Deutsche Xxxxxx Xxxxxxxx Inc. shall act as the representative (the "U.S.
Representative") of the several U.S. Underwriters, and Xxxxxx Xxxxxxxx & Co.,
Limited shall act as the representative (the "International Representative") of
the several International Underwriters. The U.S. Underwriters and the
International Underwriters are hereinafter referred to collectively as the
"Underwriters"; and the U.S. Representative and the International Representative
are hereinafter referred to collectively as the "Representatives."
The Company also proposes to grant to the U.S. Underwriters an
option to purchase up to _______ additional shares of Common Stock, par value
$.001 per share, of the Company (the "U.S. Option Securities") and to grant to
the International Underwriters an option to purchase up to _______ additional
shares of Common Stock, par value $.001 per share, of the Company (the
"International Option Securities," and together with the U.S. Option Securities,
the "Option Securities"). The Firm Securities and the Option Securities are
hereinafter collectively referred to as the "Securities."
It is further understood that the U.S. Underwriters and the
International Underwriters have entered into an Agreement Between U.S. and
International Underwriters of even date herewith (the "Agreement Between
Underwriters"), pursuant to which, among other things, the International
Underwriters may purchase from the U.S. Underwriters a portion of the U.S.
Securities to be sold pursuant hereto, and the U.S. Underwriters may purchase
from the International Underwriters a portion of the International Securities to
be sold pursuant hereto.
The terms which follow, when used in this Agreement, shall have the
following meanings:
"Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or
amendments thereto and any Rule 462(b) Registration Statement
became or become effective.
"Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties
hereto.
"Preliminary Prospectus" shall mean any preliminary
prospectus with respect to the offering of the Securities and
any preliminary prospectus with respect to the offering of the
Securities included in the Registration Statement at the
Effective Date that omits Rule 430A Information.
"Prospectus" shall mean such form of prospectus
relating to the Securities as first filed pursuant to
paragraph (1) or (4) of Rule 424(b) or, if no filing pursuant
to paragraph (1) or (4) of Rule 424(b) is made, such form of
prospectus included in the Registration Statement at the
Effective Date.
"Registration Statement" shall mean the registration
statement referred to in paragraph (i) of Section 1 below,
including exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event
any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing
Date (as hereinafter defined), shall also mean such
registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A", "Rule 462" and "Regulation
S-K" refer to such rules or regulations under the Securities
Act.
"Rule 430A Information" means information with
respect to the Securities and the offering thereof permitted
to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a
registration statement and any amendments thereto filed
pursuant to Rule 462(b) relating to the offerings covered by
the initial registration statement (file number 333-______).
"Securities Act" means the Securities Act of 1933,
as amended.
"United States or Canadian Person" shall mean any
national or resident of the United States or Canada, or any
corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada
or of any political subdivision thereof (other than a branch
located outside of the United States and Canada of any United
States or Canadian Person), and shall include any United
States or Canadian branch of a person who is otherwise not a
United States or Canadian Person.
"U.S." or "United States" shall mean the United
States of America (including the states thereof and the
District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
1. Representations and Warranties of the Company.
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The Company represents and warrants to, and agrees with, each Underwriter as
follows:
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(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (file number
333-___) on Form S-1, including a Preliminary Prospectus, for the
registration under the Securities Act of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related Preliminary Prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (A) prior to effectiveness of such
registration statement, a further amendment to such registration
statement, including the form of final prospectus, or (B) a final
prospectus in accordance with Rules 430A and 424(b)(1) or (4). In the
case of clause (B), the Company has included in such registration
statement, as amended at the Effective Date, all information (other
than Rule 430A Information) required by the Securities Act and the
rules thereunder to be included in the Prospectus with respect to the
Securities and the offering thereof. As filed, such amendment and form
of final prospectus, or such final prospectus, shall contain all Rule
430A Information, together with all other such required information,
with respect to the Securities and the offering thereof and, except to
the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein. Upon your
request, but not without our agreement, the Company will also file a
Rule 462(b) Registration Statement in accordance with Rule 462(b) under
the Securities Act.
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date and any subsequent
settlement date pursuant to Section 3 hereof, each Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Securities Act and the rules and
regulations thereunder; on the Effective Date, the Registration
Statement did not or will 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; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date and any
subsequent settlement date pursuant to Section 3 hereof, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration Statement
or the Prospectus (or any supplements thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of any Underwriter through the Representatives specifically
for inclusion in the Registration Statement or the Prospectus (or any
supplements thereto) (which the parties hereto hereby understand and
agree consists only of (A) the names of the Underwriters contained in
the Prospectus, (B) the information contained in the last paragraph of
the front cover page and in the second paragraph on page 2 of the
Prospectus, and (C) the information contained in the [fourth, fifth,
sixth, seventh, eighth, ninth, tenth and final paragraphs] under the
caption "Underwriting" in the Prospectus). No contract or other
document is required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required.
