1
3,750,000 Shares
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
_____________, 1998
CIBC Oppenheimer Corp.
Xxxx Xxxxxxxx Incorporated
c/o CIBC Oppenheimer Corp.
CIBC Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
BrightStar Information Technology Group, Inc. a Delaware
corporation (the "Company"), proposes to sell to you and the other underwriters
named on Schedule I to this Agreement (the "Underwriters"), for whom you are
acting as Representatives, an aggregate of 3,750,000 shares (the "Firm Shares")
of the Company's Common Stock, $0.001 par value (the "Common Stock"). In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 562,500 shares (the "Option Shares") of Common
Stock from it for the purpose of covering over-allotments in connection with
the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and
agreements contained in, and subject to the terms and conditions of, this
Agreement:
(a) The Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at $_____
2
per share (the "Initial Price"), the number of Firm Shares set
forth opposite the name of such Underwriter on Schedule I to this
Agreement.
(b) The Company grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of
the Option Shares at the Initial Price. The number of Option
Shares to be purchased by each Underwriter shall be the same
percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be purchased by
the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time
on or before 12:00 noon, New York City time, on the business day
before the Firm Shares Closing Date (as defined below), and only
once thereafter within 30 days after the date of this Agreement,
in each case upon written or telegraphic notice, or oral or
telephonic notice confirmed by written or telegraphic notice, by
the Representatives to the Company no later than 12:00 noon, New
York City time, on the second business day before the Firm Shares
Closing Date or at least two business days before the Option
Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the
time and date (if other than the Firm Shares Closing Date) of such
purchase.
2. Delivery and Payment. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price shall be made to the Company, or to the order
of the Company, by wire transfer of immediately available funds against delivery
to the Representatives for the respective accounts of the Underwriters, of
certificates representing the Firm Shares to be purchased by them, which
delivery shall take place at the offices of CIBC Xxxxxxxxxxx Corp., at CIBC
Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
a.m., New York City time, on the third (or, if pricing occurs after 4:30 p.m.,
New York City time, on any given day, on the fourth) business day following the
date of pricing, or at such time on such other date, not later than 10 business
days after the date of this Agreement, as shall be agreed upon by the Company
and the Representatives (such time and date of delivery and payment are called
the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by wire transfer of immediately available funds to the Company, or to the
order of the Company, shall take place at the offices of CIBC Xxxxxxxxxxx Corp.
specified above at the time and on the date (which may be the same date as, but
in no event shall be earlier than, the Firm Shares Closing Date) specified in
the notice referred to in Section 1(b) (such time and date of delivery and
payment are called the "Option Shares Closing Date"). The Firm Shares Closing
Date and the Option Shares Closing Date are called, individually, a "Closing
Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request
at least two full business days before the Firm
-2-
3
Shares Closing Date or Option Shares Closing Date, as applicable, on the day of
notice of exercise of the option as described in Section l(b) and shall be made
available to the Representatives for checking and packaging, at such place as
is designated by the Representatives, on the business day before the Firm
Shares Closing Date (or the Option Shares Closing Date in the case of the
Option Shares).
3. Registration Statement and Prospectus; Public Offering.
The Company has prepared in conformity with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-43209), including a preliminary prospectus relating to the Shares, and has
filed with the Commission the Registration Statement (as hereinafter defined)
and such amendments thereof as may have been required to the date of this
Agreement. Copies of such Registration Statement (including all amendments
thereof) and of the related preliminary prospectus have heretofore been
delivered by the Company to you. The term "preliminary prospectus" means any
preliminary prospectus (as described in Rule 430 of the Rules) included at any
time as a part of the Registration Statement. The Registration Statement as
amended at the time and on the date it becomes effective (the "Effective
Date"), including all exhibits and information, if any, deemed to be part of
the Registration Statement pursuant to Rule 424(b) and Rule 430A of the Rules,
is called the "Registration Statement." The term "Prospectus" means the
prospectus contained in the Registration Statement on the Effective Date or the
prospectus filed by the Company with the Commission pursuant to Rule 424(b) of
the Rules in the form first used to confirm sales of the Shares.
