1,900,000 Shares
STARTEC GLOBAL COMMUNICATIONS CORPORATION
Common Stock
(Par Value $0.01 Per Share)
UNDERWRITING AGREEMENT
September __, 1997
XXXXXX, XXXXX XXXXX, INCORPORATED
BOENNING & SCATTERGOOD, INC.
As Representatives of the
Several Underwriters Identified
In Schedule I Hereto,
c/o Ferris, Xxxxx Xxxxx, Incorporated
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Ladies and Gentlemen:
SECTION 1. INTRODUCTION. STARTEC Global Communications Corporation, a
Maryland corporation (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters"), for which Xxxxxx, Xxxxx Xxxxx, Inc. and
Boenning & Scattergood, Inc. are acting as Representatives (the
"Representatives"), an aggregate of 1,900,000 shares and, at the election of the
Underwriters, up to 285,000 additional shares of Common Stock, par value $0.01
per share ("Stock"), of the Company. The 1,900,000 shares to be sold by the
Company are herein called the "Firm Shares" and the 285,000 additional shares to
be sold by the Company are herein called the "Optional Shares." The Firm Shares
and the Optional Shares that the Underwriters elect to purchase pursuant to
hereof are herein collectively called the "Shares."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333- ) under
the Securities Act of 1933, as amended (the "Act"), with respect to the Shares,
including a form of prospectus subject to completion, has been prepared by the
Company in conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (the "Rules and Regulations"). Such registration statement has been
filed with the Commission under the
Act and one or more amendments to such registration statement may also have been
so filed. After the execution of this Agreement, the Company shall file with the
Commission a Prospectus (as hereinafter defined) which shall have been provided
to, and approved by, the Representatives prior to the filing thereof. As used in
this Agreement, the term "Registration Statement" means such registration
statement, as amended and revised at the time when such registration statement
becomes effective, including all financial schedules and exhibits thereto and
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined). The term "Preliminary
Prospectus" means each prospectus subject to completion contained in such
registration statement or any amendment thereto before the Registration
Statement was or is declared effective, or such prospectus subject to completion
filed pursuant to Rule 424(a) under the Act which omits the information
permitted under Rule 430A. The term "Prospectus" means a prospectus, including
any amendments or supplements thereto, relating to the Registration Statement
that includes all the information contained in the most recently filed
Preliminary Prospectus in addition to such information which may have been
omitted in any Preliminary Prospectus pursuant to Rule 430A under the Act. To
the extent the Company relies on Rule 462(b) under the Act to increase the
maximum aggregate offering price, the Company shall have made in a timely manner
any filing required under Rule 462(b) and such filing shall be in compliance
with such Rule. Copies of the Registration Statement, any amendment thereto and
any Preliminary Prospectus filed with the Commission have been delivered by the
Company to the Representatives on behalf of the Underwriters. The Registration
Statement any and post-effective amendments thereto have been declared effective
by the Commission.
(b) The Commission has not issued any order suspending the
effectiveness of the Registration Statement, any post-effective amendment
thereto or Rule 462(b) Registration Statement, if any, or preventing or
suspending the use of any Preliminary Prospectus, the Prospectus, the
Registration Statement or any amendment of supplement thereto or suspending the
registration of the Shares, nor has the Commission instituted or threatened to
institute any proceedings with respect to such an order. Each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the Rules and Regulations thereunder, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through the
Representatives expressly for use therein.
(c) The Registration Statement conforms, and the Prospectus (or
the most recent Preliminary Prospectus) and any further amendments or
supplements to the Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the Rules and Regulations
thereunder. The Registration
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Statement and any post-effective amendment thereto, as of the applicable
effective date or dates, and each Preliminary Prospectus and Prospectus, as of
the date each such Preliminary Prospectus or Prospectus is filed and at all
times subsequent thereto up to and including the Closing Date (as defined in
Section 5 hereof) and the Option Closing Date (as defined in Section 5 hereof),
and during such longer period during which the Prospectus may be required to be
delivered in connection with sales to any dealer and during such longer period
until any post-effective amendment thereto shall become effective, do not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein, and no event
will have occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement.
(d) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Maryland, its jurisdiction
of incorporation, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, except for those jurisdictions in which the
failure to so qualify has not had and will not have a Material Adverse Effect
(as hereinafter defined), and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is engaged. Each
subsidiary of the Company in existence as of the date hereof (each a
"Subsidiary" and together the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and each has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business so as to require such qualification (except for those
jurisdictions in which the failure to so qualify has not had and will not have a
Material Adverse Effect (as hereinafter defined). "Material Adverse Effect"
means, when used in connection with the Company, any development, change or
effect that is materially adverse to the business, properties, assets, net
worth, condition (financial or other), results of operations or, prospects of
the Company and its Subsidiaries, taken as a whole.
(e) The Company has the duly authorized capitalization as set
forth in the Prospectus (or most recent Preliminary Prospectus) and will have
the adjusted capitalization set forth therein at the Closing Date, based on the
assumptions set forth therein. All of the shares of capital stock of the Company
issued and outstanding have been duly and validly authorized and issued, are
fully paid and non-assessable, without personal liability attaching to the
ownership thereof, and none of such shares have been issued or are owned or held
in violation of any preemptive or other rights of
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securityholders or other persons to acquire securities of the Company. As of the
Closing Date, the securities of the Company including, without limitation, the
Stock, the Shares, the warrants (the "Underwriters' Warrants") to be issued to
the Representatives pursuant to the Underwriters' Warrant Agreement of even date
herewith (the "Underwriters' Warrant Agreement") conform to all statements
relating thereto contained in the Registration Statement or the Prospectus. With
respect to each Subsidiary of the Company, all of the issued and outstanding
shares of capital stock are fully paid and non-assessable, without personal
liability attaching to the ownership thereof, and none of such shares have been
issued or are owned or held in violation of any preemptive or other rights of
securityholders or other persons to acquire securities of the Company and
(except as otherwise described in the Prospectus (or the most recent Preliminary
Prospectus)) are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims. Other than as disclosed in the Prospectus (or
the most recent Preliminary Prospectus), there are no holders of the securities
of the Company having rights to registration thereof or pre-emptive rights to
purchase capital stock of the Company. Except as created hereby or described in
the Prospectus or most recently filed Preliminary Prospectus, there are no
commitments, plans or arrangements to issue, and no outstanding options,
warrants or other rights, calling for issuance of, any shares of capital stock
of the Company or any of its Subsidiaries or any security or other instrument
which, by its terms, is convertible into, exercisable for, or exchangeable for
capital stock of the Company or any of its Subsidiaries. Except as described in
the Prospectus or the most recently filed Preliminary Prospectus, there is no
outstanding security or other instrument which, by its terms, is convertible
into, exercisable for, or exchangeable for capital stock of the Company or any
of its Subsidiaries.
(f) The Shares and the Underwriters' Warrants have been duly and
validly authorized. When the Shares are issued and delivered against payment
therefor as provided herein, or when the Underwriters' Warrants are issued and
delivered in accordance with the terms hereof, thereof and of the Underwriters'
Warrant Agreement, such Shares and such Underwriters' Warrants, will be duly and
validly issued and fully paid and non-assessable, will not have been issued in
violation of any preemptive or other rights of securityholders or other persons
to acquire securities of the Company and will conform to all statements relating
thereto in the Registration Statement and the Prospectus. Good and marketable
title to the Shares and the Underwriters' Warrants will pass to the Underwriters
on the Closing Date free and clear of any lien, encumbrance, security interest,
claim or other restriction whatsoever. The shares to be issued upon exercise of
the Underwriters' Warrants (the "Warrant Shares") have been duly authorized and
validly reserved for issuance and, when issued, paid for and delivered in
accordance with the terms of the Underwriters' Warrants and the Underwriters'
Warrant Agreement will be duly and validly issued and fully paid and
non-assessable, will not have been issued in violation of any preemptive or
other rights of securityholders or other persons to acquire securities of the
Company and will conform to all statements relating thereto in the Registration
Statement and the Prospectus (or most recent Preliminary Prospectus).
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Good and marketable title, free and clear of any lien, encumbrance, security
interest, claim or other restriction whatsoever, will pass to the holders of
Warrant Shares issued upon exercise of Underwriters' Warrants in accordance with
the terms thereof and of the Underwriters' Warrant Agreement. The Company has
received, subject to notice of issuance, approval to have the Shares listed on
The Nasdaq National Market ("NNM") and the Company knows of no reason or set of
facts which is likely to adversely affect such approval.
(g) The financial statements and the related notes and schedules
thereto included in the Registration Statement and the Prospectus or the most
recent Preliminary Prospectus fairly present the financial condition, results of
operations, stockholders' equity and cash flows, and the other information
purported to be shown therein, of the Company and its Subsidiaries, on a
consolidated basis at the respective dates and for the respective periods
specified therein. Such financial statements and the related notes and schedules
thereto have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise noted therein and have been properly derived from the books and
records of the Company and such financial statements as are audited have been
examined by Xxxxxx Xxxxxxxx LLP, who are independent public accountants within
the meaning of the Act and the Rules and Regulations, as indicated in their
reports filed therewith. The selected financial information and statistical data
set forth under the captions "Prospectus SummaryuSummary Financial Data,"
"Capitalization," "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business" in the
Prospectus (or the most recent Preliminary Prospectus) fairly present, on the
basis stated in the Prospectus or such Preliminary Prospectus, the information
included therein and have been properly derived from the financial statements
and other operating records of the Company and its Subsidiaries. No other
financial statements or financial information, except that which is contained in
the Registration Statement, the Prospectus or the most recent Preliminary
Prospectus is required by Form S-1, the Rules and Regulations, or otherwise, to
be included in the Registration Statement, the Prospectus or such Preliminary
Prospectus.