(iii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus relating to the
proposed offering of the Securities nor instituted or, to the Company's
knowledge, threatened proceedings for that purpose.
(iv) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
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Statement and the Prospectus, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or
place where the nature of its business requires such registration or
qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a material adverse effect on the
condition (financial or other), business, prospects, properties, net
worth or results of operations of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect").
(v) All of the Company's material subsidiaries (individually,
a "Subsidiary" and collectively, the "Subsidiaries") are listed on
Schedule III hereto and on Exhibit 21.1 to the Registration Statement.
Each Subsidiary is a corporation duly organized, validly existing and
in good standing in the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement
and the Prospectus, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires
such registration or qualification, except where the failure so to
register or qualify or to be in good standing would not, singly or in
the aggregate, have a Material Adverse Effect; all of the outstanding
shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and
free of any preemptive or similar rights, and except for ______ of [MTC
Japan], are owned by the Company, free and clear of any lien, adverse
claim, security interest or other encumbrance, except as described in
the Registration Statement.
(vi) The outstanding shares of Common Stock, par value $.001
per share, of the Company have been duly authorized and validly issued
and are fully paid and non-assessable; the Securities to be issued and
sold by the Company have been duly authorized and when issued and paid
for as contemplated herein will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Securities or the issue and sale thereof.
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. The authorized capital
stock, including the Securities, of the Company conforms to the
description thereof contained in the Prospectus.
(viii) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable for any capital stock of
the Company or any such Subsidiary, (B) warrants, rights or options to
subscribe for or purchase from the Company or any such Subsidiary any
such capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company or any such
Subsidiary to issue any shares of capital stock, any such convertible
or exchangeable securities or obligations, or any such warrants, rights
or options.
(ix) The execution and delivery of this Agreement has been
duly authorized by the Company, and this Agreement has been duly
executed and delivered by the Company and is the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except (i) as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors and by rules of
law governing specific performance, injunctive relief or other
equitable remedies (regardless of whether any such remedy is considered
in a proceeding at law or in equity), and (ii) as to the enforceability
of the indemnification provisions of Section 8. The execution of this
Agreement, the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not (A) conflict in any
respect with or result in a breach of any of the terms or provisions
of, or constitute a default under, any material indenture, mortgage,
deed of trust or other material agreement or material instrument to
which the Company or any Subsidiary is a party or by which the Company
or any of the Subsidiaries is a party or by which any of the
Subsidiaries or any of their respective properties are bound, or the
charter or by-laws of the
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Company or any Subsidiary or any order, decree, rule or regulation
applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body
having jurisdiction, (B) including without limitation, the
Communications Act of 1934, as amended, and the rules and regulations
of the Federal Communications Commission thereunder.
(x) Neither the Company nor any Subsidiary is in default under
any material agreement, lease, contract, indenture or other material
instrument or material obligation to which it is a party or by which it
or any of its respective properties are bound (nor, to the Company's
knowledge is any other party thereto in default thereunder), and no
event has occurred which, with notice or the lapse of time or both,
would constitute such a default thereunder, in any such case in which a
default or event, singly or in the aggregate, would have a Material
Adverse Effect.
(xi) No legal or governmental proceedings are pending to which
the Company or any Subsidiary is a party or to which the property of
the Company or any Subsidiary is subject that are required to be
described in the Registration Statement or the Prospectus and are not
described therein, and, to the Company's knowledge, no such proceedings
have been threatened against the Company or any Subsidiary or with
respect to any of their respective properties.
(xii) Each approval, consent, order, authorization,
designation, declaration or filing 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 (except such
additional steps as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") or as may be necessary to qualify
the Securities for public offering by the Underwriters under State
securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
(xiii) Except as disclosed in the Registration Statement and
the Prospectus, there are no business relationships or related party
transactions required to be disclosed therein by Item 404 of Regulation
S-K and each business relationship or related party transaction
described therein is a fair and accurate description of the
relationships and transactions so described.