The Company understands that the Underwriters propose to make a
public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed the preliminary prospectus, which has been printed and released to
the Underwriters pursuant to the instructions of the Company and its legal
counsel, and the Underwriters and dealers are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The
Company hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date the Registration Statement
complied, and on the date of the Prospectus, on the date any
post-effective amendment to the Registration Statement shall
become effective, on the date any supplement or amendment to the
Prospectus is filed with the Commission and on each Closing Date,
the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and
the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder; the Registration Statement did not, as of the
Effective Date, contain any untrue statement of a material fact or
omit
-3-
4
to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and on the other dates referred to above neither the Registration
Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a
material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein not misleading. When any related preliminary prospectus
was first filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to
Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities
Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty as to the last
paragraph on the cover page of the Prospectus, the paragraph with
respect to stabilization on the inside front cover page of the
Prospectus and the statements contained in the second, seventh,
ninth and eleventh paragraphs under the caption "Underwriting" in
the Prospectus. The Company acknowledges that the statements
referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf
of the several Underwriters specifically for inclusion in the
Registration Statement, any preliminary prospectus or the
Prospectus.
(b) All contracts and other documents required to be
filed as exhibits to the Registration Statement have been filed
with the Commission as exhibits to the Registration Statement.
(c) The financial statements of the Company and each
of the entities listed on Schedule II hereto (collectively the
"Affiliates") (including all notes and schedules thereto) included
in the Registration Statement and Prospectus present fairly the
financial position, the results of operations and cash flows and
the stockholders' equity and the other information purported to be
shown therein of the Company and each of the Affiliates at the
respective dates and for the respective periods to which they
apply; and such financial statements have been prepared in
conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and present
fairly the information contained therein.
(d) Deloitte & Touche L.L.P. and Deloitte Touche
Tohmatsu, whose reports are filed with the Commission as a part of
the Registration Statement, are and, during the periods covered by
their reports, were independent public accountants as required by
the Securities Act and the Rules.
(e) The Company and the Affiliates have each been
duly incorporated or organized and are validly existing and in
good standing under the laws of their respective jurisdictions of
incorporation or organization. Except for the Affiliates to be
acquired
-4-
5
concurrently with the offering of the Shares, the Company has no
subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture,
association or other business organization. The Company and each
of the Affiliates is duly qualified and in good standing as a
foreign corporation or other entity in each jurisdiction in which
the character or location of its assets or properties (owned,
leased or licensed) or the nature of its business makes such
qualification necessary except for such jurisdictions where the
failure to so qualify would not have a material adverse effect on
the assets or properties, business, results of operations or
financial condition of the Company and the Affiliates taken as a
whole. With respect to the Company and the Affiliates taken as a
whole, and except as disclosed in the Registration Statement and
the Prospectus, neither the Company nor any of the Affiliates own,
lease or license any material asset or property or conduct any
material portion of their business outside the United States of
America and Australia. The Company and each of the Affiliates
have all requisite corporate or other power and authority, and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or
regulatory bodies or any other person or entity, to own, lease and
license their respective assets and properties and conduct their
respective businesses as now being conducted and as described in
the Registration Statement and the Prospectus except for such
authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a
material adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company and the Affiliates taken as a whole; no
such authorization, approval, consent, order, license, certificate
or permit contains a materially burdensome restriction other than
as disclosed in the Registration Statement and the Prospectus; and
the Company has all such corporate power and authority, and such
authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this
Agreement and to issue and sell the Shares (except as may be
required by or under the Securities Act, the National Association
of Securities Dealers Automated Quotation ("Nasdaq") National
Market System, the National Association of Securities Dealers,
Inc. ("NASD") and state and foreign Blue Sky laws).
(f) The Company and each of the Affiliates own or
possess adequate and enforceable rights to use all trademarks,
trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of their respective businesses as
described in the Registration Statement and the Prospectus. The
Company has not received any notice of, and to its best knowledge
is not aware of, any infringement of or conflict with asserted
rights of others with respect to any Intangibles which, singly or
in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect upon the
assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company or any of the
Affiliates.
-5-
6
(g) The Company and each of the Affiliates has good
title to each of the items of personal property which are
reflected in the financial statements referred to in Section 4(c)
or are referred to in the Registration Statement and the
Prospectus as being owned by it and valid and enforceable
leasehold interests in each of the items of real and personal
property which are referred to in the Registration Statement and
the Prospectus as being leased by it, in each case free and clear
of all liens, encumbrances, claims, security interests and
defects, other than those described in the Registration Statement
and the Prospectus and those which do not and will not have a
material adverse effect upon the assets or properties, business,
results of operations or financial condition of the Company and
the Affiliates, taken as a whole.