(h) Since the respective dates as of which information is given in
the Prospectus (or the most recent Preliminary Prospectus), and except as
otherwise may be stated therein (i) neither the Company, nor any of its
Subsidiaries has entered into any transaction or incurred any liability or
obligation, contingent or otherwise, which is material to the Company and its
Subsidiaries, taken as a whole, (ii) there has not been any change in the
outstanding capital stock of the Company or any of its Subsidiaries, or any
issuance of options, warrants or rights to purchase the capital stock of the
Company or any of its Subsidiaries, or any material increase in the long-term
debt of the Company or any of its Subsidiaries, or any material adverse change
in the business, condition (financial or otherwise) or results of operations of
the Company or any of its Subsidiaries, (iii) no loss or damage (whether or not
insured) to the properties of the Company or any of its Subsidiaries
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has been sustained which has resulted in a Material Adverse Effect, (iv) neither
the Company nor any of its subsidiaries has paid or declared any dividend or
other distribution with respect to its stock, and (v) there has not been any
change, contingent or otherwise, in the direct or indirect control of the
Company or any of its Subsidiaries nor, to the best knowledge of the Company, do
there exist any circumstances which would likely result in such a change.
(i) The Company and each of its Subsidiaries has filed all
foreign, federal, state and local income, franchise and other material tax
returns required to be filed (or have obtained extensions with respect thereto)
and has paid all taxes shown as due thereunder and all assessments received by
it to the extent that payment has become due, and the Company has no knowledge
of any tax deficiency which might be assessed against the Company or any of its
Subsidiaries which, if so assessed, would be reasonably expected to have a
Material Adverse Effect.
(j) The Company and each of its Subsidiaries maintains insurance
of the types and in amounts which the Company reasonably believes to be adequate
for its business in such amounts and with such deductibles as are customary for
companies in the same or similar business, all of which insurance is in full
force and effect.
(k) Other than as set forth in the Prospectus (or most recent
Preliminary Prospectus), there are no legal or governmental proceedings pending
to which the Company or any of its Subsidiaries is a party or to which any
property of the Company or any of its Subsidiaries is the subject which (i)
challenges the validity of the capital stock of the Company or this Agreement or
the Underwriters' Warrant Agreement, or of any action taken or to be taken by
the Company pursuant to or in connection herewith or therewith, (ii) is required
to be disclosed in the Registration Statement or Prospectus (or most recent
Preliminary Prospectus), or (iii) if determined adversely to the Company or any
of its Subsidiaries, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, and to the Company's best
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others. Any such proceedings that are set forth in
the Prospectus (or most recent Preliminary Prospectus) are fairly and accurately
summarized therein.
(l) The Company has full legal right, power and authority to enter
into this Agreement and the Underwriters' Warrant Agreement and to consummate
the transactions provided for and perform its obligations as provided herein and
therein. All necessary corporate proceedings of the Company have been duly taken
to authorize the execution, delivery and performance by the Company of this
Agreement and the Underwriters' Warrant Agreement. This Agreement and the
Underwriters' Warrant Agreement have been duly authorized, executed and
delivered by the Company and, assuming each is a binding agreement of yours,
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms
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(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting the enforcement of creditors' rights and the
application of equitable principles relating to the availability of remedies and
except as rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws).
(m) The Company's execution and performance of this Agreement and
the Underwriters' Warrant Agreement, including, without limitation, application
of the net proceeds of the offering, if and when received, as described in the
Prospectus (or most recent Preliminary Prospectus) under the caption "Use of
Proceeds," will not violate any provision of the Articles of Incorporation or
Bylaws or any similar constitutive documents of the Company or any of its
Subsidiaries, or any law, rule or regulation applicable to the Company or any of
its Subsidiaries of any government, court, regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of
its Subsidiaries or any of their respective businesses or properties, and will
not result in the breach, or be in contravention, of any loan agreement, lease,
franchise, license, note, bond, other evidence of indebtedness, indenture,
mortgage, deed of trust, voting trust agreement, stockholders' agreement, note
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which their respective property is or may be
subject, or any statute, judgment, decree, order, rule or regulation applicable
to the Company or any of its Subsidiaries of any government, arbitrator, court,
regulatory body or administrative agency or other governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their respective businesses, activities or properties,
except those, if any, that are described in the Prospectus (or most recent
Preliminary Prospectus) or those which would not, individually or in the
aggregate, have a Material Adverse Effect.
(n) All executed agreements or copies of executed agreements filed
as exhibits to the Registration Statement to which the Company or any of its
Subsidiaries is a party or by which any of them is or may be bound or to which
any of their respective assets, properties or businesses is or may be subject
have been duly and validly authorized, executed and delivered by the Company or
the relevant Subsidiary or Subsidiaries and, assuming that each is a binding
obligation of the other party or parties thereto, constitutes the legal, valid
and binding agreement of the Company or such Subsidiary or Subsidiaries,
enforceable against it or them in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of creditors'
rights generally, and general equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws).
The descriptions in the Prospectus and Preliminary Prospectus of contracts and
other documents are accurate and fairly present the information required to be
disclosed with respect thereto by the Act and the Rules and
7
Regulations, and there are no contracts or other documents which are required by
the Act or the Rules and Regulations to be described in the Prospectus or filed
as exhibits to the Registration Statement which are not described or filed as
required, and the exhibits which have been filed are complete and correct copies
of the documents of which they purport to be copies.
(o) The Company and each of its Subsidiaries has good and
marketable title in fee simple to all real property and good title to all other
property and assets owned thereby as set forth in the Prospectus (or most recent
Preliminary Prospectus), in each case free and clear of all liens, security
interests, pledges, charges, mortgages and other defects and encumbrances,
except such as are described in the Prospectus (or most recent Preliminary
Prospectus) or such as do not materially affect the value of such property, and
do not interfere with the use made and proposed to be made of such property by
the Company or its Subsidiaries; and any real properties and buildings held
under lease by the Company or any of its Subsidiaries are held under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries. No real property owned, leased,
licensed or used by the Company or any of its Subsidiaries is situated in an
area which is, or to the best knowledge of the Company, will be subject to
zoning, use, or building code restrictions which would prohibit (and no state of
facts relating to the actions or inaction of another person or entity or his or
its ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent) the continued effective ownership,
leasing, licensing, or use of such real property in the business of the Company
or its Subsidiaries as presently conducted or as the Prospectus (or most recent
Preliminary Prospectus) indicates any of them contemplate conducting such
business in the future, except as disclosed in the Prospectus (or most recent
Preliminary Prospectus).
(p) No consent, authorization, approval, order, license,
certificate, declaration or permit of or from, or filing with, any governmental
or regulatory authority, agent, board or other body is required for the issue
and sale of the Shares by the Company and the execution, delivery or performance
by the Company of this Agreement or the Underwriters' Warrant Agreement, or the
issuance of the Warrant Shares in accordance with the terms of the Underwriters'
Warrants and the Underwriters' Warrant Agreement, except for the registration
under the Act of the Shares and the registration of the Stock under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), each of which
has been made or obtained, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters, and such approval as may be required from the NNM to have the
Shares listed thereon. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement or understanding to which the Company or
any of its Subsidiaries are a party, or to which any
8
of their properties or assets are subject, is required for the execution,
delivery or performance of this Agreement or the Underwriters' Warrant
Agreement.
(q) Neither the Company nor any of its Subsidiaries is in
violation of its Charter or Bylaws or similar constitutive documents; neither
the Company nor any of its Subsidiaries is (or, as a result of the passage of
time or based on its projected plans of operations, will be) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or any of
its properties may be bound, which default may reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, or which could in
any way, individually or in the aggregate, impair or delay the consummation of
the transactions contemplated by this Agreement or the offering of the Shares in
the manner contemplated herein and in the Registration Statement and the
Prospectus (or most recent Preliminary Prospectus) and each such indenture,
mortgage, deed of trust, loan agreement lease or other agreement or instrument
is in full force and effect and is a legal, valid and binding obligation of the
Company or is Subsidiary or Subsidiaries, as the case may be and, to the best
knowledge of the Company, of each other party thereto.
(r) The statements set forth in the Prospectus (or most recent
Preliminary Prospectus) under the caption "Description of Capital Stock,"
insofar as they purport to constitute a summary of the terms of the Company's
securities, and under the captions "Shares Eligible For Future Sale,"
"Business," "Management" and "Underwriting" (except, with respect to the
statements under the caption "Underwriting," for information furnished in
writing to the Company by the Underwriters through the Representatives expressly
for use therein), insofar as they purport to describe the provisions of the laws
and the provisions of documents referred to therein, are accurate and fairly
summarize such provisions.
(s) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an "affiliated
person" of or a "promoter" or "principal underwriter" of or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940 (the "Investment Company Act").
(t) The Company and each of its Subsidiaries owns or is licensed
or otherwise has sufficient right to use the proprietary knowledge, inventions,
patents, trademarks, service marks, trade names, logo marks and copyrights
("Intellectual Property") currently used in the conduct of their respective
businesses, except for those patents, trademarks, service marks, trade names,
logo marks or copyrights with respect to which the failure to own or license
same would not have a Material Adverse Effect. To the best knowledge of the
Company, none of the activities engaged in by the Company or any of its
Subsidiaries infringes upon or otherwise conflicts with Intellectual Property
9
rights of others, except for any such conflicts that would not have a Material
Adverse Effect, and no claims have been asserted against the Company or any of
its Subsidiaries by any person with respect to the use of any such rights or
challenging or questioning the validity or effectiveness of any such rights.
(u) No labor disturbance by, or labor dispute with, the employees
of the Company or any of its Subsidiaries exists or is threatened or imminent
which may have a Material Adverse Effect.
(v) Since its inception, the Company has not incurred any
liability arising under or as a result of the application of the provisions of
the Act.