(xiv) None of the Company, any Subsidiary or any officer or
director acting, or to the Company's knowledge, purporting to act on
behalf of the Company or any Subsidiary has during the past five years
(A) made any contributions to any candidate for political office, or
failed to disclose fully any such contributions, in violation of law;
(B) made any payment to any foreign, federal, state or local
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed
by applicable law; (C) made any payment outside the ordinary course of
business to any purchasing or selling agent or person charged with
similar duties of any entity to which the Company or any such
Subsidiary, as applicable, sells (or has in the past sold) or from
which the Company, any such Subsidiary or any officer or director
purporting to act on behalf of the Company or any such Subsidiary, as
applicable, buys (or has in the past bought) products for the purpose
of influencing such agent or person in violation of applicable law to
buy products from or sell products to the Company or any such
Subsidiary, as applicable; or (D) engaged in any transaction,
maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected
in the normally maintained books and records of the Company or any such
Subsidiary, as applicable.
(xv) KPMG Peat Marwick LLP, who have certified certain of the
financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants with respect
to the Company and each of the Subsidiaries as required by the
Securities Act and the rules thereunder.
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(xvi) The consolidated financial statements of the Company,
together with the related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the
results of the operations of the Company, at the indicated dates and
for the indicated periods. Such financial statements have been prepared
in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of results for such
periods have been made. The summary financial and statistical data
included in the Registration Statement under "Summary Consolidated
Financial Data" and "Selected Consolidated Financial Data" present
fairly the information shown therein and has been compiled on a basis
consistent with the financial statements presented therein. The other
financial and statistical information and data set forth in the
Registration Statement (and any amendment or supplement thereto) is, in
all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of
the Company and its Subsidiaries.
(xvii) The Company and each Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xviii) Except as described in the Prospectus, the Company,
its subsidiaries which have been or are consolidated with the Company
for the purpose of filing income tax returns (the "Consolidated Tax
Subsidiaries") and any group of which the Company or any of its
Consolidated Tax Subsidiaries is or was a member for income tax
purposes have filed all foreign, federal, state and local tax returns
that are required to be filed or have requested extensions thereof and
have paid all taxes required to be paid by any of them and any related
or similar assessment, fine or penalty levied against any of them, to
the extent that any of the foregoing is due and payable, except for any
such tax, assessment, fine or penalty that is currently being contested
in good faith and by appropriate proceedings; and adequate charges,
accruals and reserves have been made in the applicable financial
statements referred to in paragraph (xvi) above in respect of all
foreign, federal, state and local taxes for all periods as to which the
tax liability of the Company, its Consolidated Tax Subsidiaries and any
group of which the Company or any of its Consolidated Tax Subsidiaries
is or was a member for income tax purposes has not been finally
determined.
(xix) The Company has not distributed nor, prior to the later
to occur of (A) 30 days after the Closing Date or (B) completion of the
distribution of the Securities, will it distribute any offering
material in connection with the offering and sale of the Securities
other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or other materials, if any, permitted by the Securities Act
and reviewed by the Representatives.
(xx) The Company and each Subsidiary has good and marketable
title to all of the properties and assets reflected in the financial
statements (except as otherwise described in the Registration Statement
and the Prospectus) hereinabove described as being owned by them,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind
except those reflected in such financial statements (except as
otherwise described in the Registration Statement and the Prospectus)
or which are not material in amount. The Company and each Subsidiary
occupies its leased properties under leases are that valid and binding
with respect to the Company or such Subsidiaries, as the case may be,
and, to the Company's knowledge, with respect to each other party to
such leases. Neither the Company nor any Subsidiary has received any
notice of any violations of laws, ordinances, codes, orders or
regulations issued by any governmental authority having jurisdiction
over or affecting any such properties or assets.
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(xxi) The Company and each Subsidiary maintains insurance with
insurers of recognized financial responsibility of the types and in the
amounts generally deemed adequate for its respective business and
consistent with insurance coverage maintained by similar companies in
similar businesses, including, but not limited to, insurance covering
real and personal property owned or leased by the Company or such
Subsidiary against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is
in full force and effect; neither the Company nor any Subsidiary has
been refused any insurance coverage sought or applied for; and the
Company and has no reason to believe that either it or any Subsidiary
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 respective business at a
cost that would not have a Material Adverse Effect.
(xxii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company or any Subsidiary,
whether or not arising in the ordinary course of business; (B) there
have been no transactions entered into by either the Company or any
Subsidiary, other than those in the ordinary course of business, which
are material with respect to the Company and the subsidiaries, taken as
a whole; (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on the Common Stock or any
issuance of any securities of the Company; and (D) neither the Company
nor any Subsidiary has incurred any liabilities or obligations, direct
or contingent, which are material to the Company and the subsidiaries,
taken as a whole.