(h) There is no litigation or governmental or other
proceeding or investigation before any court or before or by any
public body or board pending or, to the Company's best knowledge,
threatened (and the Company does not know of any basis therefor)
against, or involving the assets, properties or business of, the
Company or any of the Affiliates which would materially adversely
affect the value or the operation of any such assets or properties
or the business, results of operations, prospects or condition
(financial or otherwise) of the Company and the Affiliates, taken
as a whole.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, except as described therein, (i) there has not been
any material adverse change in the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise), of the Company and the Affiliates, taken as a whole,
whether or not arising from transactions in the ordinary course of
business; (ii) neither the Company nor any of the Affiliates have
sustained any material loss or interference with their respective
assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court
or legislative or other governmental action, order or decree; and
(iii) since the date of the latest respective balance sheets
included in the Registration Statement and the Prospectus, except
as reflected therein, neither the Company nor any of the
Affiliates have (a) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary
course of business, (b) entered into any transaction not in the
ordinary course of business or (c) declared or paid any dividend
or made any distribution on any shares of its stock or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its stock.
(j) There is no document or contract of a character
required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. Each
agreement listed in the Exhibits to the Registration Statement is,
or when executed by the respective parties thereto on the Firm
Shares Closing Date will be, in full force and effect and is, or
will be, valid and enforceable by and against the Company in
accordance with its terms,
-6-
7
assuming the due authorization, execution and delivery thereof by
each of the other parties thereto. Neither the Company nor, to
the best of the Company's knowledge, any other party is in default
in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has
occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event
would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial
or otherwise) of the Company and the Affiliates taken as a whole.
No default exists, and no event has occurred which with notice or
lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by
the Company or any of the Affiliates of any other agreement or
instrument to which the Company or any of the Affiliates is a
party or by which any of them or their properties or businesses
may be bound or affected which default or event would have a
material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company and the Affiliates taken as a whole.
(k) Neither the Company nor any of the Affiliates is
in violation of any term or provision of its charter, by-laws or
other constituent documents or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company and the Affiliates taken as a whole.
(l) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any of
the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Shares)
will give rise to a right to terminate or accelerate the due date
of any payment due under, or conflict with or result in the breach
of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result
in the execution or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company pursuant to the terms
of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which it or any
of its properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or violate any provision of
the charter or by-laws of the Company, except for such consents or
waivers which have already been obtained and are in full force and
effect.
(m) The Company has authorized and, upon the closing
of the Acquisitions and the Share Exchange (as such terms are
defined in the Prospectus) will have, outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus.
All of the outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other similar
right. The Shares, when issued and sold pursuant to this
-7-
8
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. The shares of Common Stock
issued in connection with the Acquisitions and the Share Exchange
(collectively, the "Exchange Shares"), when issued and sold
pursuant to the Acquisitions and the Share Exchange, will be duly
and validly issued, fully paid and nonassessable and none of them
will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or any of
the Affiliates or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock, the Shares and
the Exchange Shares conform in all material respects to all
statements in relation thereto contained in the Registration
Statement and the Prospectus.
(n) No holder of any security of the Company has the
right to have any security owned by such holder included in the
Registration Statement or to demand registration of any security
owned by such holder during the period ending one year after the
date of this Agreement, except in the event that the officers and
directors of the Company include shares of Common Stock owned by
them in a public offering of Common Stock registered under the
Securities Act pursuant to the Stock Transfer Restriction
Agreements entered into in connection with each of the
Acquisitions. Each of the Company, its directors and executive
officers, each person who receives Common Stock in connection with
the Share Exchange and each person who receives Common Stock in
connection with the Acquisitions has delivered to the
Representatives its enforceable written agreement that it will
not, without the prior written consent of CIBC Xxxxxxxxxxx Corp.,
directly or indirectly, make any offer, sale, assignment,
transfer, contract to sell, grant of an option to purchase or
other disposition of any Common Stock beneficially owned (within
the meaning of Rule 13d-3 under the Securities Exchange Act of
1945, as amended) by them for a period of one year subsequent to
the date hereof, other than the Common Stock to be sold hereunder
by the Company in the offering of the Shares, or Common Stock
transferred as a gift or gifts (provided that any donee thereof
agrees in writing to be bound by the terms of such lockup
agreement).