(w) The Company and each of its Subsidiaries (i) is in compliance
with all environmental, safety, health or similar law or regulation relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws")
applicable to its business, (ii) has received all permits, licenses or other
approvals required under applicable Environmental Laws to conduct its business,
and (iii) is in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance, failure to receive such
license or approval or failure to comply would not have a Material Adverse
Effect.
(x) The Company and each of its Subsidiaries is in compliance with
all federal or state laws, including the rules and regulations promulgated
thereunder, relating to discrimination in the hiring, promotion or pay of
employees, nor any applicable federal or state wages and hours law, and the
provisions of the Employee Retirement Income Security Act of 1974, as amended,
applicable to its business, except where such noncompliance would not have a
Material Adverse Effect.
(y) The Company and each of its Subsidiaries has full corporate
power and authority and has obtained and holds all necessary consents
authorizations approvals, orders, certificates and permits of and from, and have
made all declarations and filings with, all U.S. and foreign, federal state or
provincial, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license and use
its properties and assets and to conduct its business in the manner described in
the Prospectus (or most recent Preliminary Prospectus), except to the extent
that the failure to obtain or file would not have Material Adverse Effect, and
except as otherwise described in the Prospectus (or most recent Preliminary
Prospectus). Neither the Company nor any of its Subsidiaries has received any
notice of proceedings relating to, and does not have reason to believe that any
governmental body or agency is considering limiting, suspending, modifying or
revoking, any such consent, authorization, approval, order, certificate or
permit which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
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(z) The Company and each of its Subsidiaries has all necessary
applications, statements, reports, information, forms, consents, authorizations,
approvals, orders, certificates and permits ("Licenses") of and from all United
States federal or state authorities, including the Federal Communications
Commission (the "FCC") and State Public Utilities Commissions to own, lease,
license and use its properties and assets and to conduct its business in the
manner described in the Prospectus (or most recent Preliminary Prospectus),
except to the extent that the failure to obtain or file would not have a
Material Adverse Effect, and except as described in the Prospectus (or most
recent Preliminary Prospectus).
(aa) The Licenses are in full force and effect without conditions
that would have a Material Adverse Effect , except for such conditions imposed
generally by the FCC upon such licenses or conditions stated on the face of the
Licenses, (ii) all express conditions in the Licenses have been satisfied where
the failure to satisfy such conditions would have a Material Adverse Effect, and
(iii) neither the Company nor any of its Subsidiaries has received any
notification that any revocation or limitation of the Licenses is threatened or
pending that would have a Material Adverse Effect.
(bb) The Licenses are validly issued. The Company and each of its
Subsidiaries has filed with the FCC all applications, statements, reports,
information, forms, or any other document required under the Communications Act
of 1934, as amended (the "Communications Act") and the rules and regulations
thereunder, except where the failure to so file would not have a Material
Adverse Effect, and such filings or submissions were in compliance with
applicable laws or regulations when filed or submitted and no deficiencies have
been asserted by the FCC with respect to such filings or submissions, except
where the deficiency is of such a nature that failure to cure would not have a
Material Adverse Effect, the information contained in such filings or
submissions was, in all material respects, accurate, complete and up-to-date at
the time the filings or submissions were made.
(cc) With respect to matters relating to the regulation of long
distance telecommunications carriers administered by United States federal or
state authorities, including, and not limited to, the FCC and State Public
Utilities Commissions, the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement and the
Underwriters' Warrant Agreement will not contravene any provisions of applicable
law or any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any of its Subsidiaries, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
hereunder or thereunder
(dd) There is no proceeding, formal or informal complaint or
investigation before the FCC against the Company or any of its Subsidiaries or
any of the
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Licenses or based on any violation or alleged violation by the Company or any of
its subsidiaries of the Communications Act, except for proceedings affecting the
industry generally to which neither the Company nor any of its Subsidiaries is a
specific party.
(ee) Neither the execution, delivery and performance of this
Agreement by the Company, nor the issuance and sale of the Shares, the
Underwriters' Warrants or the Warrant Shares, as described in the Registration
Statement and Prospectus (or most recent Preliminary Prospectus), will conflict
with, violate or require any authorization, approval, or consent under the
Communications Act or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or cause any forfeiture or
impairment of, any of the Licenses.
(ff) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any director,
officer, agent, or employee of the Company has, directly or indirectly, while
acting on behalf of the Company (i) used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity, (ii) made any unlawful contribution to any candidate for
foreign or domestic office, or to any foreign or domestic government officials
or employees or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof or to foreign or domestic political parties or
campaigns from corporate funds, or failed to disclose fully any contribution in
violation of law, (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iv) made any other unlawful payment.
(gg) Neither the Company nor, to the Company's best knowledge, any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds which constitutes a violation by the Company of
any law, rule or regulation or of a character required to be disclosed in the
Prospectus (or most recent Preliminary Prospectus).
(hh) With respect to state certificates of public convenience and
necessity of other operating authorizations issued by state and public utility
commissions or similar state governmental agencies (collectively "PUCs" and
individually a "PUC") (such PUC certificates and authorizations are hereinafter
referred to collectively as the "State Authorizations") held by the Company or
any of its Subsidiaries, such State Authorizations are in full force and effect
and are unimpaired by any act or omission of the Company or any of its employees
or agents or the Company's Subsidiaries, in each case except where such
authorization is not required or where the failure to so hold any such State
Authorization would not have a Material Adverse Effect. The State Authorizations
are all of the licenses, authorizations, consents and approvals necessary from
the PUCs in order to allow the Company and each of its Subsidiaries to own their
respective assets and carry on their respective businesses as currently being
conducted,
12
except where the failure to so hold any State Authorizations would not have a
Material Adverse Effect. To the Company's best knowledge, there are no
proceedings of any kind, including but not limited to rulemaking proceedings of
general applicability in the industry or industries in which the Company
operates, by or before any PUC, now pending or threatened, which, if adversely
determined, would have a Material Adverse Effect. Neither the execution and
delivery of this Agreement or the Underwriters' Warrant Agreement, nor the
consummation of the transactions contemplated herein, therein and in the
Registration Statement, will conflict with or result in a breach of, or require
any authorization, approval or consent under the Communications Act, or the
rules of the FCC or the communications statutes of any state or the policies or
rules of any PUC. All applications, reports and other filings required by the
FCC or any PUC to be filed as of the date hereof with respect to any FCC license
or the State Authorizations, as the case may be, have been duly and currently
filed as of the date hereof, except where the failure to so file would not have
a Material Adverse Effect.
(ii) The Company and each of its Subsidiaries has filed with the
applicable foreign and domestic regulatory authorities each and every statement,
report, information or form required by any applicable law, regulation or order,
except where the failure to so file would not have a Material Adverse Effect,
and all such filings or submissions were in compliance with applicable laws when
filed, and no deficiencies have been asserted by any regulatory commission,
agency or authority with respect to such filings or submissions, except where
the failure to so file or cure would not have a Material Adverse Effect. The
Company and each of its Subsidiaries has maintained in full force and effect all
licenses and permits necessary or proper for the conduct of its business, except
where the failure to do so would not have a Material Adverse Effect, and neither
the Company nor any of its Subsidiaries has received any notification that any
revocation or limitation thereof is threatened or pending that would have such
an Effect. Except as disclosed in the Registration Statement and the Prospectus
(or most recent Preliminary Prospectus), there is not pending any change under
any law, regulation, license or permit that would have a Material Adverse
Effect. Neither the Company nor any or its Subsidiaries has received any notice
of, or, to the best knowledge of the Company, been threatened with or is under
investigation with respect to, a violation or a possible violation of any
provision of any law, regulation or order, except such violation or violations
as would not have a Material Adverse Effect.
(jj) The books, records and accounts and systems of internal
accounting controls of the Company currently comply with the requirements of
Section 13(b)(2) of the Exchange Act.
(kk) Neither the Company nor any of its officers, directors or
affiliates (within the meaning of the Rules and Regulations) has taken, directly
or indirectly, any action designed to stabilize or manipulate the price of any
security of the Company, or which has constituted or which might in the future
reasonably be expected to, cause or
13
result in, stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of the Shares or otherwise.
(ll) The minute books of the Company and each of its Subsidiaries
are current and contain a correct and complete record of all corporate action
taken by the respective Boards of Directors and stockholders of the Company and
the Subsidiaries and all signatures contained therein are true signatures of the
persons whose signatures they purport to be.
(mm) Except as described in the Prospectus (or most recent
Preliminary Prospectus), to the best knowledge of the Company there is no loss
or threatened loss of any key customer, supplier, or account which loss would
result in a Material Adverse Effect.
(nn) Neither the Company nor any of its Subsidiaries has incurred,
directly or indirectly, any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the offering and sale of the Shares contemplated by this Agreement.
(oo) There are no business relationships or related party
transactions of the nature described in Item 404 of Regulation S-K of the Rules
and Regulations involving the Company, any of its Subsidiaries and any person
referred to in Items 401 or 404 of such Regulation S-K, except as required to be
described, and as so described, in the Prospectus (or most recent Preliminary
Prospectus).
SECTION 3. PURCHASE OF SECURITIES BY THE UNDERWRITERS. On the basis of
the representations, warranties, covenants and agreements herein contained, and
subject to the terms and conditions herein set forth (i) the Company agrees to
sell to each of the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at a purchase price per share of
$_______, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and (ii) in the event and to the extent that
the Underwriters shall exercise the election to purchase Optional Shares as
provided below, the Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (i) of this Section
3, that portion of the number of Optional Shares as to which such election shall
have been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number of Firm Shares to be sold by a
fraction, the numerator of which is the number of Firm Shares to be purchased by
each of you as set forth opposite your respective names in Schedule I hereto and
the denominator of which is the aggregate number of Option Shares as to which
such election has been exercised.
14
The Company hereby grants to the Underwriters the right to
purchase at their election up to 285,000 Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
over-allotments, if any, in the sale of the Firm Shares. Each such election to
purchase Optional Shares may be exercised only by written notice from the
Representatives to the Company, given within a period of thirty (30) calendar
days after the date of this Agreement and setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, as determined by you but in no event earlier than the Closing
Date or, unless you and the Company otherwise agree in writing, no earlier than
two (2) nor later than ten (10) business days after the date of such notice.