(xxiii) The Company and each Subsidiary is in compliance with
its respective charter and bylaws and is operating in material
compliance with all laws, regulations, administrative orders or rulings
or court decrees applicable to it or to any of its property (including
without limitation those relating to telecommunications regulations,
environmental, safety or similar matters, and federal and state laws
relating to the hiring, promotion or pay of employees). There are no
laws, regulations, administrative orders, rulings or court decrees
required, to be described in the Registration Statement or Prospectus
that are not described as required by the Act or the rules and
regulations promulgated thereunder.
(xxiv) There is no labor strike, dispute or work stoppage or
lockout pending, or, to the knowledge of the Company, threatened,
against or affecting the Company or any Subsidiary, and no such labor
strike, dispute, work stoppage or lockout has occurred with respect to
any employees of the Company or any Subsidiary during the two years
prior to the date of this Agreement. None of the employees of the
Company or any Subsidiary are represented by a union and, to the
Company's knowledge, no union organization campaign is in progress with
respect to the employees of the Company or any Subsidiary and no
question concerning representation exists with respect to such
employees. No charges with respect to or relating to the Company or any
Subsidiary are pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices, and no such charges have
been filed against the Company or any Subsidiary.
(xxv) The Company and each Subsidiary holds all material
approvals, orders, licenses, certificates and permits from federal,
state, foreign and local governmental authorities which are necessary
to the conduct of its respective business as now being conducted and as
proposed to be conducted as described in the Registration Statement and
the Prospectus.
(xxvi) The Company and each Subsidiary owns or possesses
adequate rights to use, without infringing the rights of others, all
patents, patent applications, trademarks, trademark registrations,
service marks, service xxxx registrations, trade names, copyrights,
licenses, inventions, trade secrets, and other similar rights,
technology and proprietary knowledge
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(collectively, "Intangibles") described in the Prospectus as being
owned or used by them or any of them or necessary for the conduct of
their respective businesses, and the Company is not aware of any claim
to the contrary or any challenge by any other person to the rights of
the Company or any Subsidiary with respect to the Intangibles. Except
in connection with transactions entered into in the ordinary course of
business, neither the Company nor any Subsidiary has granted any
licenses or other rights or has any obligations to grant licenses or
any other rights to any Intangibles. Neither the Company nor any
Subsidiary has made any material claim of violation or infringement by
others of rights to, or in connection with, the Intangibles, and the
Company knows of no basis for making any such claim.
(xxvii) Neither the Company nor any Subsidiary is or, after
giving effect to the sale of the Securities, will be (A) an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (B) 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.
(xxviii) Neither the Company nor any Subsidiary has incurred
any liability for finder's or broker's fees or agent's commissions in
connection with the execution and delivery of this Agreement, the offer
and sale of the Securities or the transactions contemplated hereby.
(xxix) The Securities have been approved for listing on the
Nasdaq Stock Market's National Market (the "Nasdaq National Market"),
subject only to official notice of issuance.
2. Purchase and Sale of the Securities.
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(a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby agrees
to sell to each Underwriter, and each Underwriter hereby agrees, severally and
not jointly, to purchase from the Company, at a purchase price of U.S. $____ per
share, the number of Firm Securities set forth opposite such Underwriter's name
in Schedule I or Schedule II hereto, as the case may be.
(b) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company hereby
grants options to the several Underwriters to purchase, severally and not
jointly, up to the amount of Option Securities set forth opposite each such
Underwriter's name on Schedule I or Schedule II hereto, as the case may be, at
the same purchase price per share as the Underwriters shall pay for the Firm
Securities. Said options may be exercised only to cover over-allotments in the
sale of the Firm Securities by the Underwriters. Said options may be exercised
in whole or in part at any time on or before 5:00 p.m., New York City time, on
the 30th day after the date of the Prospectus upon written, telecopied or
telegraphic notice by the Representatives to the Company setting forth the
aggregate number of shares of Option Securities as to which the several
Underwriters are exercising the option and the related settlement date. Such
options may be exercised more than once, but in no event may the total number of
Option Securities purchased under all exercises exceed _____________ shares of
Common Stock. Delivery of certificates for the shares of Option Securities by
the Company and payment therefor to the Company shall be made as provided in
Section 3 below. The number of shares of Option Securities to be purchased by
each Underwriter shall be the same percentage of the total number of shares of
the Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Firm Securities, subject to such adjustments as
the Representatives in their sole discretion shall make to eliminate any
fractional shares.