(o) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery
and performance of this Agreement and the issuance and sale of the
Shares and the Exchange Shares by the Company. This Agreement and
each of the Agreements entered into in connection with the
Acquisitions and the Share Exchange are duly and validly
authorized, executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms,
except (A) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
and (B) to the extent that
-8-
9
rights to indemnity or contribution under this Agreement may be
limited by Federal and state securities laws or the public policy
underlying such laws.
(p) Neither the Company nor any of the Affiliates is
involved in any labor dispute nor, to the knowledge of the
Company, is any such dispute threatened, which dispute would have
a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company and the Affiliates, taken as a whole.
(q) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement
and the Prospectus.
(r) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of any of the Shares.
(s) The Company and each of the Affiliates has filed
all Federal, state, local and foreign tax returns which are
required to be filed through the date hereof, or has received
extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are
material and have become due.
(t) The Shares have been duly authorized for
quotation upon effectiveness of the Registration Statement on the
Nasdaq National Market System.
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 6(A)(a) of this
Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall
be in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the
part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of the Representatives.
-9-
10
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered
pursuant to Section 5(d) shall be true and correct when made and
on and as of each Closing Date as if made on such date and the
Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required
to be performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives and
dated such Closing Date, of the chief executive or chief operating
officer and the chief financial officer or chief accounting
officer of the Company to the effect that the signers of such
certificate have carefully examined the Registration Statement,
the Prospectus and this Agreement and that the representations and
warranties of the Company in this Agreement are true and correct
on and as of such Closing Date with the same effect as if made on
such Closing Date and the Company has performed all covenants and
agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior
to such Closing Date.
(e) The Representatives shall have received on the
Effective Date, at the time this Agreement is executed and on each
Closing Date a signed letter from Deloitte & Touche L.L.P.
addressed to the Representatives and dated, respectively, the
Effective Date, the date of this Agreement and each such Closing
Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct
insofar as it relates to them and stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules included in
the Registration Statement and the Prospectus and reported
on by them comply as to form in all material respects with
the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Summary Unaudited Pro Forma Combined
Financial Data" and "Selected Financial Data," carrying
out certain procedures (but not an examination in
accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter, a
reading of the minutes of the meetings of the stockholders
and directors of the Company and the Affiliates, and
inquiries of certain officials of the Company and the
Affiliates who have responsibility for financial and
accounting matters of the Company and the Affiliates as to
transactions and events subsequent to the date of the
latest audited financial statements, except as disclosed
in the Registration Statement and the Prospectus, nothing
came to their attention which caused them to believe that:
-10-
11
(A) the amounts in "Summary Unaudited
Pro Forma Combined Financial Data," and "Selected
Financial Data" included in the Registration
Statement and the Prospectus do not agree with
the corresponding amounts in the audited and
unaudited financial statements from which such
amounts were derived; or
(B) with respect to the Company and each
of the Affiliates, there were, at a specified
date not more than five business days prior to
the date of the letter, any increases in the
current liabilities and long-term liabilities of
the Company or the Affiliates or any decreases in
net income or in working capital or the
stockholders' equity in the Company or the
Affiliates, as compared with the amounts shown on
their respective audited balance sheets for the
most recent fiscal year ended and the most recent
interim period included in the Registration
Statement; and
(iii) they have performed certain other
procedures as a result of which they determined that
certain information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company and the
Affiliates) set forth in the Registration Statement and
the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the
Company and the Affiliates.
References to the Registration Statement and the
Prospectus in this paragraph (e) are to such documents as
amended and supplemented at the date of the letter.
(f) The Representatives shall have received on each
Closing Date from Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx,
P.C., counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect
that:
(i) The Company, BIT Group Services, Inc., a
[Delaware] corporation ("BITG"), and BIT Investors, LLC, a
[Delaware] limited liability company ("BITI"), have been
duly organized and are validly existing as a corporation
or limited liability company, as the case may be, in good
standing under the laws of the State of [Delaware]. The
Company is a wholly owned subsidiary of BITG, and BITG is
a wholly owned subsidiary of BITI. To the best of such
counsel's knowledge, none of the Company, BITG and BITI
have any other subsidiary and do not control, directly or
indirectly, any other corporation, partnership, joint
venture, association or other business organization. The
Company and BITG are duly qualified and in good standing
as foreign corporations, and BITI is duly qualified and in
good standing as a foreign limited liability company, in
each jurisdiction in which the character or location of
their
-11-
12
respective assets or properties (owned, leased or
licensed) or the nature of their respective businesses
makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not
have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company, BITG or
BITI.