SECTION 4. OFFERING OF THE SHARES BY THE UNDERWRITERS. Upon the
authorization by the Representatives of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
SECTION 5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) The Firm Shares to be purchased by each Underwriter hereunder,
in definitive form, and in such authorized denominations and registered, in such
names as the Representatives may request upon at least forty-eight (48) hours'
prior notice to the Company shall be delivered by or on behalf of the Company to
the Representatives, for the account of such Underwriter, against payment by or
on behalf of such Underwriter of the purchase price therefor in Federal (same
day) funds. The Company will cause the certificates representing the Firm Shares
to be made available for checking and packaging at least twenty-four (24) hours
prior to the Closing Date (as defined below) with respect thereto at the office
of Xxxxxx, Xxxxx Xxxxx, Incorporated, 0000 Xxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000 (the "Designated Office"). The time and date of such delivery and payment
shall be, with respect to the Firm Shares, at ______ o'clock a.m., Washington,
DC time, on ______________, 1997 or such other time and date as the
Representatives and the Company may agree. Such time and date for delivery of
the Firm Shares is herein called the "Closing Date."
(b) Delivery any payment of any Optional Shares to be purchased by
each Underwriter pursuant hereto shall be made at the Designated Office at _____
o'clock a.m., Washington, DC time, on the date specified by the Representatives
in the written notice of the Underwriters' election to purchase such Optional
Shares, or such other time and date as the Representatives and the Company may
agree. Such time and date for delivery of Optional Shares, if not the Closing
Date, is herein called the "Option Closing Date."
(c) The documents to be delivered at the Closing Date or any
Option Closing Date, as the case may be, by or on behalf of the parties hereto
pursuant to
15
Section 8 hereof, including the cross-receipt for the Shares and any additional
documents requested by the Underwriters will be delivered at the offices of
Venable, Baetjer, Xxxxxx & Civiletti, LLP, 0000 Xxx Xxxx Xxxxxx, XX, Xxxxxxxxxx,
XX 00000 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, on the Closing Date or the Option Closing Date, as the case
may be.
(d) A meeting will be held at the Closing Location at 2:00 p.m.,
Washington, D.C. time, on the business day next preceding Closing Date or any
Option Closing Date, as the case may be, or at such other time as is mutually
agreed upon by the parties hereto, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees
with each of the Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as promptly as
practicable. If required, the Company will file the Prospectus and any
amendments or supplements thereto with the Commission in the manner and within
the time period required by Rule 424(b). During any time when a prospectus
relating to the Shares is required to be delivered under the Act, the Company
will comply with all requirements imposed upon it by the Act and the Rules and
Regulations to the extent necessary to permit the continuance of sales of or
dealings in the Shares in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented. With respect to any registration
statement, prospectus, amendment, or supplement to be filed with the Commission
in connection with the Shares, the Company will provide a copy of each such
document to each of the Representatives a reasonable time prior to the date such
document is proposed to be filed with the Commission and will not file any such
document without the consent of the Representatives. Any such registration
statement, prospectus, amendment or supplement, when filed, will comply with the
Act. In the event that the Registration Statement is effective at the time of
execution of this Agreement, but the total number of Shares subject to this
Agreement exceeds the number of Shares covered by the Registration Statement,
the Company will promptly file with the Commission on the date hereof a
registration statement pursuant to Rule 462(b) in accordance with the
requirements of such Rule and will make payment of the filing fee therefor in
accordance with the requirements of Rule 111(b) under the Act.
(b) The Company will advise the Representatives promptly (i) when
the Registration Statement, as amended, has become effective; (ii) if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A; (iii) when any
post-effective amendment to the Registration Statement becomes effective; (iv)
of any request made by the Commission
16
for amendments or supplements to the Registration Statement, any Preliminary
Prospectus or Prospectus or for additional information; (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus or
any amendment or supplement thereto or the institution or threat of any
investigation or proceeding for that purpose, and will use its best efforts to
prevent the issuance of any such order and, if issued, to obtain the lifting
thereof as soon as possible; and (vi) of the receipt of any comments from the
Commission regarding the Registration Statement, any post-effective amendment
thereto, the Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto. The Company will use its best efforts to prevent the
issuance of any stop order by the Commission, and if at any time the Commission
shall issue any stop order, the Company will use its best efforts to obtain the
withdrawal of such stop order at the earliest possible moment.
(c) The Company will cooperate with the Representative, its
counsel and the Underwriters in qualifying or registering the Shares for sale,
or obtaining an exemption therefrom, under the Blue Sky laws of such
jurisdictions as the Representatives shall designate, and will continue such
qualifications or registrations or exemptions in effect so long as reasonably
requested by the Representatives to effect the distribution of the Shares. The
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is not
presently qualified.
(d) The Company consents to the use of the Prospectus (and any
amendment or supplement thereto) by the Underwriters and all dealers to whom the
Shares may be sold, in connection with the offering or sale of the Shares and
for such period of time thereafter as the Prospectus is required by law to be
delivered in connection therewith. If, at any time when a prospectus relating to
the Shares is required to be delivered under the Act, any event occurs as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, or if it becomes
necessary at any time to amend or supplement the Prospectus to comply with the
Act or the Rules and Regulations, the Company promptly will so notify the
Representatives, will prepare and file with the Commission an amendment to the
Registration Statement or an amendment or supplement to the Prospectus which
will correct such statement or omission or effect such compliance, each such
amendment or supplement to be reasonably satisfactory to counsel to the
Underwriters.
(e) As soon as practicable, but in any event not later than
forty-five (45) days after the end of the 12-month period beginning on the day
after the end of the fiscal quarter of the Company during which the effective
date of the Registration Statement occurs (90 days in the event that such
quarter is the Company's last fiscal
17
quarter), the Company will make generally available to its security holders, in
the manner specified in Rule 158(b) of the Rules and Regulations, and will
deliver to each of the Representative, an earnings statement which will be in
the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which
statement need not be audited unless required by the Act or the Rules and
Regulations, covering a period of at least twelve (12) consecutive months after
the effective date of the Registration Statement.
(f) During the period of five (5) years commencing with the date
hereof, the Company will deliver to the Representatives:
(i) within ninety (90) days after the end of each fiscal
year, financial statements for the Company, certified by the Company's
independent certified public accountants, including a balance sheet, statement
of operations, statement of stockholders' equity and statement of cash flows,
with supporting schedules, prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal year and for the twelve (12)
months then ended, accompanied by a copy of the certificate or report thereon of
such independent certified public accountants; provided that if, during such
five-year period, the Company has active subsidiaries, the foregoing financial
statements will be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which is not so
consolidated;
(ii) as soon as practicable after filing with the Commission,
all such reports, forms or other documents as may be required from time to time,
under the Act, the Rules and Regulations, the Exchange Act and the rules and
regulations thereunder;
(iii) as soon as they are available, copies of all
information (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the National Association of
Securities Dealers, Inc. ("NASD") or any securities exchange or market;
(v) promptly following release by the Company, every press
release and every material news item or article of interest to the financial
community in respect of the Company or its affairs which was released or
prepared by the Company; and
(vi) as soon as possible following receipt of a request, any
additional information of a public nature concerning the Company or its business
which the Representatives may reasonably request.
18
(g) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the Transfer Agent) for its Stock.
(h) The Company will furnish, without charge, to the
Representatives or on the Representatives' order, at such place as the
Representatives may designate, copies of the Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto, and any registration statement filed pursuant to Rule 462(b) of which
three (3) copies will be signed and will include all financial statements and
exhibits) and the Prospectus, and all amendments and supplements thereto in each
case as soon as available and in such quantities as the Representatives may
reasonably request. The Company will provide or cause to be provided to the
Representatives and upon request to each Underwriter, a copy of the report on
Form SR filed by the Company as required by Rule 463 under the Act.
(i) Except pursuant to this Agreement, the Company will not,
directly or indirectly, without the prior written consent of the
Representatives, issue, offer, sell, offer to sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose (or announce any issuance,
offer, sale, offer of sale, contract of sale, grant of any option to purchase,
pledge or other disposition) of any shares of Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Stock for a
period of one hundred eighty (180) calendar days after the date hereof, other
than issuances pursuant to the exercise of stock options outstanding on or
granted subsequent to the date hereof, pursuant to a stock option or other
employee benefit plan in existence on the date hereof.
(j) The Company will cause the Shares to be duly approved for
listing on the NNM prior to the Closing Date. The Company shall take all
necessary and appropriate action such that the Shares are authorized for
quotation on the NNM as soon as practicable after the effectiveness of the
Registration Statement and the Shares shall remain so authorized for at least
thirty-six (36) months thereafter.
(k) Neither the Company nor any of its officers or directors, nor
affiliates of any of them (within the meaning of the Rules and Regulations) will
take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to, cause or result in, or which will constitute,
stabilization or manipulation of the price of any securities of the Company.
(l) The Company will apply the net proceeds of the offering
received in the manner set forth under the caption "Use of Proceeds" in the
Prospectus and will file on a timely basis such reports with the Commission with
respect to the sale of the Shares and the application of the proceeds therefrom
as may be required pursuant to Rule 463 under the Act. The Company will operate
its business in such a manner and, pending application of the net proceeds of
the offering for the purposes and in the manner set forth
19
under the caption "Use of Proceeds" in the Prospectus, will invest such net
proceeds in such securities so as not to become an "investment company" as such
term is defined under the Investment Company Act.