3. Delivery and Payment. Delivery of and payment for
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the Firm Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the second business
day prior to the Closing Date) shall be made at 10:00 a.m., New York City time,
on the fourth full business day following the date of this Agreement or at such
later date as the Representatives shall designate, which date and time may be
postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and
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payment for the Securities being herein called the "Closing Date"). Delivery of
the Securities shall be made to the U.S. Representative for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the U.S. Representative of the aggregate purchase price of the
Securities to or upon the order of the Company by wire transfer of immediately
available funds. Delivery of the Firm Securities and the Option Securities shall
be made at such location as the U.S. Representative shall reasonably designate
at least one business day in advance of the Closing Date and payment for the
Securities shall be made at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000
Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000 (or at such other location as may be agreed
upon by the Company and the Representatives). Certificates for the Securities
shall be registered in such names and in such denominations as the U.S.
Representative may request not less than three full business days in advance of
the Closing Date.
The Company agrees to have the Securities available for
inspection, checking and packaging by the U.S. Representative in New York, New
York not later than 1:00 p.m., New York City time, on the business day prior to
the Closing Date.
If the options provided for in Section 2(b) hereof are
exercised after the third business day prior to the Closing Date, the Company
will deliver or have delivered (at the expense of the Company) to the U.S.
Representative for the respective accounts of the several Underwriters, at 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the U.S.
Representative (which shall be within three business days after the exercise of
said option), certificates for the Option Securities in such names and
denominations as the U.S. Representative shall have requested against payment by
the several Underwriters through the U.S. Representative of the purchase price
thereof to the order of the Company by wire transfer of immediately available
funds. If settlement for the Option Securities occurs after the Closing Date,
the Company will deliver to the Representatives on the settlement dates for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters delivered on the Closing Date pursuant to Section 6
hereof, in each case speaking as of such settlement dates.
4. Offering by Underwriters. It is understood that the
------------------------
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus. Each U.S. Underwriter hereby makes to and with the
Company the representations and agreements of such U.S. Underwriters contained
in ______ of the Agreement Between Underwriters. Each International Underwriter
hereby makes to and with the Company the representations and agreements of such
International Underwriter contained in ______ of the Agreement Between
Underwriters.
5. Agreements of the Company. The Company agrees with
-------------------------
the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the offering
of the Securities (which will be deemed to have occurred on the date that is the
earlier of (i) 60 days after the Closing Date and (ii) the date on which the
Representatives shall have informed the Company in writing that the offering of
the Securities has terminated), the Company will not file any amendment of the
Registration Statement, supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished the Representatives a
copy for their review prior to filing and will not file any such proposed
amendment, supplement or Rule 462(b) Registration Statement to which the
Representatives reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to Rule 430A, or
filing of the Prospectus is otherwise required under Rule 424(b), the Company
will cause the Prospectus, properly completed, and any supplement thereto to be
filed with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. Upon your request but not without our
agreement, the Company will cause the Rule 462(b) Registration Statement,
completed and in compliance with the Securities Act and the applicable rules and
regulations thereunder, to be filed with the Commission pursuant to Rule 462(b)
and
9
will provide evidence satisfactory to the Representatives of such filing. The
Company will promptly advise the Representatives (A) when the Registration
Statement, if not effective at the Execution Time, and any amendment thereto,
shall have become effective, (B) when the Prospectus, or any respective
supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (C) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been filed or
become effective, (D) of any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for any additional
information, (E) 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 (F) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company will 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.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Securities Act, any event
occurs as a result of which the Prospectus as then 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
the Registration Statement or supplement the Prospectus to comply with the
Securities Act or the rules and regulations thereunder, the Company shall
promptly (i) prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 5, an amendment or supplement which
will correct such statement or omission or an amendment which will effect such
compliance and (ii) supply any supplemented Prospectus to you in such quantities
as you may reasonably request.
(c) As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act.
(d) The Company will furnish to the U.S. Representative
on behalf of the Representatives and to counsel for the Underwriters, without
charge, a complete manually signed copy of the Registration Statement (including
exhibits thereto) as originally filed and each amendment thereto, and to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) as originally filed and each amendment thereto; and so long as
delivery of a prospectus by any Underwriter or dealer may be required by the
Securities Act, as many copies of each Preliminary Prospectus and the Prospectus
and any supplement thereto as either of the Representatives may reasonably
request. The Company will pay the expenses of printing or other reproduction of
all documents relating to the offering of the Securities.
(e) The Company will arrange for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in effect so
long as required for the distribution of the Securities. The Company will pay
the fee of the NASD in connection with its review of the offering and the
reasonable fees of counsel for the Underwriters in connection therewith.