(ii) The Company, BITG and BITI have all
requisite corporate or other power and authority to own,
lease and license their respective assets and properties
and conduct their respective businesses as now being
conducted and as described in the Registration Statement
and the Prospectus; and the Company has all requisite
corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and
perform this Agreement and to issue and sell the Shares
and the Exchange Shares other than those required by or
under the Securities Act, the Nasdaq National Market
System, the NASD and state and foreign Blue Sky laws.
(iii) The Company has authorized and issued
capital stock as set forth in the Registration Statement
and the Prospectus; the certificates evidencing the Shares
conform to the applicable requirements of the Delaware
General Corporation Law and have been duly authorized for
issuance by the Company; all of the outstanding shares of
Common Stock of the Company and BITG, and all of the
outstanding member interests of BITI, have been duly and
validly authorized and have been duly and validly issued
and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar
right. The Exchange Shares have been duly authorized and
reserved by the Company. The Shares when issued and sold
pursuant to this Agreement and the Exchange Shares, when
issued and sold pursuant to the Acquisitions and the Share
Exchange, will be duly and validly issued, outstanding,
fully paid and nonassessable and none of them will have
been issued in violation of any preemptive or other
similar right. To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of
stock of the Company or BITG, or any interest in BITI, or
any security convertible into, exercisable for, or
exchangeable for stock of or interests in the Company,
BITG or BITI. The Common Stock, the Shares and the
Exchange Shares conform in all material respects to the
descriptions thereof contained in the Registration
Statement and the Prospectus.
(iv) Each of the agreements of the Company's
directors and executive officers providing that for a
period of one year from the date of this Agreement such
directors and executive officers will not, without CIBC
Xxxxxxxxxxx Corp.'s prior written consent, sell, grant any
option for the sale of, or otherwise dispose of, directly
or indirectly, any shares of Common Stock (or any
securities
-12-
13
convertible into, exercisable for, or exchangeable for any
shares of Common Stock) owned by them has been duly and
validly delivered by the parties thereto and constitutes
the legal, valid and binding obligation of each such
person enforceable against each such person in accordance
with its terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(v) All necessary corporate action has been
duly and validly taken by the Company to authorize (A) the
execution, delivery and performance of this Agreement, (B)
the execution, delivery and performance of each of the
agreements entered into by the Company in connection with
the Acquisitions and the Share Exchange (the "Exchange
Agreements") and (C) the issuance and sale of the Shares
and the Exchange Shares. This Agreement has been duly and
validly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery by
the Underwriters, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company
in accordance with its terms except (A) as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity
or contribution under this Agreement may be limited by
Federal or state securities laws or the public policy
underlying such laws.
(vi) Neither the execution, delivery and
performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated
hereby or by the Exchange Agreements (including, without
limitation, the issuance and sale by the Company of the
Shares and the Exchange Shares) will give rise to a right
to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any
term or provision of, or constitute a default (or any
event which with notice or lapse of time, or both, would
constitute a default) under, or require consent or waiver
under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets
of the Company pursuant to the terms of any indenture,
mortgage, deed trust, note or other agreement or
instrument of which such counsel is aware and (i) to which
the Company is a party or (ii) by which it or any of its
properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or
regulation of which such counsel is aware or violate any
provision of the charter or by-laws of the Company.
(vii) To the best of such counsel's knowledge,
no default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a
default, in the due performance and observance of any
term, covenant or
-13-
14
condition by the Company, BITG or BITI of any indenture,
mortgage, deed of trust, note or any other agreement or
instrument to which the Company, BITG or BITI is a party
or by which they or any of their respective assets or
properties or businesses may be bound or affected, where
the consequences of such default would have a material and
adverse effect on the assets, properties, business,
results of operations, prospects or condition (financial
or otherwise) of the Company, BITG or BITI.
(viii) To the best of such counsel's knowledge,
neither the Company, BITG nor BITI is in violation of any
term or provision of its charter or by-laws or any
franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of
such violation would have a material and adverse effect on
the assets or properties, businesses, results of
operations, prospects or condition (financial or
otherwise) of the Company, BITG or BITI.
(ix) No consent, approval, authorization or
order of any court or governmental agency or body is
required for the performance of this Agreement or the
Exchange Agreements by the Company or the consummation of
the transactions contemplated hereby or thereby, except
such as have been obtained under the Securities Act and
such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of
the Shares by the several Underwriters.