(m) The Company will timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the Rules and
Regulations, the Exchange Act and the rules and regulations thereunder, and all
such reports, forms and documents so filed will comply as to form and substance
with the applicable requirements under the Act, the Rules and Regulations, the
Exchange Act and the rules and regulations thereunder which may from time to
time be applicable to the Company. Without limiting the generality of the
foregoing, the Company has filed a registration statement on Form 8-A covering
the Shares pursuant to Section 12(b) of the Exchange Act and will use its best
efforts to cause said registration statement to become effective on the
Effective Date. The Company shall comply with the provisions of all undertakings
contained in the Registration Statement.
(n) Except as described in the Prospectus, the Company will not,
until the earlier to occur of (i) thirty (30) days following the date of this
Agreement or (ii) the Option Closing Date at which the Underwriters shall have
purchased all of the Optional Shares of immediately after which all Optional
Shares shall have been so purchased, incur any liability or obligation, direct
or contingent, or enter into any material transaction, other than in the
ordinary course of business.
(o) For a period of thirty (30) days following the date of this
Agreement the Company will not acquire any of the Company's capital stock,
declare or pay any dividend or make any other distribution upon its capital
stock payable to its holders of record on a date prior to the expiration of such
30-day period.
(p) The Company will comply or cause to be complied with the
conditions to the Underwriters' obligations set forth in Section 8 hereof.
(q) On the Closing Date, the Company will enter into the
Underwriters' Warrant Agreement and, pursuant thereto will sell to the
Representatives the Underwriters' Warrants to purchase in the aggregate, 150,000
shares of Stock at an aggregate price of $____________ .
(r) During the period of thirty (30) calendar days commencing with
the date of this Agreement, the Company shall neither issue any press release or
other communication, directly or indirectly, nor hold any press conference with
respect to the offering of the Shares, the Company, its subsidiaries or its
business, results of operations, condition (financial or otherwise), property,
assets, liabilities or prospects of the Company or any of its subsidiaries,
without the prior written consent of the Representatives, which consent shall
not unreasonably be denied or delayed; provided, however, that if counsel to
20
the Company is of the opinion that the issuance of a press release or other
communication or a press conference is required to comply with or avoid a
violation of applicable law, and having been so informed the Representatives
decline to consent thereto, the Company shall be permitted to issue such press
release or other communication or hold such press conference in the manner
advised by its counsel.
(s) Neither the Company nor any of its Subsidiaries will grant any
person or entity registration rights with respect to any of its securities,
except such rights as are subordinate to the registration rights contained in
the Underwriters' Warrant Agreement and are exercisable no earlier than six (6)
months after the securities to be registered upon exercise of such registration
rights contained in the Underwriters' Warrant Agreement have been offered for
sale pursuant to an effective registration statement under the Act and
registered or qualified for sale under the Blue Sky or state securities law,
rules or regulations of the jurisdictions in which such securities are to be
offered for sale.
SECTION 7. EXPENSES.
(a) If the Underwriters purchase the Firm Shares, in accordance
with the terms of this Agreement, the Company will pay the Representatives, out
of the first proceeds of the offering contemplated by this Agreement, a
non-accountable expense allowance of one percent (1%) of the gross proceeds
raised, in order to compensate the Representatives for their expenses in
connection with the transactions contemplated hereby The costs and expenses of
registration, filings and fees of all counsel in completing the applications and
in clearing the offering contemplated by this Agreement through the state
securities commissions or similar regulatory authorities of the various states
or other jurisdictions shall be borne and paid by the Company in addition to the
non-accountable expense allowance referred to in the immediately preceding
sentence.
(b) If the purchase of the Firm Shares as herein contemplated is
not consummated for any reason other than the Underwriters' default under this
Agreement or other than by reason of Section 11(a), the Company shall reimburse
the several Underwriters, in an among not to exceed $100,000 in the aggregate,
for their out-of-pocket expenses (including but not limited to counsel fees and
disbursements) in connection with any investigation made by them, and any
preparation made by them in respect of marketing of the Shares or in
contemplation of the performance by them of their obligations hereunder.
SECTION 8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations
of each Underwriter to purchase and pay for the Shares set forth opposite the
name of such Underwriter in Schedule I are subject to the continuing accuracy of
the representations and warranties of the Company herein as of the date hereof
as of the Closing Date, and as of each Option Closing Date, if any, as if they
had been made on and as of the Closing
21
Date or Option Closing Date, as the case may be; the accuracy on and as of the
Closing Date, and each Option Closing Date, if any, of the statements of
officers of the Company made pursuant to the provisions hereof; the performance
by the Company on and as of the Closing Date, and each Option Closing Date, as
the case may be, of their respective covenants and agreements hereunder; and the
following additional conditions:
(a) The Registration Statement shall have been declared effective,
and the Prospectus (containing the information omitted pursuant to Rule 430(A))
shall have been filed with the Commission not later than the Commission's close
of business on the second business day following the date hereof or such later
time and date to which the Representatives shall have consented. No stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the best knowledge of the Company or the
Representatives, shall be contemplated by the Commission. The Company shall have
complied with any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall not have advised the Company that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Representatives' opinion, is material, or omits
to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material, or
omits to state a fact which, in the Representatives' opinion, is material and is
required to be stated thein or is necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(c) On or prior to the Closing Date, and any Option Closing Date,
as the case may be, the Representatives shall have received from counsel to the
Underwriters, such opinion or opinions with respect to the issuance and sale of
the Firm Shares, the Registration Statement and the Prospectus and such other
related matters as the Representatives reasonably may request and such counsel
shall have received such documents and other information as they request to
enable them to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have received the
opinion, dated the Closing Date, of Shulman, Rogers, Gandal, Pordy & Xxxxx,
P.A., counsel to the Company (which opinion may rely, with respect to certain
regulatory matters, upon the opinion, dated the Closing Date, of Xxxxxx Xxxx &
Xxxxxx LLP, regulatory counsel to the Company, copies of which shall be provided
to counsel for the Underwriters and shall be attached to the opinion of counsel
of the Company and may be referred to therein), to the effect set forth below:
22
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Maryland, its
jurisdiction of incorporation, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, (except for those
jurisdictions in which the failure to so qualify has not had and will not have a
Material Adverse Effect). Each of the Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and each has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business so as to require such qualification (except for those
jurisdictions in which the failure to so qualify has not had and will not have a
Material Adverse Effect).
(ii) The Company has the duly authorized capitalization as
set forth in the Prospectus. All of the shares of capital stock of the Company
issued and outstanding immediately prior to the Closing Date or an Option
Closing Date, as the case may be, have been duly and validly authorized and
issued, are fully paid and non-assessable, without personal liability attaching
to the ownership thereof, and none of such shares have been issued or are owned
or held in violation of any preemptive or other rights of securityholders or
other persons to acquire securities of the Company. The securities of the
Company including, without limitation, the Shares, the Stock, the Underwriters'
Warrants and the Warrant Shares conform to all statements relating thereto
contained in the Registration Statement or the Prospectus. With respect to each
Subsidiary of the Company, all of the issued and outstanding shares of capital
stock are fully paid and non-assessable, without personal liability attaching to
the ownership thereof, and none of such shares have been issued or are owned or
held in violation of any preemptive or other rights of securityholders or other
persons to acquire securities of the Company and (except as otherwise described
in the Prospectus) are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims. Other than as disclosed in the
Prospectus, to the best knowledge of such counsel, there are no holders of the
securities of the Company or any of its Subsidiaries having rights to
registration thereof or pre-emptive rights to purchase capital stock of the
Company or any such Subsidiary. Except as created hereby or described in the
Prospectus, to the best knowledge of such counsel, there are no commitments,
plans or arrangements to issue, and no outstanding options, warrants or other
rights, calling for issuance of, any shares of capital stock of the Company or
any of its Subsidiaries or any security or other instrument which, by its terms,
is convertible into, exercisable for, or exchangeable for capital stock of the
Company or any of its Subsidiaries.
(iii) The Shares AND THE UNDERWRITERS' WARRANTS have been
duly and validly authorized and, when the Shares are issued and delivered
against
23
payment therefor as provided herein, or when such Underwriters' Warrants are
issued and delivered in accordance with the terms thereof and of the
Underwriters' Warrant Agreement, will be duly and validly issued and fully paid
and non-assessable, will not have been issued in violation of any preemptive or
other rights of securityholders or other persons to acquire securities of the
Company and will conform to all statements relating thereto in the Registration
Statement and the Prospectus. Good and marketable title to the Shares and the
Underwriters' Warrants will pass to the Underwriters on the Closing Date free
and clear of any lien, encumbrance, security interest, claim or other
restriction whatsoever. The Warrant Shares have been duly authorized and validly
reserved for issuance and, when issued, paid for and delivered in accordance
with the terms of the Underwriters' Warrant Agreement and the Underwriters'
Warrants, the Warrant Shares will be duly and validly issued and fully paid and
non-assessable, will not have been issued in violation of any preemptive or
other rights of securityholders or other persons to acquire securities of the
Company and will conform to all statements relating thereto in the Prospectus.
Good and marketable title, free and clear of any lien, encumbrance, security
interest, claim or any other restriction will pass to the holders of Warrant
Shares issued upon exercise of Underwriters' Warrants in accordance with the
terms thereof and of this Agreement and the Underwriters' Warrant Agreement.
(iv) The Shares have been duly approved for listing on the
NNM.
(v) The Registration Statement is effective under the Act.
Any required filing of a registration statement pursuant to Rule 462(b) has been
made in the manner and within the time period required by Rule 462(b). The
Prospectus has been filed with the Commission pursuant to the appropriate
subparagraph of Rule 424(b) under the Act and no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has been
issued, and no proceedings for that purpose have been instituted or are pending
or, to the best knowledge of such counsel, are threatened or contemplated under
the Act.