(f) The Company will not, for a period of 180 days
following the Execution Time, without the prior written consent of the U.S.
Representative, directly or indirectly, offer to sell, contract to sell, sell or
otherwise dispose of, or announce the offering of, any other shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
shares of Common Stock; provided, however, that the Company may issue (i) shares
of Common Stock (and options therefor) under the stock option plans in effect at
the Execution Time and described in the Prospectus under the caption "Management
Stock Option Plans and Arrangements", (ii) shares of Common Stock upon exercise
of warrants outstanding as of the Execution Time and (iii) shares of Common
Stock upon conversion of the Company's Series A Secured Subordinated Convertible
Promissory Notes. In addition, the Company
10
shall cause each of the persons listed as directors or executive officers of the
Company under the caption "Management" in the Prospectus and all other holders
of Common Stock and securities convertible into or exchangeable for shares of
Common Stock as of the date hereof to execute, at the Execution Time, a letter
in form acceptable to the U.S. Representative (each, a "Lock-Up Letter"),
wherein such person agrees that for a period of 180 days following the Execution
Time, without the prior written consent of the U.S. Representative, he or she
shall not, directly or indirectly, offer to sell, contract to sell, sell or
otherwise dispose of, or announce the offering of, any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for shares of
Common Stock (and upon Execution Time the Company shall instruct its Registrar
and Transfer Agent to not effect any such restricted transfer).
(g) The Company shall apply the net proceeds from the
sale of Securities as set forth in the Prospectus.
(h) The Company shall take all steps as shall be
necessary to ensure that neither the Company nor any Subsidiary shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the Commission thereunder.
(i) The Company confirms as of the date hereof that it
is in compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, An Act Relating to Disclosure of Doing Business with Cuba, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in the
Prospectus, if any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, if then required
by Florida law and as appropriate, in a form acceptable to the Department.
(j) During a period of three years from the Effective
Date, the Company shall furnish to the Representatives copies of all reports or
other communications (financial or other) furnished to shareholders, provided
that the foregoing shall not obligate the Company to furnish projections or any
other forward-looking information.
(k) Until such time as the Company's independent public
accountants provide it with a letter stating that there are no material
weaknesses with respect to the Company's internal control structure or its
operation, all of the Company's consolidated financial statements for all
annual, quarterly or other interim periods shall be audited by independent
public accountants, and no public release of any financial information related
to any such consolidated financial statements shall occur prior to the
completion of the audit of such consolidated financial statements.
6. Conditions to the Obligations of the Underwriters.
-------------------------------------------------
The obligations of the Underwriters to purchase the Firm Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any subsequent settlement date pursuant
to Section 3 hereof, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become effective not
later than (i) 6:00 p.m., New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 3:00
p.m., New York City time, on such date or (ii) 12:00 Noon, New York City time,
on the business day following the day on which the public offering price was
determined, if such determination occurred after 3:00 p.m., New York City time,
on such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to the applicable paragraph of Rule 424(b), the Prospectus,
and any such supplement, will be filed in the manner and within the time
11
period required by Rule 424(b); and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the
Representatives the opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, counsel for the Company, dated the Closing Date, to the effect
that:
(i) each of the Company and each Subsidiary has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such
qualification, except where the failure to so qualify or be in good
standing, singly or in the aggregate would not have a material Adverse
Effect;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable and all outstanding shares of capital
stock of the Subsidiaries (other than ___ of [MTC Japan]) are owned by
the Company free and clear of any perfected security interest and, to
the knowledge of such counsel, after due inquiry, any other security
interests, claims, liens or encumbrances, except as described in the
Registration Statement;
(iii) the Company's authorized equity capitalization is as
set forth in the Prospectus; the capital stock of the Company conforms
to the description thereof contained in the Prospectus; the outstanding
shares of Common Stock, par value $.001 per share, of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold hereunder have been duly and
validly authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities are duly authorized for quotation,
subject to official notice of issuance, on the Nasdaq National Market;
the certificates for the Securities are in valid and sufficient form;
and the holders of outstanding shares of capital stock of the Company
are not entitled to preemptive or other rights to subscribe for the
Securities;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit,
which is not described or filed as required; and the statements in the
Prospectus under the captions "Prospectus Summary--Reorganization,"
"Risk Factors--Government Regulation," "Risk Factors--Impact of Shares
Eligible for Future Sale," "Business-Regulation," "Business--Legal