(x) To the best of such counsel's knowledge,
there is no litigation or governmental or other proceeding
or investigation, before any court or before or by any
public body or board pending or threatened against, or
involving the assets, properties or businesses of, the
Company, BITG or BITI which would have a material adverse
effect upon the assets or properties, business, results of
operations, prospects or condition (financial or
otherwise) of the Company, BITG or BITI.
(xi) The statements in the Prospectus under
the captions "the Company-Summary of Terms of the
Acquisitions," "Managements Discussion and Analysis of
Financial Condition and Results of OperationsCLiquidity
and Capital Resources," "ManagementCExecutive Compensation
and Employment Agreements," "ManagementC1997 Long-Term
Incentive Plan," "Certain Transactions," "Description of
Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting," insofar as such statements constitute a
summary of documents referred to therein or matters of
law, are fair summaries in all material respects and
accurately present the information called for with respect
to such documents and matters. All contracts and other
documents required to be filed as exhibits to, or
described in, the Registration Statement have been so
filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
-14-
15
(xii) The Registration Statement, all
preliminary prospectuses and the Prospectus and each
amendment or supplement thereto (except for the financial
statements and schedules and other financial and
statistical data included therein, as to which such
counsel need not express an opinion) comply as to form in
all material respects with the requirements of the
Securities Act and the Rules.
(xiii) The Registration Statement has become
effective under the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have
been instituted or are, to the best of such counsel's
knowledge, threatened, pending or contemplated.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of New York, the General Corporation Law of the State of Delaware and
the Federal laws of the United States; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on
such other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except
as specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial and statistical data included therein, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements and notes
schedules thereto and other financial and statistical data included therein, as
to which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(g) All proceedings taken in connection with the sale
of the Firm Shares and the Option Shares as herein contemplated
shall be reasonably satisfactory in form and substance to the
Representatives and their counsel and the Underwriters shall have
received from Fulbright & Xxxxxxxx L.L.P. a favorable opinion,
addressed to the Representatives and dated such Closing Date, with
respect to the Shares, the Registration Statement and the
Prospectus, and such other related matters, as the Representatives
may
-15-
16
reasonably request, and the Company shall have furnished to
Fulbright & Xxxxxxxx L.L.P. such documents as they may reasonably
request for the purpose of enabling them to pass upon such
matters.
(h) Immediately preceding the time of the closing of
the Firm Shares, each of the Acquisitions shall have been closed
into escrow pending only the delivery of the consideration for the
Acquisitions required to be delivered on the Firm Shares Closing
Date.
(i) The Underwriters shall have been expressly
entitled to rely on any and all legal opinions delivered in
connection with the closings of the Acquisitions.
6. Covenants of the Company.
(A) The Company covenants and agrees as follows:
(a) The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act, and shall promptly advise the
Representatives (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the
prevention or suspension of the use of any preliminary prospectus
or the Prospectus or of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that
purpose and (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a
copy for its review prior to filing and shall not file any such
proposed amendment or supplement to which the Representatives
promptly and reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Securities Act and
the Rules, any event occurs as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare
and file with the Commission,
-16-
17
subject to the second sentence of paragraph (a) of this Section
6(A), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such
compliance.
(c) The Company shall make generally available to its
security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of the
Company during which the Effective Date occurs (or 90 days if such
12-month period coincides with the Company's fiscal year), an
earnings statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions
of Section 11(a) of the Securities Act or Rule 158 of the Rules.
(d) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed copies of
the Registration Statement (including all exhibits thereto and
amendments thereof) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and all
amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the
Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as
the Representatives may reasonably request.
(e) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify the
Shares for offer and sale under the laws of such jurisdictions as
the Representatives may designate and shall maintain such
qualifications in effect so long as required for the distribution
of the Shares; provided, however, that the Company shall not be
required in connection therewith, as a condition thereof, to
qualify as a foreign corporation or to execute a general consent
to service of process in any jurisdiction or subject itself to
taxation as doing business in any jurisdiction.
(f) For a period of two years after the date of this
Agreement, the Company shall supply to the Representatives copies
of such financial statements and other periodic and special
reports as the Company may from time to time distribute generally
to the holders of any class of its capital stock and to furnish to
the Representatives a copy of each annual or other report it shall
be required to file with the Commission (including the reporting
required by Rule 463 of the Rules).