(vi) The registration statement originally filed with respect
to the Shares and each amendment thereto, each Preliminary Prospectus and
Prospectus and, if any, each amendment and supplement thereto (except for the
financial statements, schedules and other financial data included therein, as to
which such counsel need not express any opinion), complies as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
(vii) The descriptions and summaries contained in the
Prospectus of contracts, agreements, instruments leases, licenses and other
documents, are accurate and fairly represent the information required to be
disclosed with respect thereto by the Act and the Rules and Regulations. To the
best knowledge of such counsel, all contracts, agreements, instruments, leases,
licenses or other documents which
24
are required by the Act or the Rules and Regulations to be described in the
Prospectus or to be filed as exhibits to the Registration Statement have been so
described or filed.
(viii) To the best knowledge of such counsel, there is not
pending or threatened against the Company any action, suit or proceeding by any
person or any action, suit, proceeding or investigation before or by any court,
regulatory body, or administrative agency or any other governmental agency or
body, domestic or foreign, of a character required to be disclosed in the
Registration Statement or the Prospectus which is not so disclosed therein.
(ix) The statements set forth under the captions "Risk
Factors," "Use of Proceeds," "Business," "Management," "Shares Eligible for
Future Sale," and "Description of Capital Stock" in the Prospectus, insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly and accurately summarize such legal
matters, documents and proceedings.
(x) The Company has full legal right, power, and authority to
enter into this Agreement and the Underwriters' Warrant Agreement and to
consummate the transactions provided for herein and therein. All necessary
corporate proceedings of the Company have been taken to authorize the execution,
delivery and performance, by the Company, of this Agreement and the
Underwriters' Warrant Agreement. This Agreement and the Underwriters' Warrant
Agreement have been duly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery by each other party hereto or
thereto, constitute the valid and binding agreements of the Company, enforceable
in accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of remedies and except
as rights to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws.
(xi) No consent of any party to any material contract,
agreement, instrument, lease, license, or other document, or any arrangement or
understanding to which the Company or any of its Subsidiaries is a party, or to
which any of the property, assets or business of the Company or any of its
Subsidiaries is subject, is required for the execution, delivery and performance
of this Agreement and the Underwriters Warrant Agreement. None of the Company's
execution and delivery of this Agreement and the Underwriters Warrant Agreement,
performance of its obligations hereunder and thereunder, consummation of the
transactions contemplated herein or therein, and application of the net proceeds
of the offering in the manner set forth under the caption "Use of Proceeds" in
the Prospectus will conflict with or results in any breach or violation of any
of the terms or provisions of, or constitute a default under, or entitle any
other party to terminate or call a default under, or result in the creation or
imposition of
25
any lien, charge or encumbrance upon, any property or asset of the Company or
any of its Subsidiaries pursuant to the terms of (i) the Charter or Bylaws of
the Company or any of its Subsidiaries; (ii) the terms of any indenture,
mortgage, deed of trust, voting trust agreement, stockholders agreement, note
agreement or other agreement or instrument known to such counsel after
reasonable investigation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is or may be bound or
to which any of their respective properties, assets or businesses may be
subject; (iii) any statute, rule or regulation of any regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its Subsidiaries or any of their
respective businesses, activities or properties; or (iv) any order or decree of
any government, arbitrator, court, regulatory body or administrative agency or
other governmental agency or body, domestic or foreign, having such
jurisdiction.
(xii) All legally required proceedings in connection with the
authorization, issue and sale of the Shares, the Underwriters' Warrants and the
Warrant Shares by the Company in accordance with the provisions of this
Agreement and the Underwriters' Warrant Agreement have been taken and no
consent, approval, authorization, order, license, certificate declaration or
permit from or of any court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign has been or is required for the
Company's performance of this Agreement and the Underwriters Warrant Agreement
or the consummation of the transactions contemplated hereby and thereby, except
such as may be required under federal or state securities laws in connection
with the purchase and distribution by the Underwriters of the Shares.
(xiii) To such counsel's best knowledge, the conduct of the
business of the Company and each of its Subsidiaries is not in violation of any
federal, state or local statute, administrative regulation or other law, which
violation could have a Material Adverse Effect. The Company and each of its
Subsidiaries possesses all licenses, permits, approvals and other governmental
authorizations required for the conduct of its business, as described in the
Prospectus; all such licenses, permits and other governmental authorizations are
in full force and effect and the Company and each of its Subsidiaries is in all
material respects in compliance therewith. To such counsel's best knowledge,
there is no reason why the Company would not receive, or would be unlikely to
receive such licenses, permits, approvals and other governmental authorization
as would be required for the conduct of the Company's business as contemplated
by the Prospectus.
(xiv) Neither the Company nor any of its Subsidiaries is in
violation or breach of its respective Charter or Bylaws or similar constitutive
documents. To such counsel's best, except as disclosed in the Prospectus, none
of the Company, any of its Subsidiaries, or any other party is now in violation
or breach of, or in default with
26
respect to complying with, any material provision of any indenture, mortgage,
deed of trust, debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license, or arrangement or understanding which
is material to the Company, and each such indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness, contract, agreement,
instrument, lease or license is in full and force and is the legal, valid and
binding obligation of the Company or its Subsidiary or Subsidiaries, except to
the extent that the enforceability of the rights and remedies of the Company or
any of its Subsidiaries under any such lease or other agreement may be limited
by bankruptcy, insolvency, or similar laws generally affecting the rights of
creditors and by equitable principles limiting the right to specific performance
or other equitable relief.
(xv) To such counsel's best knowledge, the Company and each
of its Subsidiaries has good and marketable title except in fee simple, to all
the real property owned thereby as set forth in the Prospectus, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind or nature whatsoever
except those, if any, referred to in the Prospectus (or reflected in the
financial statements included therein) or which, in the aggregate, are not
material to the Company and its business and do not materially affect the value
of such property; and the real properties held or used by the Company and each
of its Subsidiaries under material leases or other material agreements as set
forth in the Prospectus are held under valid, subsisting and enforceable leases
or other agreements with respect to which neither the Company nor any of its
Subsidiaries is in default, except to the extent that the enforceability of the
rights and remedies of the Company or any of its Subsidiaries under any such
lease or other agreement may be limited by bankruptcy, insolvency, or similar
laws generally affecting the rights of creditors and by equitable principles
limiting the right to specific performance or other equitable relief.
(xvi) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company," or an
"affiliated person" of or a "promoter" or "principal underwriter" of or an
entity "controlled" by an "investment company," as such terms are defined in the
Investment Company Act.
(xvii) Neither the Company nor any other person associated
with or acting on behalf of the Company including, without limitation, any
director, officer, agent, or employee of the Company has, directly or
indirectly, while acting on behalf of the Company, (i) used any corporate funds
for unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; (ii) made any unlawful contribution to any
candidate for foreign or domestic office, or to any foreign or domestic
government officials or employees or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof or to foreign or domestic
political parties or campaigns from corporate funds, or failed to disclose fully
any contribution in violation
27
of law; (iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iv) made any other unlawful payment.
(xviii) To the best knowledge of such counsel, since the
effective date of the Registration Statement or the later effective date of any
amendment thereto, no event has occurred which should have been set forth in an
amendment or supplement to the Registration Statement or Prospectus which has
not been so set forth. (xix) Schedule 1 hereto accurately and completely lists
all of the licenses, permits, and authorizations issued by the FCC
(collectively, the "Licenses") necessary for the Company to carry on its
business as described in the Registration Statement and Prospectus. Schedule 2
hereto accurately and completely lists all pending applications filed by the
Company with the FCC.
(xx) To the best knowledge of such counsel, the Licenses are
validly issued. "Validly issued" as used herein means that the Licenses have
been issued through the means of regular FCC procedures applied in conformity
with the Communications Act and prior FCC practice and there is no legal basis
under the Communications Act to conclude that the Company cannot hold one or
more of the Licenses as a matter of law. To the best of knowledge of such
counsel (i) the Licenses are in full force and effect without conditions that
would have a Material Adverse Effect , except for such conditions imposed
generally by the FCC upon such licenses or conditions stated on the face of the
Licenses, (ii) all express conditions in the Licenses have been satisfied where
the failure to satisfy such conditions would have a Material Adverse Effect, and
(iii) the Company has not received any notification that any revocation or
limitation of the Licenses is threatened or pending that would have a Material
Adverse Effect.
(xxi) Except as specified in Schedule 3 hereto, the Company
has filed with the FCC all applications, statements, reports, information,
forms, or any other document required under the Communications Act, except where
the failure to so file would not have a Material Adverse Effect, and, to the
best knowledge of such counsel, such filings or submissions were in compliance
with applicable laws or regulations when filed or submitted and no deficiencies
have been asserted by the FCC with respect to such filings or submissions except
where the deficiency is of such a nature that failure to cure any such
deficiency would not have a Material Adverse Effect, and the information
contained in such filings or submissions was, in all material respects,
accurate, complete and up-to-date at the time the filings or submissions were
made.
(xxii) The Company has filed with the applicable foreign and
domestic regulatory authorities each and every statement, report, information or
form required by any applicable law, regulation or order, except where the
failure to so file would not have a Material Adverse Effect, and all such
filings or submissions were in
28
compliance with applicable laws when filed, and no deficiencies have been
asserted by any regulatory commission, agency or authority with respect to such
filings or submissions, except where the failure to so file or cure any such
deficiency would not have a Material Adverse Effect. The Company has maintained
in full force and effect all licenses and permits necessary or proper for the
conduct of its business, except where the failure to do so would not have a
Material Adverse Effect, and the Company has not received any notification that
any revocation or limitation thereof is threatened or pending that would have
such an effect. Except as disclosed in the Registration Statement and the
Prospectus, there is not pending any change under any law, regulation, license
or permit that would have a Material Adverse Effect. The Company has not
received any notice of, or, to the best knowledge of such counsel, been
threatened with or is under investigation with respect to, a violation or a
possible violation of any provision of any law, regulation or order, except such
violation or violations as would not have a Material Adverse Effect.