Proceedings," "Business--Reorganization," "Management--Stock Option
Plans and Arrangements," "Certain Transactions," "Description of
Capital Stock, "Shares Eligible for Future Sale," and "Certain U.S. Tax
Considerations for Non-U.S. Holders" fairly summarize, in all material
respects, the matters therein described, in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein;
(v) the Registration Statement has become effective
under the Securities Act; any required filing of the Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for
that purpose have been instituted or threatened; the Registration
Statement and the Prospectus (other than the financial statements and
other financial and
12
statistical information contained therein as to which such counsel need
render no opinion) comply as to form in all material respects with the
applicable requirements of the Securities Act and the rules and
regulations thereunder; and such counsel has no reason to believe that
at the Effective Date the Registration Statement (other than the
financial statements and other financial and statistical information
contained therein as to which such counsel need render no opinion)
includes any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date or the Closing Date (other than the financial statements and other
financial and statistical information contained therein as to which
such counsel need render no opinion), includes any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(vi) this Agreement has been duly authorized, executed
and delivered by the Company;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as have been
obtained under the Securities Act and such as may be required under the
blue sky laws of any jurisdiction or the NASD Corporate Financing Rule
in connection with the purchase and distribution of the Securities by
the Underwriters and such other approvals (if any, and specified in
such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor
the consummation of any other of the transactions contemplated herein,
nor the fulfillment of the terms hereof will conflict with result in a
breach or violation of, or constitute a default under, any law or the
charter or by-laws of the Company or the terms of any indenture or
other agreement or instrument known to such counsel and to which the
Company or any Subsidiary is a party or bound or any judgment, order or
decree known to such counsel to be applicable to the Company or any
Subsidiary of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or
any Subsidiary; and
(ix) no holders of securities of the Company have rights to
the registration of such securities under the Registration Statement,
which rights have not been satisfied or waived with respect to the
offering made by the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of California or the federal laws of the United States,
to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at the Closing Date.
With respect to paragraph (b)(v) of this Section 6, counsel
may state that its belief is based upon its participation in the
preparation of the Registration Statement and Prospectus and any
amendments and supplements thereto and review and discussion of the
contents thereof, but is without independent check or verification.
(c) The Representatives shall have received from Xxxxxx
& Xxxxxxx, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities, the
Registration Statement, the Prospectus (together with any supplements thereto)
and other related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
13
(d) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chief Executive
Officer, President and Chief Financial Officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectus, any supplement to the Prospectus,
and this Agreement, and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied hereunder at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any supplements
thereto), there has been no material adverse change, or development
involving a prospective change, in the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplements thereto).
(e) At the Execution Time and at the Closing Date, KPMG
Peat Marwick LLP shall have furnished to the Representatives a signed letter,
dated respectively as of the Execution Time and as of the Closing Date, each in
the respective form contemplated for "comfort letters addressed to underwriters"
by Statement of Auditing Standards No. 72 ("SAS 72"), and in form and substance
previously provided to for review and agreed to as satisfactory to the
Representatives and to counsel for the Underwriters. Each such letter shall
specify therein, inter alia, the amounts described as being set forth therein in
paragraph (f)(i) of this Section 6 as of the dates contemplated by SAS 72.
(f) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any increases in the Company's
(including its consolidated subsidiaries') long-term debt (including current
maturities), or changes in the Company's (including its consolidated
subsidiaries') capital stock or stockholders' equity, or decreases in the
Company's (including its consolidated subsidiaries') working capital, total net
sales, net income (or increases in net loss) or per share amounts, in each case
from the amounts specified in the letter delivered at the Execution Time and
referred to in paragraph (e) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and its subsidiaries, taken as a whole, the effect of
which, in any case referred to in clauses (i) or (ii) above, is, in the judgment
of the Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectus (exclusive of any supplement thereto).
(g) On or prior to the Execution Time, the NASD shall
have approved the Underwriters' participation in the distribution of the
Securities and the Nasdaq National Market shall have approved the Securities for
listing thereon.
(h) At the Execution Time, the Company shall have
furnished to the Representatives each of the signed Lock-Up Letters.
(i) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives or counsel for the Underwriters may reasonably
request.