(g) Without the prior written consent of the
Representatives, for a period of one year after the date of this
Agreement (the "Lockup Period"), the Company shall not issue, sell
or register with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or indirectly,
any equity securities of the Company (or any securities
convertible into or exercisable or exchangeable for equity
securities of the Company), except for (i) the issuance of the
Shares pursuant to the Registration Statement, (ii) the issuance
of the Exchange Shares and the issuance of Common Stock in
connection with future acquisitions, (iii) the issuance of Common
-17-
18
Stock on exercise of the MG Warrant and the BGCA Option and (iv)
pursuant to awards under the Company's 1997 Long-Term Incentive
Plan, provided that the recipients of shares of Common Stock in
connection with any of the transaction described in (i) through
(iv) above agree not to offer or sell any of those shares during
the Lockup Period. In the event that during this period, (i) any
shares are issued pursuant to the Company's existing stock option
plan or bonus plan or (ii) any registration is effected on Form
S-8 or on any successor form, the Company shall obtain the written
agreement of such grantee or purchaser or holder of such
registered securities that, during the Lockup Period, such person
will not, without the prior written consent of the
Representatives, offer for sale, sell, distribute, grant any
option for the sale of, or otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to,
any shares of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common Stock)
owned by such person.
(h) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the NASDAQ National Market System
(including any required registration under the Exchange Act).
(B) The Company agrees to pay, or reimburse if paid
by the Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
6(A)(e), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or by
dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6(A)(f); (vii) inclusion of the
Shares for quotation on the NASDAQ National Market System; and (viii) all
transfer taxes, if any, with respect to the sale and delivery of the Shares by
the Company to the Underwriters. Subject to the provisions of Section 9, the
Underwriters agree to pay, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Underwriters under this
Agreement not payable
-18-
19
by the Company pursuant to the preceding sentence, including, without
limitation, all fees and disbursements of Fulbright and Xxxxxxxx L.L.P.,counsel
for the Underwriters.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, or arise out of or are
based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that
such indemnity shall not inure to the benefit of any Underwriter
(or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of
the Shares to any person by such Underwriter if such untrue
statement or omission or alleged untrue statement or omission was
made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, (i) in reliance
upon and in conformity with information furnished in writing to
the Company by the Representatives on behalf of any Underwriter
specifically for use therein or (ii) was corrected in a
preliminary prospectus, the Registration Statement or the
Prospectus prepared and delivered to the Underwriters prior to the
consummation by an Underwriter of a sale, and such Underwriter
failed to timely distribute the corrected materials to the
purchaser. This indemnity agreement will be in addition to any
liability which the Company may otherwise have and shall be given
effect cumulatively with any other remedies of the Underwriters
such that the Underwriters are entitled to one complete relief.
(b) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, each person,
if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each
director of the Company, and each officer of the Company who signs
the Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar
as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary
prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, contained in the last
paragraph of the cover page, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus and
the statements contained under the caption
-19-
20
"Underwriting" in the Prospectus; provided, however, that the
obligation of each Underwriter to indemnify the Company (including
any controlling person, director or officer thereof) shall be
limited to the net proceeds received by the Company from such
Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be
available to any party who shall fail to give notice as provided
in this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action,
suit or proceeding shall not relieve it from any liability that it
may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and,
to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party
for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may
be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be
liable for any settlement of any action, suit, proceeding or claim
effected without its written consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) is due in accordance with its terms but for any reason is held to
be unavailable from the Company, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any
-20-
21
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by the Company
from persons other than the Underwriters, such as persons who control the
Company within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement and directors of the Company, who may also be
liable for contribution) to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) in no case shall any
Underwriter (except as may be provided in the Agreement Among Underwriters) be
liable or responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder, and (ii) the
Company shall be liable and responsible for any amount in excess of such
underwriting discount; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties under this
Section, notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise
than under this
-21-
22
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The
Underwriter's obligations to contribute pursuant to this Section 8 are several
in proportion to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with
respect to the Shares to be purchased on a Closing Date by the Representatives
by notifying the Company at any time
(a) in the absolute discretion of the Representatives
at or before any Closing Date: (i) if on or prior to such date,
any domestic or international event or act or occurrence has
materially disrupted, or in the opinion of the Representatives
will in the future materially disrupt, the securities markets;
(ii) if there has occurred any new outbreak or material escalation
of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it,
in the judgment of the Representatives, inadvisable to proceed
with the offering; (iii) if there shall be such a material adverse
change in general financial, political or economic conditions or
the effect of international conditions on the financial markets in
the United States is such as to make it, in the judgment of the
Representatives, impracticable to market the Shares; (iv) if
trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock Exchange, Inc. or on the
American Stock Exchange, Inc. has been suspended or limited, or
minimum or maximum ranges for prices for securities generally
shall have been fixed, or maximum ranges for prices for securities
generally shall have been required, by said exchanges or by order
of the Commission, the National Association of Securities Dealers,
Inc., or any other governmental or regulatory authority; or (v) if
a banking moratorium has been declared by any state or Federal
authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled
when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
the Company shall not be under any liability to any Underwriter, and no
Underwriter shall be under any liability to the Company, except that (y) if
this Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company
will reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of Fulbright & Xxxxxxxx L.L.P., their
counsel) incurred by them in connection with the proposed purchase and sale of
the Shares or in contemplation of performing their obligations hereunder and
(z) no Underwriter who shall have failed or refused to purchase the Shares
agreed to be purchased by it under this Agreement, without a reason sufficient
under the terms of this Agreement to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal
(including the reasonable fees and disbursements of the Company's auditors and
legal counsel).