(xxiii) With respect to state certificates of public
convenience and necessity or other operating authorizations issued by state and
public utility commissions or similar state governmental agencies (collectively
"PUCs" and individually a "PUC") (such PUC certificates and authorizations are
hereinafter referred to collectively as the "State Authorizations") held by the
Company, such State Authorizations are in full force and effect and are
unimpaired by any act or omission of the Company or any of its employees or
agents, in each case except where such authorization is not required or where
the failure to so hold any such State Authorization would not have a Material
Adverse Effect.. The State Authorizations are all of the licenses,
authorizations, consents and approvals necessary from the PUCs in order to allow
the Company to own its assets and carry on its business as currently being
conducted, except where the failure to so hold any State Authorizations would
not have a Material Adverse Effect. To the best knowledge of such counsel, there
are no proceedings of any kind, including but not limited to rulemaking
proceedings of general applicability in the industry or industries in which the
Company operates, by or before any PUC, now pending or threatened, which, if
adversely determined, would have a Material Adverse Effect. Neither the
execution and delivery of this Agreement and the Underwriters' Warrant Agreement
or the consummation of the transactions contemplated herein and therein and in
the Registration Statement will conflict with or result in a breach of, or
require any authorization, approval or consent under the Communications Act of
1934, as amended (the "Communications Act"), or the rules of the Federal
Communications Commission (the "FCC") or the communications statutes of any
state or the policies or rules of any PUC.
(xxiv) To the best knowledge of such counsel, there is no
proceeding, formal or informal complaint or investigation before the FCC or any
PUC against the Company or any of the Licenses identified in Schedule 1 or based
on any violation or alleged violation by the Company of the Communications Act
or any state law, except for proceedings affecting the industry generally to
which the Company is not a specific party.
29
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
its Subsidiaries, with the Company's independent public accountants, and with
the Representatives, at which conferences such counsel made inquiries of such
officers, representatives and accountants and discussed the contents of the
Registration Statement and the Prospectus and on the basis of the foregoing,
nothing has come to such counsel's attention that would lead such counsel to
believe that either the Registration Statement or any amendment thereto, as of
the date the Registration Statement or such amendment is or was declared
effective, and as of the Closing Date or any Option Closing Date, as the case
may be, or the Prospectus as of the date thereof and as of the Closing Date or
any Option Closing Date, as the case may be, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any belief with respect to
the financial statements, and the notes and schedules related thereto and other
financial information or statistical data included in the Registration
Statement, any amendment thereto, or the Prospectus).
In rendering any such opinions, such counsel may rely, (i) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company provided that copies of any such
certificates shall be delivered to counsel for the Underwriters; and (ii) to the
extent such counsel deems proper, upon written statements or certificates of
public officials, provided that copies of any such statements or certificates
shall be delivered to counsel for the Underwriters.
References to the Registration Statement and the Prospectus in
this paragraph (d) shall include any amendment or supplement thereto at the date
of such opinion.
(e) On or prior to the Closing Date or any Option Closing Date, as
the case may be, counsel to the Underwriters shall have been furnished such
documents, certificates and opinions as they may reasonably require in order to
evidence the accuracy, completeness or satisfaction of any of the
representations or warranties of the Company or conditions herein contained.
(f) At the time that this Agreement is executed by the Company the
Underwriters shall have received from Xxxxxx Xxxxxxxx LLP a letter as of the
date of this Agreement in form and substance satisfactory to the Representatives
(the "Original Letter"), and on the Closing Date and any Option Closing Date the
Underwriters shall have received from such firm a letter dated the Closing Date
or such Option Closing Date, stating that, as of a specified date not earlier
than five (5) calendar days prior to the
30
Closing Date or Option Closing Date, as the case may be, nothing has come to the
attention of such firm to suggest that the statements made in the Original
Letter are not true and correct.
(g) On the Closing Date and any Option Closing Date, the
Underwriters shall have received a certificate, dated the Closing Date or such
Option Closing Date, as the case may be, of the principal executive officer and
the principal financial or accounting officer of the Company to the effect that
each such person has carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto and this Agreement, and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to the Closing
Date or such Option 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 are pending or, to the best knowledge of each such person,
are contemplated or threatened under the Act and any and all filings required by
Rule 424, Rule 430A and Rule 462(b) have been timely made;
(iii) The Registration Statement and Prospectus and, if any,
each amendment and each supplement thereto, contain all statements and
information required by the Act or the Rules and Regulations to be included
therein, and neither the Registration Statement or the Prospectus nor any
amendment or supplement thereto includes any untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus or any
amendment or supplement thereto, up to and including the Closing Date or the
Option Closing Date, as the case may be, neither the Company nor any of its
Subsidiaries has incurred, other than in the ordinary course of its business or
as described in the Prospectus or in an amended or supplemented Prospectus, any
material liabilities or obligations, direct or contingent; the Company has not
purchased any of its outstanding capital stock or paid or declared any dividends
or other distributions on its capital stock; neither the Company nor any of its
Subsidiaries has entered into any transactions not in the ordinary course of
business; and there has not been any change in the capital stock or long-term
debt or any increase in the short-term borrowings (other than any increase in
short-term borrowings in the ordinary course of business) of the Company or any
material adverse change to the
31
business, properties, assets, net worth, condition (financial or other), results
of operations or prospects of the Company; the Company has not sustained any
material loss or damage to its property or assets, whether or not insured; there
is no litigation which is pending or threatened against the Company which is
required under the Act or the Rules and Regulations to be set forth in an
amended or supplemented Prospectus which has not been set forth; and there has
not occurred any event required to be set forth in an amended or supplemented
Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus
in this paragraph (g) are to such documents as amended and supplemented at the
date of this certificate.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus up to and
including the Closing Date or any Option Closing Date, as the case may be, there
has not been (i) any change or decrease specified in the letter or letters
referred to in paragraph (f) of this Section 8 or (ii) any change, or any
development involving a prospective change, in the business or properties of the
Company which change or decrease in the case of clause (i) or change or
development in the case of clause (ii) makes it impractical or inadvisable in
the Representatives' judgment to proceed with the public offering or the
delivery of the Shares as contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any
jurisdiction designated by you pursuant to Section 6(c) hereof has been issued
on or prior to the Closing Date or any Option Closing Date, as the case may be,
and no proceedings for that purpose have been instituted or, to the best
knowledge of such persons or that of the Company, have been or are contemplated.
(j) The Representatives shall have received from each person
who is a director or officer of the Company, each stockholder, and each other
person, if any, who has the right to acquire more than 5% or more of the
outstanding shares of Stock, assuming exercise of currently exercisable stock
options on a fully diluted basis, an agreement to the effect that such person
will not, directly or indirectly, without the prior written consent of the
Representatives, on behalf of the Underwriters, offer, sell, offer to sell,
contract to sell, grant any option to purchase, pledge or otherwise dispose (or
announce any offer, sale, offer of sale, contract of sale, grant of an option to
purchase, pledge or other disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 180 days after the date of this Agreement.
(k) The Shares shall have been duly authorized for listing on
the NNM.
32
(l) The NASD, upon review of the terms of the public offering
of the Shares contemplated hereby, shall have indicated that it has no objection
to the underwriting arrangements pertaining to the sale of the Shares and the
Underwriters' participation in the sale of the Shares as so contemplated.
(m) The Company shall have furnished the Underwriters with
such further opinions, letters, certificates or documents as the Representatives
or counsel for the Underwriters may reasonably request.
All opinions, certificates, letters and documents to be furnished by
the Company will comply with the provisions hereof only if they are reasonably
satisfactory in all material respects to the Underwriters and to counsel for the
Underwriters. The Company shall furnish the Underwriters with manually signed or
conformed copies of such opinions, certificates, letters and documents in such
quantities as you reasonably request. The certificates delivered under this
Section 8 shall constitute representations, warranties and agreements of the
Company as to all matters set forth therein as fully and effectively as if such
matters had been set forth in Section 2 of this Agreement.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at either the Closing Date or any Option Closing Date is
not so satisfied, this Agreement, at the Representatives' election, will
terminate upon notification to the Company without liability on the part of any
Underwriter (including the Representatives) or the Company, except for the
expenses to be paid by the Company pursuant to Section 7 hereof and except to
the extent provided in Section 9 hereof.
SECTION 9. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, and its officers, directors, partners, employees, agents and
counsel, and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages, liabilities or expenses whatsoever (which shall
include, for all purposes of this Section 9, but not be limited too, attorneys
fees and any and all fees and 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), joint or several
(and actions in respect thereof), to which such Underwriter, officer, director,
partner, employee, agent counsel or controlling person may become subject, under
the Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or any blue sky application or other document executed by the Company
specifically for the purposes of qualifying, or based upon
33
written information furnished by the Company in any state or other jurisdiction
in order to qualify, any or all of the Shares under the securities or blue sky
laws thereof (any such application, document or information being hereinafter
called a "Blue Sky Application"), 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 not misleading and will reimburse,
as incurred, such Underwriter, partner, employee, agent, counsel or controlling
person in connection with investigating, defending or appearing as a third party
witness in connection with any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability, expense or action
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in any of such documents in reliance upon
and in conformity with information furnished in writing to the Company on behalf
of such Underwriter through the Representatives expressly for use therein, and
provided, further, that such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
such loss, claim, damage, liability or action purchased Shares which are the
subject thereof to the extent that any such loss, claim, damage, liability or
action (i) results from the fact that such Underwriter failed to send or give a
copy of the Prospectus (as amended or supplemented) to such person at or prior
to the confirmation of the sale of such Shares to such person in any case where
such delivery is required by the Act and (ii) arises out of or is based upon an
untrue statement or omission of a material fact contained in such Preliminary
Prospectus that was corrected in the Prospectus (as amended and supplemented),
unless such failure resulted from non-compliance by the Company with Section
6(h) hereof. The indemnity agreement in this paragraph (a) shall be in addition
to any liability which the Company may otherwise have.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any and all losses, claims, damages, liabilities or
expenses whatsoever (which shall include, for all purposes of this Section 9,
but not be limited too, attorneys fees and any and all fees and 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), (and actions in respect thereof) to which the
Company or any such director, officer, or controlling person may become subject,
under the Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities, expenses
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement thereto
or in any Blue Sky Application, or arise out of or are
34
based upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with information furnished in writing by that
Underwriter through the Representatives to the Company expressly for use
therein. The Company acknowledges that the statements with respect to the public
offering of the Shares set forth under the caption "Underwriting" and the
stabilization legend the Prospectus have been furnished by the Underwriters to
the Company expressly for use therein and constitute the only information
furnished in writing by or on behalf of the Underwriters for inclusion in the
Prospectus. The indemnity agreement contained in this paragraph (b) shall be in
addition to any liability which the Underwriters 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 it to be made against one or more
indemnifying parties under this Section 8, notify such indemnifying party or
parties of the commencement thereof; but the failure so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under paragraph (a) or (b) of this Section
8 to the extent that the indemnifying party was not adversely affected by such
omission. In case any such action is brought against an indemnified party and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties against which a claim is to be made will be
entitled to participate therein and, to the extent that it or they may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party has 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, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and otherwise to participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses (other than the reasonable costs of investigation)
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party has employed such counsel in connection
with the assumption of such different or additional legal defenses in accordance
with the proviso to the immediately preceding sentence, (ii) the indemnifying
party has not employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.