14
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of
---------------------------------------
the Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof 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 other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand by the Representatives for all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel for the
Underwriters) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities prior to the earliest of (i) the
date notice of cancellation is given pursuant to Section 6, (ii) the date of
termination pursuant to Section 10, or (iii) the date of such refusal, inability
or failure by the Company.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(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 for the registration of the Securities as originally
filed or in any amendment thereof, or in any Preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, (ii) 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 (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Securities or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
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 through the Representatives specifically for inclusion therein
(which the parties hereto understand and agree consists only of the information
specifically identified as such in paragraph (ii) of Section 1 of this
Agreement). This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such
15
Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity (which the parties hereto understand and agree consists only of the
information specifically identified as such in paragraph (ii) of Section 1 of
this Agreement). This indemnity agreement will be in addition to any liability
which any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties (which consent will not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding. An indemnified party will
not, without the prior written consent of the indemnifying party, which consent
will not be unreasonably withheld, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and by the
Underwriters, on the other hand, from the offering of the Securities; provided,
however, that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Underwriters in connection with the statements
or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed to be
equal to the total net proceeds from the offering of the Securities (before
deducting expenses) received by it, and benefits received by the Underwriters
shall be
16
deemed to be equal to the total underwriting discounts and commissions from the
offering of the Securities, in each case as set forth on the cover page of the
Prospectus. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Underwriters. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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 8, each person who controls any
Underwriter within the meaning of either the Securities Act or the Exchange Act
and each director, officer, employee and agent of any Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Securities Act or 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 the applicable terms and provisions of this
paragraph (d).
9. Default by any Underwriter. If any one or more Underwriters
--------------------------
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Firm Securities
set forth opposite their names in Schedule I or Schedule II, as the case may be,
bears to the aggregate amount of Firm Securities set forth opposite the names of
all the remaining Underwriters) the Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I and Schedule II hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
non-defaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any non-defaulting Underwriter or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company and any non-defaulting Underwriter for damages occasioned by its default
hereunder.
10. Effective Date of Agreement and Termination. This Agreement
-------------------------------------------
shall become effective at such time (after notification of the effectiveness of
the Registration Statement has been released by the Commission) as the
Representatives and the Company shall agree on the initial public offering price
and underwriting discount per share, unless prior to such time such of the
Underwriters as have agreed to purchase in the aggregate 50% or more of the
Securities shall have given notice to the Company that such Underwriters elect
that this Agreement shall not become effective; provided, however, that the
provisions of this Section 10 and of Section 8 hereof shall at all times be
effective. If this Agreement shall not have become effective prior to 5:00 p.m.,
New York City time, on the seventh full business day after the Effective Date,
this Agreement shall not thereafter become effective unless such period is
extended by agreement among the Underwriters and the Company.
This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such time (i) trading in
the Company's Common Stock shall have been suspended from quotation by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on either of such Exchanges or Market System, (ii) a banking
moratorium shall have been declared either by federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial
17
markets is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto).
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officer, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provision of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing
-------
and effective only on receipt, and, if sent to the U.S. Representative or the
International Representative, will be mailed, delivered or telegraphed and
confirmed to them, care of Deutsche Xxxxxx Xxxxxxxx Inc., at 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (with a copy to Xxxxxx & Xxxxxxx, 000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, attention:
Xxxxxxxxxxx X. Xxxxxxx, Esq.); or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 0000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, attention: Xxxxxx X. Xxxxxxxxx, Chief Executive
Officer (with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx 00000, attention: Xxxxx X. Xxxxx, Esq.).
13. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
--------------
construed in accordance with the internal laws of the State of New York.
18
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
NetSource Communications, Inc.
By:
------------------------------------
Chief Executive Officer
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
Deutsche Xxxxxx Xxxxxxxx Inc.
As U.S. Representative of the
several U.S. Underwriters,
By: Deutsche Xxxxxx Xxxxxxxx Inc.
By:
---------------------------
Director
For themselves and the other several
U.S. Underwriters named in Schedule I
to the foregoing Agreement.
Xxxxxx Xxxxxxxx & Co., Limited
As International Representative of the
several International Underwriters,
By: Xxxxxx Xxxxxxxx & Co., Limited
By:
--------------------------
Director
For themselves and the other several
International Underwriters named in
Schedule II to the foregoing Agreement.
19
SCHEDULE I
U.S. Underwriters
Maximum Number
Number of U.S. of U.S. Option
U.S. Underwriters Firm Securities Securities
to be Purchased to be Purchased
Deutsche Xxxxxx Xxxxxxxx Inc. ...................
------------------------
Total....................... _____________ _______________
========================
20
SCHEDULE II
International Underwriters
Number of Maximum Number
International Firm of International
Securities Option Securities
International Underwriters to be Purchased to be Purchased
Xxxxxx Xxxxxxxx & Co., Limited .................................
------------------------
Total......................... _____________ _______________
========================
21
SCHEDULE III
List of Material Subsidiaries
of
NetSource Communications, Inc.
MTC Telemanagement Corporation, a California corporation
MTC International, Inc., a Nevada corporation
MTC Japan, Ltd.
[others]
22