-22-
23
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more
substitute underwriters to purchase such Shares or make such other arrangements
as the Representatives may deem advisable or one or more of the remaining
Underwriters may agree to purchase such Shares in such proportions as may be
approved by the Representatives, in each case upon the terms set forth in this
Agreement. If no such arrangements have been made by the close of business on
the business day following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10%
of the Shares that all the Underwriters are obligated to purchase
on such Closing Date, then each of the nondefaulting Underwriters
shall be obligated to purchase such Shares on the terms herein set
forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that
any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of
such number of Shares without the written consent of such
Underwriter, or
(b) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall exceed 10% of
the Shares that all the Underwriters are obligated to purchase on
such Closing Date, then the Company and the nondefaulting
Underwriters shall be entitled to an additional business day
within which they may, but are not obligated to, find one or more
substitute underwriters reasonably satisfactory to the
Representatives to purchase such Shares upon the terms set forth
in this Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration
Statement or Prospectus) may be effected by the Representatives and the
Company. If the number of Shares to be purchased on such Closing Date by such
defaulting Underwriter or Underwriters shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, and none of
the nondefaulting Underwriters or the Company shall make arrangements pursuant
to this Section within the period stated for the purchase of the Shares that
the defaulting Underwriters agreed to purchase, this Agreement shall terminate
with respect to the Shares to be purchased on such Closing Date without
liability on the part of any nondefaulting Underwriter to the Company and
without liability on the part of the Company, except in both cases as provided
in Sections 6(B), 7, 8 and 9. The provisions of this Section shall not in any
way affect the liability of any defaulting Underwriter to the Company or the
nondefaulting Underwriters arising out of such default. A substitute
underwriter hereunder shall become an Underwriter for all purposes of this
Agreement.
11. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in
-23-
24
or made pursuant to this Agreement shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or any of the officers, directors or controlling persons referred to in
Sections 7 and 8 hereof, and shall survive delivery of and payment for the
Shares. The provisions of Sections 6(B), 7, 8 and 9 shall survive the
termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company,
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include any purchaser of Shares from any Underwriter
merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC Xxxxxxxxxxx Corp., CIBC
Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
Xxxxxx Xxxxx, and (b) if to the Company, to its agent for service as such
agent's address appears on the cover page of the Registration Statement.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
-24-
25
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
BRIGHTSTAR INFORMATION TECHNOLOGY
GROUP, INC.
By:
------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chief Executive Officer
Confirmed:
CIBC XXXXXXXXXXX CORP.
XXXX XXXXXXXX INCORPORATED
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By: CIBC XXXXXXXXXXX CORP.
By:
------------------------
Name:
Title:
-25-
26
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- --------------
CIBC Xxxxxxxxxxx Corp.
Xxxx Xxxxxxxx Incorporated
-----------------------------------
--------------
Total
==============
-26-
27
SCHEDULE II
Jurisdiction of
Incorporation or
Name Organization
---- ----------------
BIT Investors, LLC Texas
BIT Group Services, Inc. Delaware
Xxxxx X. Xxxxxxxxx and Associates, Inc. Texas
Integrated Controls, Inc. Louisiana
Mindworks Professional Education Group, Inc. Arizona
Software Consulting Services America, LLC California
SCS Unit Trust Victoria, Australia
Software Innovators, Inc. Arkansas
Zelo Group, Inc. California
-27-