35
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each of the contributing parties, on the
one hand, and the party to be indemnified, on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. In any case
where the Company is a contributing party and the Underwriters are the
indemnified party, 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 the total net proceeds from the offering of the Shares (before
deducting expenses) bear to the total underwriting discounts received by the
Underwriters hereunder, in each case as set forth in the table on the cover page
of the Prospectus. Relative fault 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 untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above in this paragraph (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this paragraph (d), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by the Underwriters
hereunder. The Underwriters' obligations to contribute pursuant to this
paragraph (d) are several in proportion to their respective underwriting
obligations, and not joint. No person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), (i) each person, if any,
who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter and (ii) each director of the Company, each officer of the
Company who has signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Company.
Any party entitled to contribution will, promptly after receipt of notice of
36
commencement of any action, suit or proceeding against such party in respect to
which claim for contribution may be made against another party or parties under
this paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation (x) it or they may have hereunder or otherwise than under this
paragraph (d) or (y) to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
SECTION 10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Shares. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
SECTION 11. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at _____ a.m.,
Washington, D.C. time, on the first business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representatives, in their sole discretion, shall release the Shares for the sale
to the public, unless prior to such time the Representatives shall have received
written notice from the Company that it elects that this Agreement shall not
become effective, or the Representatives shall have given written notice to the
Company that the Representatives on behalf of the Underwriters elect that this
Agreement shall not become effective; provided, however, that the provisions of
this Section 11 and of Section 7 and Section 9 hereof shall at all times be
effective. For purposes of this Section 11(a), the Shares to be purchased
hereunder shall be deemed to have been so released upon the earlier of
notification by the Representatives to securities dealers releasing such Shares
for offering or the release by the Representatives for publication of the first
newspaper advertisement which is subsequently published relating to the Shares.
(b) This Agreement (except for the provisions of Sections 7 and 9
hereof) may be terminated by the Representatives by notice to the Company in the
event that the Company has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or any Option Closing Date, as the case may be, or if any of
the representations or warranties of the Company are not accurate in any respect
or if the covenants, agreements or conditions of, or applicable to, the Company
herein contained have not been complied with in any
37
respect or satisfied within the time specified on the Closing Date or any Option
Closing Date, as the case may be, or if prior to the Closing Date or any such
Option Closing Date:
(i) the Company shall have sustained a loss by strike, fire,
flood, accident or other calamity of such a character as to interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss was insured;
(ii) trading in the Stock shall have been suspended by the
Commission or the NNM or trading in securities generally on the New York Stock
Exchange or the NNM shall have been suspended or a material limitation on such
trading shall have been imposed or minimum or maximum prices shall have been
established on either such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an outbreak or
escalation of any other insurrection or armed conflict involving the United
States;
(v) there shall have been commenced any action, suit or
proceeding at law or in equity against the Company, or by any federal, state or
other commission, board or agency, wherein any unfavorable decision would
materially adversely affect the business, properties or financial condition of
the Company;
(vi) there shall have occurred any material adverse market
conditions, of which the Representatives shall be the sole judge;
(viii) Company's independent public accountants shall have
imposed qualifications in certifying to, or its attorneys in opining upon,
material items including, without limitation, information in the footnotes to
the financial statements or matters incident to the issuance and sale of the
Shares, corporate proceedings or other subjects; or
(vi) there shall have been a material adverse change in (i)
general economic, political or financial conditions or (ii) the present or
prospective business or condition (financial or other) of the Company that, in
each case, in the Representative's judgment makes it impracticable or
inadvisable to make or consummate the public offering, sale or delivery of the
Company's Shares on the terms and in the manner contemplated in the Prospectus
and the Registration Statement.
38
(c) Termination of this Agreement under this Section 11 or Section
12 after the Firm Shares have been purchased by the Underwriters hereunder shall
be applicable only to the Optional Shares. Termination of this Agreement shall
be without liability of any party to any other party other than as provided in
Sections 7 and 9 hereof.
SECTION 12. SUBSTITUTION OF UNDERWRITERS. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 8 or
11 hereof) to purchase and pay for (a) in the case of the Closing Date, the
number of Firm Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to the Representatives such Firm Shares in accordance with the terms
hereof or (b) in the case of any Option Closing Date, the number of Optional
Shares agreed to be purchased by such Underwriter or Underwriters upon tender to
the Representatives of such Optional Shares in accordance with the terms hereof,
and the number of such Shares shall not exceed 10% of the Firm Shares or
Optional Shares required to be purchased on the Closing Date or such Option
Closing Date, as the case may be, then, each of the non-defaulting Underwriters
shall purchase and pay for (in addition to the number of such Shares which it
has severally agreed to purchase hereunder) that proportion of the number of
Shares which the defaulting Underwriter or Underwriters shall have so failed or
refused to purchase on such Closing Date or Option Closing Date, as the case may
be, which is the percentage set forth next to each such Underwriter's name on
Schedule I. In such case, the Representatives, on behalf of the Underwriters,
shall have the right to postpone the Closing Date or the Option Closing Date, as
the case may be, to a date not exceeding seven (7) full business days after the
date originally fixed as such Closing Date or the Option Closing Date, as the
case may be, pursuant to the terms hereof in order that any necessary changes in
the Registration Statement, the Prospectus or any other documents or
arrangements may be made.
If one or more of the Underwriters shall fail or refuse (otherwise than
for a reason sufficient to justify the termination of this Agreement under the
provisions of Section 8 or 11 hereof) to purchase and pay for (a) in the case of
the Closing Date, the number of Firm Shares agreed to be purchased by such
Underwriter or Underwriters upon tender to you of such Firm Shares in accordance
with the terms hereof or (b) in the case of the Option Closing Date, the number
of Optional Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to you of such Optional Shares in accordance with the terms hereof,
and the number of such Shares shall exceed 10% of the Firm Shares or Optional
Shares required to be purchased by all the Underwriters on the Closing Date or
the Option Closing Date, as the case may be, then (unless within forty-eight
(48) hours after such default arrangements to your satisfaction shall have been
made for the purchase of the defaulted Shares by an Underwriter or Underwriters)
and subject to the provisions of Section 11(b) hereof, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or on
the part of the Company except as otherwise provided in Sections 7 and 9 hereof.
As used in this Agreement, the term "Underwriter" includes
39
any person substituted for an Underwriter under this paragraph. Nothing in this
Section 12, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in writing
and if sent to the Representatives shall be mailed or delivered or sent by
facsimile transmission and confirmed by letter to Xxxxxx, Xxxxx Xxxxx,
Incorporated at 0000 Xxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention:
Xxxxxxx X. Xxxxx (facsimile number: (000) 000-0000) or, if sent to the Company,
shall be mailed or delivered or sent by facsimile transmission and confirmed by
letter to the Company at 00000 Xxxxx Xxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000,
attention: Ram Xxxxxxx (facsimile number: (000) 000-0000).
SECTION 14. SUCCESSORS. This Agreement shall inure to the benefit of
and be binding upon the Company and each Underwriter and the Company's and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representatives, warranties, indemnities and
contribution agreements of the Company contained in this Agreement shall also be
for the benefit of the partners, employees agents of each Underwriter and any
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and except that the
Underwriters' indemnity and contribution agreements shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement and any person or persons, if any, who control
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Shares from the Underwriters will be deemed a
successor because of such purchase.
SECTION 15. APPLICABLE LAW; JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland,
without giving effect to the choice of law or conflict of law principles
thereof. Each party hereto consents to the jurisdiction of each court in which
any action is commenced seeking indemnity or contribution pursuant to Section 9
above and agrees to accept, either directly or through an agent, service of
process of each such court.
SECTION 16. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
40
If the foregoing is in accordance with your understanding, please sign
and return to us three (3) counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
STARTEC GLOBAL COMMUNICATIONS, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Accepted as of the date hereof
XXXXXX, XXXXX XXXXX, INCORPORATED
0000 XXX XXXXXX, X.X.
XXXXXXXXXX, X.X. 00000
BY: XXXXXX, XXXXX XXXXX, INCORPORATED
ON BEHALF OF EACH OF THE UNDERWRITERS
BY:
--------------------------------
NAME:
TITLE:
41
SCHEDULE I
NUMBER OF SHARES TO BE
PURCHASED BY EACH UNDERWRITER
Number of Firm
--------------
Shares to be Purchased
---------------------
Name of Underwriter Percentage from the Company
------------------- ---------- ----------------
Xxxxxx, Xxxxx Xxxxx, Incorporated................
Boenning & Scattergood...........................
42
